I know I responded to your email (not heard back yet!), but this blog comment was just brought to my attention and is in a similar vein to your email so I thought some other Carbon Commentary readers might find my reply useful/interesting too…

I think you may misunderstand how ROCs work and what the implications of trading an excess of them are.

ROCs are designed to stimulate the building of new green generation in the UK, they do this by providing a tradeable piece of paper – it is worth about 50% of the income of a windfarm – to give you an idea of how important it is.

When raising finance to build new wind farms, ROCs and their value is vital to the economic case.

Without ROCs and their value, most wind energy projects in the UK would not get built.

ROCs are thus designed to be sold – it’s how they do their job. And that job is vital economic support to new build.

My second point on ROCs is with regards what happens when we sell our excess (each year we have more than we need for compliance purposes)

You believe that selling ROCs (to BG for example – they buy them from us) allows someone else to pollute – it doesn’t.

All electricity suppliers have to hold a certain amount of ROCs – for those they don’t hold (their shortfall) they have to pay the face value to OFGEM (this money gets recirculated to ROC holders). It makes no difference economically for a company to hold ROCs or just pay the face value.

More importantly there are not enough ROCs in the UK to meet the needs of all suppliers – the market is short, chronically short. And the government have committed to keeping the market short by moving the target rate up to keep it ahead of the delivery rate.

The market is permanently short.

Making it every so slightly shorter by voluntary retirement is pointless – it costs a lot to the consumer and achieves nothing. It does not achieve new capacity. This is the view of the ASA and of various industry bodies. It’s a red herring that you are buying into.

Building new windfarms, as we do, is new capacity and it comes about only because we can sell ROCs.

The irony of your argument here is that retirement is supposed to increase the value of ROCs so that more new capacity gets built (that is how it is supposed to work according to the few supporters of it) – that value can only be realised by selling those ROCs…. and we’re back to square one.

Our £ for £ is real – it’s a real outcome from each of our electricity customers bills – it’s tangible, we can show you the windmills that get built from it. Nobody can show you anything that ROC retirement ever got built – it doesn’t exist.

Third point – you say BG retires 12% of it’s ROCs. But do they? We recently exposed the bad practice of Good Energy, which have failed for five years to make good their ROC retirement promises – we did that using OFGEM data. That same data says that BG don’t retire any ROCs.

Sorry that you left us and sorry that you don’t understand what we do or don’t rate it. I hope that I might shed a little light into this world for you here.

Cheers.