Despite regular reassurances from the UK Government that the RO system will be “grandfathered” in such a way as to keep the system operational and effective beyond 2017, the proposed closing of the RO scheme to new entrants and its replacement by the new FiT CfD1 has caused unease amongst potential investors, who are concerned as to the value and stability of the RO system following the switch. This unease is not unreasonable: the value of ROC derives not from the ROCs themselves, but from the way that the RO system creates a demand and thus a market for the ROCs. How will that demand be maintained once large-scale renewable energy projects do not exclusively fall within the RO pool, and once generators can meet renewable energy targets through FiT CfD projects? Will existing projects maintain their value following the 2017 switch, and for the duration of what is often (for large-scale wind and solar projects) an anticipated project lifetime of at least 20 years? This alert explains how recent UK Government policy statements answer these questions.

Once the RO scheme has been closed to new entrants, it would need to adapt in order to remain viable and effective and to provide equivalent benefits, by making sure that there is still demand for ROCs and that money is paid into the redistribution fund.

Please see full Alert below for further information.