Renewable Obligation Certificates (ROCs) are green certificates presented by Ofgem to accredited renewable energy generators for the electricity they generate. They are intended to create a market and be traded at market prices.They can be traded with other parties but are ultimately used to demonstrate that the suppliers have met their obligations. Generators will sell their ROCs to electricity suppliers or traders and this allows them to receive a premium as well as the wholesale electricity price. Suppliers present the certificates to Ofgem to demonstrate their compliance with the obligation but if they do not present enough ROCs the suppliers have to pay a penalty known as the Buy Out Price. For 2012/13 this is set out at £40.13 for each ROC. The money collected by Ofgem from the Buy Out Fund is recycled on a pro-rata basis to suppliers who presented enough ROCs.
The cost of ROCs is paid for by electricity consumers of supply companies that fail to present sufficient ROCs while reducing the cost to consumers of supply consumers who submit large numbers of ROCs. The default is one ROC per megawatt hour (MWh) of production with some technologies receiving more.