Ofgem has revealed there is an approximate 14.2 million renewables obligation certificate (ROC) shortfall, after suppliers failed to meet their entire obligation for the 2019/20 year.
The regulator has said however that initial, unverified figures suggest the outstanding obligation value as of 1 September was less than the same point in time last year.
Ofgem published the obligation of more than 130 million ROCs last month and since then suppliers have presented almost 116 million certificates towards this before the 1 September deadline.
Those who did not meet their entire obligation through presenting ROCs will, between them, meet the approximate 14,241,629 shortfall through buy-out and late payments.
The deadline to make buy-out payments was 31 August, while the deadline for late payments is 31 October.
Ofgem will confirm the amounts suppliers made in buy-out payments of £48.78 per ROC, and what it redistributes back to them, after it withdraws its administration costs in October. It will then confirm the amount of late payments made and redistributed to compliant suppliers.
RO scheme
The RO scheme requires suppliers to buy a certain percentage of the power they sell to customers from renewable sources.
Accredited generators receive a set number of Renewable Obligation Certificates (ROCs) for each megawatt hour they produce, with the rate depending on a number of factors including technology type. They can then sell these certificates to suppliers.
Suppliers must present enough ROCs to Ofgem each year to demonstrate they have met their yearly obligation and make up any difference with buyout payments. These payments are first used to cover the administration costs of the scheme, with the rest being returned to suppliers in proportion to the number of ROCs they submitted to Ofgem.
If the outstanding payments following the final deadline exceed a certain threshold known as the relevant shortfall, the mutualisation process is triggered.
Suppliers who met all or part of their obligation must together fill the gap over four quarterly payments.
In 2019 mutualisation was triggered for the second time in as many years, after a £206 million shortfall in outstanding payments was reached, well above the relevant shortfall thresholds of £15.4 million for England and Wales and £1.54 million for Scotland.