The gap, however, may increase again in the current year, warns Fiona Santokie from green power brokers Natsource, the result of a reduction in the number of Renewable Obligation Certificates (ROCs) eligible from co-firing in 2006-2007. Until this year, electricity retailers were able to meet up to 25% of their obligation by burning biomass in conventional power plants alongside fossil fuels, but the government has dramatically reduced the allowed level of co-firing to 10%. As the major electricity suppliers all have their own co-firing facilities there is little demand for ROCs from the technology, Santokie points out. This has led to a drop in the ROC price for co-firing to £21 per ROC, compared with an average of £44.25 for other renewables, she says.
The RO requires electricity suppliers to source a rising percentage of their power from renewable sources. They meet their obligation by buying ROCs or by paying a "buy out" penalty. A ROC is awarded for each megawatt hour of renewable generation. During the last ROC year -- from April 2005 to March 2006 -- the level of the RO was 5.5%. It currently stands at 6.7%.