The History of the ROC Market
Action Renewables Energy Trading (ARET) has a significant client base of over 7,000 renewable generating stations, making it the largest independent Renewable Obligation Certificate (ROC) and electricity trading organisation in Northern Ireland. Our wealth of experience means that we are widely recognised as a leading authority on renewable energy, with a proven track record of maximising the returns for owners and developers of renewable generating stations.
We offer a comprehensive management package including; turnkey management of accreditation (if necessary), post-accreditation Ofgem data management; handling of ROCs from the Ofgem account to trade. Our existing clients find that our unique service is greatly beneficial to their operations as we navigate the volatile market on their behalf and ensure a smooth process for monetising their ROCs. We actively trade on the ROC market, aggregating the ROCs from the large portfolio of generators which gives us a strong selling power to leverage higher values. We have established relationships with ROC buyers, who actively bid for ROCs giving us confidence in achieving the best value for generators ROCs. We have provided a snapshot of our market tracker here showing ARET’s performance against the market alternative. We are consistent in reaching market leading value for our clients.
A commonly asked question from our clients is – “Where is the ROC market at the moment?” Here is a short overview of the last three to four years:
The market was oversupplied with ROCs over the compliance periods thirteen (2014 – 2015) and fourteen (2015 – 2016). This was the result of the release of approximately four million CP14 ROCs from Drax Power; over production of ROCs coupled with a mild winter and increased buyer banking during periods of lower ROC prices. Oversupply in the CP14 market is further evidenced by there being no recycle value – in fact, there was not enough funds available in the recycle fund to pay for Ofgem’s costs, traditionally financed from this pot of money.
For compliance period fifteen (2016 – 2017) we saw significant price increases. This was due to a higher obligation level applied on suppliers by Ofgem, low wind speeds and approval by the European Commission for the Drax biomass power station to receive a CfD (Contract for Difference). Previously Drax provided circa 5% of the ROCs in the market and this volume will no longer exist in the market, as it has moved to the CfD scheme. These factors influenced an increase in ROC value due to the belief that the market was undersupplied this year. Recycle payments will be announced in January 2018 for the CP15 period. Current profiles and predictions expect this value to sit between £2.50 and £3.00 per ROC for CP15.
A strengthened market future
The ROC market has strengthened in compliance period sixteen (2017-2018) and we believe will continue into compliance period seventeen (2018 – 2019). This is because Ofgem is aware of incoming grace period applications and will have clearer visibility of the ROC generation entering the market after the closure of the ROC regime in April 2017. Following this, Ofgem can set the uplift in ROC obligation levels on suppliers to ensure an appropriate trading market and the return of healthy recycle payments. Note, however that wind speeds and winter weather will continue to influence ROC values in the market place.