Ofgem probes Drax’s compliance with RO reporting requirements

Great Britain’s Office of Gas and Electricity Markets (Ofgem), an independent energy regulator, on May 31 announced it is opening an investigation into whether Drax Power Ltd. is in breach of annual profiling requirement relating to the U.K. Renewables Obligations (RO) scheme.

A notice published by Ofgem indicates that the opening of the investigation does not imply that the agency has made any findings about possible non-compliance by Drax.

Drax issued a statement in response to Ofgem’s announcement, noting the agency has also confirmed that it has not established any non-compliance that would affect the issuance of Renewable Obligation Certificates to Drax, and therefore the associated financial benefit.

The RO scheme came into effect in Great Britain during 2002 with the goal of encouraging generation of electricity from eligible renewable sources. Under the scheme, electricity suppliers are required to present to Ofgem a specified number of ROCs per megawatt hour (MWh) of electricity supplied to their customers. These obligations can be met by presenting ROCs, making a payment into a buy-out fund, or a combination of the two. ROCs are issued to operators of accredited renewable generating stations for the eligible renewable electricity that they generate. Operators are able to trade ROCs with other parties, or sell them directly to suppliers.

The RO scheme requires stations fueled with solid biomass, bioliquids and/or biogas that have a capacity of 1 MW or more to report against and meet particular sustainability criteria in order to be eligible for ROCs. The sustainability criteria include land criteria, which focuses on the land from which the biomass is sourced, and greenhouse gas (GHG) criteria, which accounts for the lifecycle GHG emissions of the biomass. According to Ofgem, the land and GHG criteria were both developed based on the requirements imposed by the European Commission via the Renewable Energy Directive.

Data related to the land and GHG criteria must be submitted to Ofgem monthly. Bioenergy producers are also required to submit annual profiling data that includes information on the sustainability characteristics of their fuel, including type of biomass, form of biomass, country of origin and whether it was wood or derived from wood. Bioenergy producers are also required to commission an independent sustainability audit report on an annual basis and submit it to Ofgem. The audit aims to verify the sustainability information that has been submitted by the operator, according to Ofgem.

“Like all energy generators, Drax receives regular requests from Ofgem and continues to cooperate fully throughout this process,” said Drax in a statement.

“Last year Drax appointed a third party to independently verify the accuracy of its biomass sustainability and profiling data as part of an ongoing process,” Drax continued. “Drax is confident in the compliance of its biomass with the Renewables Obligation criteria.”