Current | Cornwall Insight warns of risk of RO mutualisation

The risk of Renewable Obligation (RO) mutualisation has grown, as the supply market continues to be challenging. Currently, there is a potential shortfall in the RO buy-out fund of approximately half of the £16.94 million mutualisation threshold.

The shortfall has been created by supplier exits. Although, fewer have left the market in the current RO period – with just seven leaving the market over the year than the previous couple of years.

Contrary to the two previous compliance periods where the mutualisation trigger was breached, it is not currently expected that the impact of supplier exits in CP18 will surpass this amount. The seven exited suppliers each had relatively small supply volumes in the 2019/20 period.

This does not mean there is not a risk of mutualisation, as we could see further suppliers exit the market in the months ahead, or suppliers failing to meet the late payment deadline.

Tim Dixon, Wholesale Team Lead