What is the Renewables Obligation on my electricity bill?
The Renewables Obligation funds the legacy scheme that supported large-scale renewable generation. Every licensed electricity supplier must present 0.472 Renewables Obligation Certificates for each MWh it supplies in Great Britain in the obligation period 1 April 2026 to 31 March 2027, or pay a buy-out price of £69.34 for each one it does not present. Suppliers recover that cost from customers.
The scheme closed to new generating capacity in 2017 and its final obligation period ends on 31 March 2037. Nothing is published as a rate per kWh for a customer, which makes this one of the few lines on a business invoice that cannot be rebuilt from a public schedule.
- ROCs per MWh supplied
- 0.472
- The Great Britain obligation level for 2026/27, down from 0.493. Northern Ireland has its own, 0.184.
- Buy-out price, per ROC
- £69.34
- For the same period, up from £67.06. The first buy-out price indexed to CPI rather than to the Retail Prices Index.
- When the obligation ends
- 2037
- The last obligation period is the twelve months ending 31 March 2037.
What the obligation pays for, and under what instrument
The Renewables Obligation works by manufacturing demand for a certificate. Ofgem issues Renewables Obligation Certificates to accredited generators for the electricity they produce, and obliges every licensed supplier to hand a set number back each year. Generators sell their certificates to suppliers, and the price suppliers pay is the subsidy.
Three instruments run three separate obligations: the Renewables Obligation Order 2015 for England and Wales, the Renewables Obligation (Scotland) Order 2009 for Scotland, and a separate one for Northern Ireland. Government sets the obligation level before the period begins. Ofgem administers the scheme, publishes the buy-out price and holds the funds.
The scale is not small. In the twelve months to 31 March 2025 Ofgem issued 101.4 million certificates to 26,644 accredited stations holding 35.0 GW, covering 30.2 per cent of the UK electricity supply market. The scheme is the predecessor of the Contracts for Difference levy, and the contrast explains both: a Contract for Difference fixes a price centrally, while the Renewables Obligation set a quantity and let a market find the price. The guide to a business electricity bill maps where both sit, and the glossary has the short definition of this one.
Who pays it, and what comes off
Everybody supplied with electricity in Great Britain pays it, at one national level, half-hourly meter or not. What can be taken off is narrow.
- GB supply, Electricity supplied in Great Britain by a licensed supplier
- All meters, Half-hourly and non half-hourly points alike, at the same level
- Per MWh, Volume supplied, with no locational or time-of-day variation
- The certified EII share, A meter certified at 85.3 per cent pays 14.7 per cent of the levy.
- Northern Ireland supply, A separate obligation at a separate level, 0.184 ROCs per MWh for 2026-27, with no mutualisation.
- Gas, The obligation is on electricity supply.
The Renewables Obligation is one of the four schemes an Energy Intensive Industries certificate exempts, alongside Contracts for Difference, the small-scale Feed-in Tariff and the Capacity Market. A certificate removes a certified share of those four and never touches the Climate Change Levy, which is a tax under a different statute with different qualifying tests. The EII exemption guide covers how one is obtained and why it so often fails to reach the invoice.
How an obligation becomes a rate
Two published figures decide what the obligation costs: the obligation level, which is how many certificates are owed per MWh supplied, and the buy-out price, which is what one costs if none is presented. Multiply them, then convert into the unit a bill is written in.
0.472 for Great Britain in the period 1 April 2026 to 31 March 2027, set by government before it begins.
£69.34 at the buy-out price for the same period. A supplier buying certificates instead pays a market price, and no public source publishes it.
One pound per MWh is exactly 0.1 pence per kWh, so dividing by ten moves the result into the unit the bill is in. Division by a power of ten is exact.
That gives £32.73 per MWh for the current period, or 3.272848 pence per kWh, and it is a benchmark rather than a tariff. Unlike distribution and transmission charges, published per network area, and unlike balancing charges and AAHEDC, published as one national rate, nobody publishes a Renewables Obligation rate for a customer. Better metering does not change that: Market-wide Half Hourly Settlement sharpens the volume a supplier is settled on, exactly as it sharpens imbalance, and leaves both published figures untouched.
A year at the published figures
One assumption, stated: a site consuming a flat one million kWh over the obligation period. Every other figure below is published.
- Consumption assumed, 1 April 2026 to 31 March 2027
- 1,000,000 kWh
- Obligation at 0.472 ROCs per MWh
- 472 ROCs
- Valued at the £69.34 buy-out price
- £32,728.48
- The same figure as a unit rate
- 3.272848p per kWh
- The same site on the 2025/26 figures, 0.493 at £67.06
- £33,060.58
- Change year on year, on identical consumption
- £332.10 lower
The obligation level fell by more than the buy-out price rose, so the cost went down on unchanged consumption. A Renewables Obligation line that rose across 1 April 2026 did not rise because the published figures did.
