Posted on: 19/03/2019
Analysts believe energy companies will have to pay an extra £43.8 million to cover a shortfall in the Renewables Obligation (RO) buyout fund.
Consultancy Cornwall Insight made the prediction following the collapse of 14 suppliers since the beginning of last year.
The RO requires energy companies to either buy a set amount of power from renewable sources or instead pay into a buyout fund.
If suppliers don’t pay into the fund then the shortfall is spread out or “mutualised” across all companies, which led to £56.8m in extra payments in 2017-18.
Mutualisation expected to be triggered
Tim Dixon, the firm’s Team Lead, said: “With 14 suppliers now having exited the market since the start of 2018, 10 of which had supply volumes in CP17 (2018-19), Cornwall Insight expects mutualisation to also be triggered for the current compliance period."
“Suppliers will need to meet their CP17 obligations by either making buy-out payments or presenting Renewables Obligation Certificates by 31 August and 1 September 2019 respectively."
“We expect, from suppliers exits to date, that the shortfall in the buy-out fund will be almost £45m, and this money will once again need to be recovered by suppliers who met their RO.”