Introduction - Wind Power Integration: Connection and System Operational Aspects - page 4

The UK target is for 15% of energy to be sourced from renewables for 2020.
The National Renewable Energy Action Plan (UK government - gov.uk, undated)
provides details on a set of measures that would enable the United Kingdom to
meet its 2020 target. The government considers that the target is feasible through
domestic action and could be achieved with the following proportion of energy
consumption in each sector coming from renewables:

Around 30% of electricity demand, including 2% from small-scale sources ●

12% of heat demand ●

10% of transport demand ●

1.2.1.3 Policy instruments
The principal instrument that has been used to stimulate the development of
electricity from renewable energy sources in the United Kingdom since 2002 has
been the RO. More recently, small-scale generation has been supported through a
Feed-In Tariff (FIT) scheme.
The RO came into effect in 2002 in England, Wales and Scotland and in 2005
in Northern Ireland. It places an obligation on UK electricity suppliers to source an
increasing proportion of electricity they supply to customers from renewable
sources. Renewables Obligation Certificates (ROCs) are green certificates issued
by the Authority to operators of accredited renewable generating stations for the
eligible renewable electricity they generate. Operators can then trade the ROCs
with other parties, with the ROCs ultimately being used by suppliers to demonstrate
that they have met their obligation.
Where suppliers do not have a sufficient number of ROCs to meet their obli-
gation, they must pay an equivalent amount into a 'buy-out' fund. The adminis-
tration cost of the scheme is recovered from the fund and the rest is distributed back
to suppliers in proportion to the number of ROCs they produced in respect of their
individual obligation.
During 2011-2012 34.8 million ROCs were issued and the total output
from accredited renewable generating stations was 31.0 TWh, an increase of
34% compared to 2010-2011. The total electricity supplied in the United
Kingdom in 2011-2012 was 308 TWh, and the total extra cost was £1.45 billion
(OFGEM, 2013).
The RO will be replaced by Contracts for Differences (CfDs) which aim to
stimulate investment in low-carbon technologies (including renewables, nuclear
and Carbon Capture and Storage (CCS)) by providing predictable revenue streams.
CfDs should encourage investment by reducing risks to investors and by making it
easier and cheaper to secure finance. The Contract for Difference is a long-term
contract that pays the generator the difference between an estimate of the market
price for electricity (the 'reference price') and an estimate of the long-term price
needed to bring forward investment in a given technology (the 'strike price'). This
reduces generators' long-term exposure to electricity price volatility, substantially
reducing the commercial risk and encouraging investment in low-carbon generation
at least cost to consumers.