Historically, the value of a ROC has averaged about £47.00. The value at any specific time is determined by the market. However, it is common for electricity supply companies to offer a fixed price per ROC to customers. This price is often lower than the market value, because of the risk involved to the electricity supply company in predicting the ROC value. Only by understanding this ROC trading process can a generator maximise its return from the ROC market.
Case Study – 250kW wind turbine
Generator has two tradable commodities – electricity and ROCs Economic business case depends on the percentage of electricity exported Electricity company offers fixed rate for exported electricity but a low rate for ROCs For technologies getting 4 ROCs per kWh generated, it is not a simple comparison A 250kW wind turbine is assumed to generate 400,000kWh per year. It will be rewarded with 1600 ROCs. If the turbine is owned and located by a factory, or other large consumer of electricity, and all the electricity is consumed onsite, then the factory is offsetting 400,000kWh of electricity it would otherwise have had to buy from an electricity supply company. Assuming this saves 14p per kWh, the generator saves the factory £56,000 per year in electricity. The ROCs can also be traded in the marketplace and may fetch the average price of £47.00 per ROC, totalling £75,200 per year. From this example, it is clear that ROCs can represent the majority of income for a generator, and therefore a complete and accurate business case or financial feasibility assessment is strongly recommended.
Action Renewables’ role is to determine the most financially beneficial option for the generator, and to trade ROCs in order to maximise their benefit. In this way, Action Renewables ensures the most effective return on investment.