The buy-out fund, the recycle and mutualisation
The compliance year is what makes this levy behave differently from the others. It runs on statutory dates, and the money moves twice more after the period has ended.
- 1 April to 31 MarchThe obligation accrues→
Every MWh supplied adds to it at the level fixed before the period began.
- By 1 SeptemberCertificates, or buy-out→
Article 67 of the 2015 Order requires payment before the 1st September in the following obligation period.
- 1 September to 31 OctoberThe late payment window→
Article 66 defines it. Money arriving in it carries daily interest at 5 percentage points above the Bank of England base rate.
- By 31 OctoberAny shortfall is determined
Ofgem compares what the funds hold against what they would hold had every supplier paid.
What goes into the buy-out fund does not stay there. Ofgem takes the cost of administering the scheme out of it and distributes the rest to suppliers in proportion to the certificates each presented. For 2024-25, suppliers presented 105,852,239 certificates against a buy-out fund of £854,589,500.29 across the three jurisdictions, and the redistribution on 24 October 2025 returned about £7.97 per certificate. The late payment fund of £7,414,269.00 followed on 9 December 2025 and added £0.07, making the final recycle value £8.04.
Mutualisation is the other side of it. Where money is missing, article 72 makes Ofgem determine whether a relevant shortfall has occurred, at a threshold of 1 per cent of the total obligation multiplied by the buy-out price, rounded to the nearest £100,000. Above it, the shortfall is recovered from every other supplier, up to a ceiling.
| Figure | England and Wales | Scotland |
|---|---|---|
| Mutualisation threshold | £83,300,000 | £8,300,000 |
| Mutualisation ceiling | £417,747,225.53 | £41,774,722.53 |
This is not theoretical. Suppliers failed to discharge their 2021-22 obligations by the late payment deadline of 31 October 2022, a relevant shortfall was reached under article 72 of the 2015 Order and article 48 of the 2009 Scottish Order, and the cost was mutualised across both.
Where it appears on your invoice
There is no standard line name, and this is one of the charges most often bundled into something larger.
| Line name | What it usually means | Can it be checked |
|---|---|---|
| RO, Renewables Obligation | The obligation itemised on its own line, as a rate per kWh. | Against the contract rate, with the published figures as a sanity band. |
| ROC, ROCs, ROC charge | The same charge, named after the certificate rather than the obligation. | The same way. |
| RO/FiT, Renewables, Renewable Levies | The Renewables Obligation and the Feed-in Tariff billed as one line. | In total only. An overcharge on one half hides under an undercharge on the other. |
| Environmental Levies, Green Levies, Policy Costs | The Renewables Obligation with Contracts for Difference, the Feed-in Tariff, the Capacity Market and sometimes more. | In total only, and the components have different bases and different cycles. |
| Non-commodity, Third Party Costs, Pass-through | Every levy and network charge in one number. | No. Nothing inside it is separable without a breakdown from the supplier. |
On a pass-through contract the levy arrives at a stated rate and moves when the contract says it moves. On a fully fixed contract it sits inside the unit rate at a level the supplier estimated, plus a premium for having estimated it.
How to check it, and what goes wrong
The published figures describe what a supplier owes across its whole supply, and turning them into a rate for one customer is a commercial decision, so the reference for this line is the contract. Four things go wrong often enough to name.
- The rate did not move on 1 April. Both published figures change on that date, and for 2026/27 they moved in opposite directions. A pass-through contract billing an identical rate across the boundary is worth a question.
- The volume was grossed up for losses. Several charges on the same invoice apply to loss-adjusted volume. This one is billed on metered consumption, so a rebuild from grossed-up kWh reads as an overcharge that is not there.
- A certificate was missed, or over-applied. The exemption is applied meter by meter at the certified proportion. Under exemption is relief paid for and not received. Over exemption is a liability to repay, recovered here by government directly rather than through the supplier.
- It is inside a combined line. Where the levy is billed with the Feed-in Tariff or with everything else, only the total is checkable. Ask for the breakdown per charge, not per group.
What is changing
The buy-out price is now indexed to CPI
Article 67 sets the buy-out price at £44.33 for the obligation period beginning in April 2016 and indexes it every year afterwards, by the Retail Prices Index up to April 2025. The government response of 28 January 2026 confirmed an immediate switch to CPI-based indexation ahead of the annual adjustment scheduled in April 2026, and the 2026-27 price applied a CPI change of 3.4 per cent for the 2025 calendar year. Government estimated the change could, at its peak in 2030, bring about savings in policy costs directly borne by consumers to the order of £270 million a year.
