soaring wholesale prices are only one reason why the UK’s energy sector is in crisis. Insiders argue that Britain’s renewable energy regime – a legacy of the Labour government – is also to blame, heaping pressure on challenger firms struggling with payments to the regulator. Renewables Obligation Certificates, known as ROCs, were the brainchild of Gordon Brown’s administration more than a decade ago. The scheme was introduced to force Britain into producing more green energy. “It’s no surprise that these businesses are failing when the ROCs fall due,” says an industry insider. The scheme worked by handing tradable certificates by Ofgem, the industry regulator, to firms that generated electricity from renewable sources such as solar panels or wind turbines. Suppliers would then have to buy certificates from these generators to cover a percentage of the energy they sold to customers, and lodge them with Ofgem at the end of August each year. Alternatively, suppliers could instead pay a cash lump sum to Ofgem. Though the rates were more punitive, it allowed challenger firms to avoid tying up vital capital – money that could instead be used for expansion.
Telegraph 4th Oct 2021 read more »