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Ofgem has revealed it expects the costs of administering the renewables obligation (RO) for 2020-21 to be £6.6 million – a more than 20 per cent increase compared to the previous year.
The charges are used to cover a number of costs under the scheme including issuing and revoking renewables obligation certificates (ROCs), maintaining a register of ROCs and maintaining and upgrading the IT system used to administer the obligation.
Among the primary reasons for the cost rise is the new requirement for increased volumes of audits and as a result, more staff to manage the process.
Additionally the Renewables and CHP Register, the system used to administer the RO scheme, was developed in 2006 and is now considered a legacy system. As a result, a number of key processes have to be performed outside of the register, leading to higher operational costs and increased risk.
Ofgem added that a new system is in development and is due to launch towards the end of this financial year.
Despite the increase, the administration costs for the period reflect just 0.1 per cent of the overall estimated value of the scheme.
Ofgem says it intends to recover these costs in October from the money paid into the buy-out fund for the 2019-20 compliance period.
Earlier this month, the regulator revealed there was an approximate 14.2 million renewables obligation certificate (ROC) shortfall, after suppliers failed to meet their entire obligation for the 2019/20 year.
Ofgem has said however that initial, unverified figures suggest the outstanding obligation value as of 1 September was less than the same point in time last year.
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