The scheme is winding down, slowly
Article 2 of the 2015 Order runs the obligation to the twelve months ending on 31st March 2037, and generators come off the scheme between 2027 and then as their twenty years of support end. Expect this line to shrink over the next decade rather than to disappear at a date.
Deep dives and edge cases
Two questions come up often enough to answer, and not often enough to interrupt the main path.
Why a certificate is worth more than the buy-out priceThe recycle value, and what it does to the price of a ROC.＋
A supplier can always discharge the obligation at the buy-out price, so that price looks like a ceiling on what a certificate is worth. It is not, because presenting one also buys a share of the fund the buy-out payments created.
For 2024-25 the redistribution returned about £7.97 per certificate presented, the late payment fund added £0.07, and the buy-out price was £64.73. A certificate presented that year was worth about £72.77 to the supplier presenting it. That is why buying certificates and buying out are not equivalent, and why a market price for a certificate normally sits above the buy-out price rather than below it.
How the obligation level is set, and what headroom isTwo calculations, the higher one wins, and 10 per cent is added on purpose.＋
Government sets the level from a forecast of certificate supply rather than from a target. For 2026-27 the calculation that governed produced 109.2 million certificates before headroom and 120.1 million after a 10 per cent headroom, and it was used because it was the higher of the two.
Headroom exists so that demand for certificates comfortably exceeds supply. Without it, certificates would be worth less than the buy-out price and generators would be under-rewarded. For a bill payer, the obligation is deliberately set a little above what generation alone would require.
Questions
What is the RO charge on my business electricity bill?＋
It is the Renewables Obligation, the levy that funds the legacy scheme supporting large-scale renewable generation. Ofgem issues Renewables Obligation Certificates to accredited generators for the electricity they produce, and every licensed electricity supplier must present a set number of those certificates each year or pay a buy-out price instead. Suppliers recover that cost from customers, which is why RO appears on a business invoice as a rate per kWh.
What is the Renewables Obligation level for 2026 to 2027?＋
0.472 Renewables Obligation Certificates per MWh supplied in Great Britain, for the obligation period 1 April 2026 to 31 March 2027, and 0.184 ROCs per MWh in Northern Ireland. The Great Britain level for 2025-26 was 0.493, so the obligation fell. Government publishes the calculation before the period begins; the 2026-27 figure was published on 29 September 2025.
What is the ROC buy-out price?＋
It is what a supplier pays for each certificate it does not present. For the obligation period 1 April 2026 to 31 March 2027 it is £69.34 per Renewables Obligation Certificate, up from £67.06 for 2025-26 and £64.73 for 2024-25. Article 67 of the Renewables Obligation Order 2015 set the price at £44.33 for the period beginning in April 2016 and indexes it every year afterwards.
How much does the Renewables Obligation cost per kWh?＋
There is no published per-kWh rate for a customer. The obligation level multiplied by the buy-out price gives what the obligation costs a supplier per MWh supplied: 0.472 times £69.34 is £32.73 per MWh, or 3.272848 pence per kWh, for 2026-27. That is a floor rather than a tariff, because a supplier that presents certificates pays a market price instead, and what reaches a bill is the rate stated in the supply contract.
Did the Renewables Obligation close?＋
It closed to new generating capacity in 2017. Ofgem words this as closing to all new generating capacity on 1 April 2017; the government response of 28 January 2026 words it as the three schemes closing to most new applications on 31 March 2017. Both describe the same boundary. Closure stopped new accreditations, it did not stop the annual obligation, and the final obligation period is the twelve months ending 31 March 2037.
Why am I still paying the RO if the scheme is closed?＋
Because generators accredited before closure still receive certificates, for up to twenty years or until the scheme closes on 31 March 2037, whichever comes first. In the twelve months to 31 March 2025 Ofgem issued 101.4 million certificates to 26,644 accredited stations holding 35.0 GW between them, covering 30.2 per cent of the UK electricity supply market. The obligation to buy those certificates is what keeps the line on the bill.
What is RO mutualisation?＋
It is the mechanism that recovers a supplier default from every other supplier. Under article 72 of the Renewables Obligation Order 2015, Ofgem determines by 31 October whether the buy-out and late payment funds fall short of what they would hold had every supplier paid. The threshold is 1 per cent of the total obligation multiplied by the buy-out price, rounded to the nearest £100,000. For 2026-27 that is £83,300,000 in England and Wales and £8,300,000 in Scotland.
