Clock may be ticking on the RO scheme, but costs still set to rise

Our Informer Series webinars provided the latest insight on energy prices, charges and benefits. Gavin Baker, Head of Pricing, looked at some of the factors influencing the cost of the Renewables Obligation.

Forecasting that the cost of the Renewables Obligation (RO) scheme is likely to rise next year is easy, predicting by just how much is the hard part!

There are still some big unknowns which will impact on the costs of the scheme for business energy users.

One key issue which energy buyers need to keep an eye on is the European Commission’s state aid investigation over a CfD subsidy contract for a 645MW biomass-fired power unit at Drax’s power station at Derby.

The outcome will determine whether the plant is eligible for a subsidy under the CfD scheme and if not, the costs could fall under the RO scheme charges for next year.

Another significant factor is the planned exemption for Energy Intensive Industries (EIE) from the indirect costs of the RO and the Feed-in Tariff scheme.

At this stage it is difficult to know how much volume will qualify for exemption which is due to come in next April. The more that does, the higher proportion of the costs of the RO will fall on other energy users.

In our recent webinar we looked at what might happen to RO costs next year under a range of different scenarios and at prospects for further ahead as the scheme starts to wind down.

As well as the latest insight on the RO, the webinars also covered what is happening with wholesale prices, along with latest forecasts on system and network charges and whether the timing of the Triad periods last winter provide any pointers to when they might fall this winter.

Hear Mark Cox and I give a more detailed overview of the forecasts for RO, taken from our June Informer Series webinar:

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