Cost of the renewables obligations in 2007/2008

Ofgem notice (2 pages, PDF) of the likely level of the UK renewables obligation schemes for the financial year 2007/2008.

The total cost to customers of the scheme (excluding VAT and administration costs) was £873 million (the cost of a notional total buy-out, which is spent anyway due to the "recycling" arrangements), up by 21 per cent on 2006/2007.

The effective subsidy rates for generators will depend on the amount of qualifying power generated, which the notice does not disclose. Ofgem's database suggests that the total qualifying volume was 15.9TWh (up 7 per cent), implying a subsidy rate of £54.7/MWh.

The effective tax rate for residential customers in Great Britain was 0.28 p/kWh (including 5 per cent VAT), or £9.40 a year for a 3,300 kWh household.

For further information or advice please contact Franck Latrémolière.

Filed under Electricity, Ofgem, State aid.

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