What is the mutualisation ceiling for 2026 to 2027?＋
£417,747,225.53 in England and Wales and £41,774,722.53 in Scotland. It is the maximum that can be recovered from suppliers for one obligation period. Article 73 of the Renewables Obligation Order 2015 set the cap at £267,035,558.91 for 2015/16 and indexes it annually, by the retail prices index to 2024/25 and by the consumer prices index afterwards. Mutualisation does not apply in Northern Ireland.
Has RO mutualisation actually happened?＋
Yes. Suppliers failed to discharge their 2021-22 Renewables Obligations in full by the late payment deadline of 31 October 2022, a relevant shortfall was reached under article 72 of the Renewables Obligation Order 2015 and article 48 of the Renewables Obligation (Scotland) Order 2009, and the cost was mutualised in respect of both. Ofgem has published mutualisation notices for earlier obligation periods too.
What is the RO recycle value?＋
It is the money returned to suppliers from the buy-out fund. Ofgem recovers the cost of administering the scheme from the fund and distributes the rest to suppliers in proportion to the certificates each presented. For the 2024-25 obligation period, 105,852,239 certificates were presented against a buy-out fund of £854,589,500.29, and the redistribution on 24 October 2025 returned about £7.97 per certificate. The late payment fund added £0.07 on 9 December 2025, making the final recycle value £8.04.
Does an EII certificate remove the Renewables Obligation?＋
It removes the certified proportion of it. The Renewables Obligation is one of the four schemes an Energy Intensive Industries certificate exempts, alongside Contracts for Difference, the small-scale Feed-in Tariff and the GB Capacity Market, and the exemption is applied meter by meter at the proportion certified, so a meter certified at 85.3 per cent pays 14.7 per cent of the levy. It never removes the Climate Change Levy, which is a tax under a different statute.
Can I check the RO charge on my bill against a published rate?＋
Not directly. What is published is an obligation level and a buy-out price, both of which describe what a supplier owes across its whole supply rather than what one customer should be billed. Turning them into a rate per kWh is a commercial decision, so the reference for the line is the rate stated in your supply contract, with the published figures as a sanity band around it. Both published figures change on 1 April, so a pass-through rate that does not move across that date is worth a question.
The levy nobody publishes a rate for, checked anyway.
Simplest Energy prices the Renewables Obligation from the rate in your contract, on our own consumption figure, with the certified exemption applied before the line rounds to pence.
- The Renewables Obligation checked against the contract rate, which is the only per-customer source there is, because no per-customer schedule is published
- The certified EII exempt proportion removed before the line rounds to pence
- Itemised levies compared line by line, on quantities taken from our own consumption data rather than from the bill
- A combined policy levy line, where only the total can be compared until the supplier itemises what is inside it
Built from the primary document.
Renewables Obligation: buy-out price and mutualisation threshold and ceilings 2026 to 2027, published 31 March 2026
Calculating the level of the Renewables Obligation for 2026 to 2027, published 29 September 2025
Calculating the level of the Renewables Obligation for 2025 to 2026, published 30 September 2024
The Renewables Obligation Order 2015, articles 2, 66, 67, 72 and 73
Renewables Obligation: buy-out price and mutualisation threshold and ceilings 2025 to 2026, published 18 February 2025
Renewables Obligation buy-out price, mutualisation threshold and mutualisation ceilings for 2024 to 2025, published 3 April 2024
Renewables Obligation Certificates presented and Redistribution of Buy-Out Fund 2024 to 2025, published 12 November 2025
Renewables Obligation Late Payment Distribution 2024 to 2025, published 9 December 2025
Renewables Obligation Annual Report: Scheme Year 23, 1 April 2024 to 31 March 2025
Renewables Obligation scheme indexation changes: government response, published 28 January 2026
Renewables Obligation 2021/22: Mutualisation, published 9 November 2022
- Last reviewed
- 3 September 2026
- Technical basis
- The Renewables Obligation Order 2015 (articles 2, 66, 67, 72 and 73), the Ofgem buy-out price and mutualisation notices for 2024-25, 2025-26 and 2026-27, the DESNZ obligation level calculations for 2025-26 and 2026-27, the Ofgem buy-out fund and late payment redistribution notices for 2024-25, the Renewables Obligation Annual Report for Scheme Year 23, and the government response on RO indexation of 28 January 2026, all checked 3 September 2026
- Review trigger
- Ofgem publishing the buy-out price, mutualisation threshold and mutualisation ceilings for 2027-28, the DESNZ obligation level calculation for that period, an Ofgem determination that a relevant shortfall has occurred for an obligation period, or a further change to how the buy-out price is indexed.
This guide explains how the Renewables Obligation is set and how its cost reaches a bill. It is not tax, legal or procurement advice. Both published figures change on 1 April, and no public source publishes a rate for an individual customer, so check the linked source and your own contract before relying on a figure.