Current | Mutualisation of Renewables Obligation triggered for third year as suppliers struggle to meet payment deadlines

For the third year in a row, mutualisation of Renewables Obligations (RO) has been triggered according to Ofgem.

A number of suppliers failed to make their 2019-20 RO payments by the late payment deadline of 31 October 2020. This lead to a “relevant shortfall” in the clean energy support mechanism.

In September, we commented that the threshold was once again being neared. Suggesting there is a potential shortfall in the RO buy-out fund of approximately half of the £16.94 million mutualisation threshold at the time.

Unfortunately, this means that other suppliers will be picking up the costs of exited rivals across 2021 and 2022, which will ultimately be passed on to the consumers’ bill

While Ofgem will not confirm the total shortfall until early December, it seems unlikely that we will see a shortfall as large as the levels seen in 2017-18 and 2018-19. But the legacy of any defaulted payments will endure.

Tim Dixon, Wholesale, Team Lead

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