The Renewables Obligation requires licensed electricity suppliers to source a specific and annually increasing percentage of the electricity they supply from renewable sources. The current target is 6.7% for 2006/07 rising to 15.4% by 2015/16.

It is expected that the Obligation, together with exemption from the Climate Change Levy for electricity from renewables, will provide support to industry of upto £1billion per year by 2010.

Eligible renewable sources
At the end of 2005, generation from renewable sources eligible under the Obligation stood at 4%. This rises to 4.2% if non-eligible sources are included.

Eligible Renewable sources are listed in the following table:

Eligible Renewable Sources

The eligibility of energy from waste is summarised below:

Eligibility of Waste

* Subject to a maximum fossil-derived energy content of 2 per cent to allow for accidental contamination.
Only stations first commissioned or re-equipped on or after 1 January 1990 (except micro-hydro and co-firing stations) are eligible.
All stations must be located within the UK, its territorial waters or the Continental Shelf.

The Obligation is administered by Ofgem. For further information on the Obligation visit www.ofgem.gov.uk.

The Renewables Obligation (Scotland) and consultation documents are available at www.scotland.gov.uk/consultations/.

For information on Northern Ireland visit www.energy.detini.gov.uk.

The Obligation is working well with more new capacity installed in the first two years since its introduction than over the last decade. A statutory review of the Obligation is currently taking place and changes from the review are likely to come into force from 1 April 2006.