The Government has set the 2027–28 Renewables Obligation at 0.369 certificates per MWh of electricity supplied in Great Britain, while indicating that the figure could be revised before April once a wider manufacturing electricity cost exemption is implemented.
The Department for Energy Security and Net Zero published the calculation ahead of the obligation year beginning on 1 April 2027. Northern Ireland’s corresponding rate has been set at 0.143 Renewables Obligation Certificates per MWh.
Electricity suppliers must present a specified number of certificates to Ofgem for each MWh supplied to customers. The costs associated with meeting that obligation are recovered through electricity pricing, which has made exemptions from the mechanism part of the Government’s approach to industrial electricity costs.
The 2027–28 calculation produces an expected UK obligation of 92.8 million ROCs after the scheme’s 10% headroom is included. Expected certificate issuance before headroom is 84.4 million ROCs, considerably above the alternative fixed-target calculation of 40.9 million.
Great Britain’s published rate already accounts for the existing Energy Intensive Industries exemption. Eligible EIIs have been exempt from up to 100% of the indirect cost of the Renewables Obligation since the 2024–25 obligation year.
A second manufacturing exemption is being introduced through the British Industrial Competitiveness Scheme. BICS is intended to reduce electricity costs for eligible manufacturing businesses in England, Scotland, and Wales through exemptions from the Renewables Obligation and Feed-in Tariffs from April 2027, followed by Capacity Market relief from October 2027.
The Government’s current BICS guidance states that applications for the first year will open on 1 October 2026 and close on 30 November. Businesses are due to receive eligibility decisions in January before the first RO and Feed-in Tariff exemptions begin in April.
For the Renewables Obligation calculation, the new scheme creates an unusual numerical effect. Removing qualifying manufacturing electricity from the volume on which the obligation is recovered reduces the liable electricity base while the overall certificate requirement remains governed by the scheme calculation.
DESNZ consequently estimates that the Great Britain obligation rate would rise from 0.369 to 0.394 ROCs per MWh if the legislation implementing the BICS exemption is in force in time for a revised level to be confirmed before 1 April 2027.
Eligible manufacturing electricity would be excluded from the relevant cost rather than paying the higher rate. The revised 0.394 figure would apply to electricity remaining within the obligation mechanism.
The change remains conditional. Draft regulations have been published, but the legislation has not yet been made as a UK statutory instrument. DESNZ says the scheme must complete subsidy control procedures and the necessary legislation must secure Parliamentary approval and enter into force by 1 April.
If that timetable is met, a revised obligation level can apply for the whole 2027–28 year from 1 April. If implementation is not completed in time, the existing EII-only calculation will remain in place and the Great Britain rate will stay at 0.369 ROCs per MWh for that obligation period.
The Department says it will publish a further notice confirming which rate applies. Electricity suppliers and manufacturers therefore have a defined current figure but not yet the final structure that will govern the complete obligation year.
The scale of exempt electricity explains the movement between the two rates. The latest outturn for electricity receiving the 100% EII exemption was 12.7TWh in 2025–26, while the forecast for 2027–28 is 13.6TWh. BICS is forecast to exempt a further 15.7TWh during 2027–28.
Those volumes place the scheme directly inside manufacturing cost structures. Energy intensive processes including metals, chemicals, glass, ceramics, paper, industrial gases, and other electrically demanding production activities compete against overseas plants operating under different combinations of wholesale electricity prices, network charges, and policy costs.
BICS does not remove the wholesale price of electricity or the physical cost of delivering power through the network. It removes specified policy-related charges from qualifying consumption, reducing one part of the electricity bill faced by approved manufacturing sites.
The draft regulations also set conditions around qualification and measurement. Among them, a manufacturing site must use at least 33MWh annually and carry out specified activities, while electricity already covered by an EII certificate cannot simultaneously receive a BICS determination for the same amount.
The first-year application timetable is now approaching before the final Renewables Obligation rate itself has been settled. Businesses can begin applying in October, while the legislation and subsequent DESNZ calculation will determine whether the new treatment is reflected from the first day of the 2027–28 obligation year.
The published 0.369 figure is therefore the statutory starting point rather than necessarily the number suppliers will ultimately use. The next material step is the implementation of BICS and the revised notice that will confirm whether the manufacturing exemption changes the Great Britain calculation to 0.394 ROCs per MWh.
