Heightened risk of suppliers failing to meet RO: Latest forecasts from Cornwall Insight show a potential shortfall in the Renewable Obligation (RO) buy-out fund of approximately half of the £16.94mn mutualisation threshold. Supplier exits to date alone are not expected to trigger the mutualisation process. However, there is a heightened risk that some active suppliers may now be unable to meet their obligation, which could contribute to triggering mutualisation.

 

Key findings

  • Seven suppliers have exited the market with supply volumes in CP18.
  • The total estimated impact of these exits currently sits at approximately half the mutualisation trigger.
  • Although mutualisation is unlikely to be triggered by these supplier exits, there is a risk of RO mutualisation due to challenging market conditions.

Tim Dixon, Wholesale Team Lead at Cornwall Insight said:

 

“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 CP18.

 

“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.

 

“In fact, should a supplier comparable to Extra Energy, Economy Energy or Spark Energy – all of which exited the market the previous year – exit the market it would likely tip the scale and push the shortfall in the buy-out fund towards the mutualisation trigger.

 

“Suppliers have had to face challenging market conditions amid the COVID-19 pandemic, and as a result, there is a heightened risk that some suppliers may now be unable to meet their obligations and instead contribute towards triggering mutualisation. If mutualisation does occur the costs will be recovered from suppliers who met their obligations and ultimately be passed on to the consumers’ bill.

 

“With initial compliance deadlines now having passed, any suppliers with remaining obligations will now need to make a payment by the late payment deadline of 31 October. This could prove a particularly fateful day for the energy sector, with both the RO late payment deadline and the end of the furlough scheme set to end.”

Heightened risk of suppliers failing to meet RO – Post kindly provided by Cornwall Insight

Previous Post
Pharmaceutical products called on to be greener by MEPs
Next Post
Prince Charles says ‘climate crisis could dwarf coronavirus’

Related Posts

German high-level nuclear waste to be returned

German high-level nuclear waste to be returned: High-level nuclear waste in the form of vitrified residues will be returned from the UK to Germany over the coming years. The waste which had previously been used to produce electricity by utilities in Germany, results from the reprocessing and recycling of spent nuclear fuel at the Sellafield…
Read More
TPIs revenues

TPIs revenues fall by 18% due to COVID-19

TPIs revenues fall by 18% due to COVID-19: Third-party Intermediaries (TPIs) have seen a decrease in growth in both the Small and Medium Enterprise (SME) and Industrial & Commercial (I&C) sectors, as a result of COVID-19 and general market uncertainty, according to Cornwall Insight’s Annual TPI report. This led to a target revenue pool for…
Read More
Menu

Subscribe to our newsletter!

You have successfully subscribed to the newsletter

There was an error while trying to send your request. Please try again.

British Utilities will use the information you provide on this form to be in touch with you and to provide updates and marketing.