[Footprint] Let's Get ROCs

Renewable Obligation Certificates (ROCs) are earnt by green/renewable energy suppliers for the energy they create from hydro, wind, tidal energy sources.

Every energy supplier has to source some of it's generation (about 5%, but climbing yearly) from renewable sources - in other words every supplier has to get hold of some ROCS to meet their legal obligation. This is because earning a ROC shows that you have generated a corresponding amount of energy from renewable sources. Alternatively purchasing a ROC shows that someone else has generated the corresponding amount of energy from renewable sources for you (whether you personally use the energy or not).

So, simply put, if you buy one ROC (and do not sell it on) then you are forcing the energy market to produce a certain amount of energy from renewable sources. In fact one ROC is given for every megawatthour (mWh - 1,000kWh) of electricity generated from renewable sources. It is perhaps typical for a family home to use around 5mWh of electricity per year.

To force electricity suppliers to generate an additional amount of energy from renewable sources, equal to your consumption, would mean buying 5 ROCs at a cost, on the open market, of around £50 each - total £250. This is a rational alternative to producing your own renewable energy using, perhaps, a wind turbine (or five) on your roof.

However, the story isn't over yet! We all consume a LOT more energy than just the electricity we are supplied with. We also consume gas, petrol (or diesel) and basically anything we buy has been manufactured and transported using fossil fuels. Also the services we receive are supplied with the use of fossil fuels.

Now, if each of the suppliers, in the supply chain of the goods and services we buy, were using renewable energy then we wouldn't have an issue - the prices of those goods and services would be higher as they would incorporate the costs of renewable energy. However, on the whole they are not. So what can we do? Again, we really need to offset our indirect energy consumption (the energy others are using for us, to supply the products and services to us) and force an equivalent amount of renewable energy to be generated.

So how do you figure out how much energy was used? Well, unfortunately it appears that most of the cost of goods and services is ultimately energy cost:

• Raw materials - mining costs are largely energy.
• Transport of raw materials, processed components and finished goods - energy.
• Processing of raw materials and assembly of components - energy.
• Human labour - well, their lives run on energy too, so most of their wage is spent on energy and as human labour and people's lives are part of the supply chain they must be included.

So let's pick a figure out of the air - 90% of the money we spend is ultimately to pay for fossil fuel energy. So, if we have an average per capita income of £8,000 per year (which is close to average - remember that this is averaged across all people including children, not just the average income per worker) and that income is paying for energy then we are consuming about 114mWh. To pay for that we need to buy 114 ROCs at a total cost of £5,700 (per person).

Another way of analysing this is to find the per capita energy consumption figures (which I previously quoted here) which is at a rate of about 5kW which, multiplied by the hours in a year gives you 43mWh per year. However, this doesn't take into account the energy consumed for us in imported goods but does take into account the energy consumed by exported goods (which we aren't responsible for as we are not the end consumer). Because the UK imports more than it exports we need to increase our figure for energy consumption, perhaps by a further 20% to 52mWh, which is 52 ROCs at a cost of £2,600 per person.

Let's average the figures we get in the two analyses (£5,700 and £2,600) - £4,150.

So the final result is that a family of four needs to buy ROCs to a value of around
(£4,150 x 4) + £250 = £16,850.

But let's finish with some good news:

1. Seeing as you are now rather poorer you won't actually be consuming as much energy (including buying as many goods and services) as calculated, because you can't afford to! So let's cut the per family figure to £8,000.
2. You get a rebate for the ROCs that you own, at the end of the year: Any energy suppliers who don't meet their legal requirement of renewable production are fined and the fines are redistributed to holders of ROCS. Typically you should expect to get around 30-40% of the cost of your ROCs back - taking your £8,000 spend back down to perhaps £5,200.

So there you have it - renewable energy for a whole family for a mere £5,200 per year (but note high earners are also, typically, high energy users so may have to pay a whole lot more).