More difficult to discover, however, is the value of the ROCs that are being traded. The clearest indication publicly available of their value comes from the auction of power contracted under the previous system, the Non Fossil Fuel Obligation (NFFO). This is the biggest single source of renewables generated electricity in the UK market.
Mary Miller from ILEX Energy Consulting says that the prices paid in August's auction reveal a ROC value of around £45/MWh after peeling away from the overall prices the wholesale value of the electricity and the value of the exemption from the Climate Change Levy. This assumes the market is going to be around 30-35% short of renewable power in the first year of 2002-03. But she says this price is based on short term contracts of six months.
ILEX, which has just updated its Value of Renewables report, says that unless new renewable plant is brought online faster, ROC values could reach levels of over £60/MWh. It also warns that values could fall to around the level of the £30/MWh buy-out price (the price retailers may pay to "buy-out" of the obligation to source a specified proportion of their generation from renewables) in the years up to 2006. This fall could happen if, against the background of the fall in wholesale electricity prices, conventional generators invest in converting existing fossil fuel plant to burn a proportion of biomass -- and therefore qualify for ROCs.
"There is potential for large coal fired plants to put a lot of ROCs on the market in the short term," says Miller. Beyond 2006, ROC prices could rise again, since between 2006 and 2011 coal-fired plant will only be able to earn ROCs if the biomass element accounts for at least 75% of total output -- so it is more questionable whether coal generators would want to commit that level of investment for five years of earning ROCs.
The other major uncertainty over the future value of ROCs is how much hydro plant is repowered. Large hydro of above 20 MW is excluded from the renewables obligation, but ROCs can be issued for any additional capacity resulting from repowering. She also points out that in at least one case, a hydro plant has been repowered to below the qualifying 20 MW threshold.