The Non-Fossil Fuel Obligation (NFFO) refers to a collection of

orders Order, ORDER or Orders may refer to: * A socio-political or established or existing order, e.g. World order, Ancien Regime, Pax Britannica * Categorization, the process in which ideas and objects are recognized, differentiated, and understood * H ...

requiring the electricity

distribution network operator A distribution network operator (DNO), also known as a distribution system operator (DSO), is the operator of the electric power distribution system which delivers electricity to most end users. Each country may have many local distribution netwo ...

s in

England England is a Countries of the United Kingdom, country that is part of the United Kingdom. It is located on the island of Great Britain, of which it covers about 62%, and List of islands of England, more than 100 smaller adjacent islands. It ...

and

Wales Wales ( ) is a Countries of the United Kingdom, country that is part of the United Kingdom. It is bordered by the Irish Sea to the north and west, England to the England–Wales border, east, the Bristol Channel to the south, and the Celtic ...

to purchase electricity from the

nuclear power Nuclear power is the use of nuclear reactions to produce electricity. Nuclear power can be obtained from nuclear fission, nuclear decay and nuclear fusion reactions. Presently, the vast majority of electricity from nuclear power is produced by ...

and

renewable energy Renewable energy (also called green energy) is energy made from renewable resource, renewable natural resources that are replenished on a human lifetime, human timescale. The most widely used renewable energy types are solar energy, wind pow ...

sectors. Similar mechanisms operated in

Scotland Scotland is a Countries of the United Kingdom, country that is part of the United Kingdom. It contains nearly one-third of the United Kingdom's land area, consisting of the northern part of the island of Great Britain and more than 790 adjac ...

(the Scottish Renewable Orders under the Scottish Renewables Obligation) and

Northern Ireland Northern Ireland ( ; ) is a Countries of the United Kingdom, part of the United Kingdom in the north-east of the island of Ireland. It has been #Descriptions, variously described as a country, province or region. Northern Ireland shares Repub ...

(the Northern Ireland Non-Fossil Fuel Obligation). Five orders were made under the NFFO before the UK government replaced it with the Renewables Obligation. The first order or 'tranche' was on 1 October 1990 with an average price of 7.51 pence per kWh being paid to energy generators, and the fifth and last was in September 1998 at an average of 2.71 pence per kWh.

Background

The Non-Fossil Fuel Obligation was put in place under the powers of the Electricity Act 1989, under which

electricity generation Electricity generation is the process of generating electric power from sources of primary energy. For electric utility, utilities in the electric power industry, it is the stage prior to its Electricity delivery, delivery (Electric power transm ...

in the UK was

privatised Privatization (rendered privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation wh ...

. The original intention was to provide financial support to the UK nuclear power generators, which continued to be state-owned. The proposals were enlarged in scope before the obligation was brought into operation in 1990 to include the renewable energy sector. Contracts from the last three rounds remain in place with the generators receiving the agreed amount from the NFPA and the NFPA effectively taking ownership of the Renewables Obligation certificate (ROC) to which the generator is entitled.

Funding

Funding for the NFFO was originally generated by the Fossil Fuel Levy, a levy placed on all electricity consumption in the UK. This was collected by

Ofgem The Office of Gas and Electricity Markets (Ofgem) is the government regulator for the electricity and downstream natural gas markets in Great Britain. It was formed by the merger of the Office of Electricity Regulation (OFFER) and Office of G ...

, which paid it to the Non-Fossil Purchasing Agency, a body created in 1990 by the

public electricity supplier Public electricity suppliers (PES) were the fourteen electricity companies created in Great Britain when the electricity market in the United Kingdom was privatised following the Electricity Act 1989. The Utilities Act 2000 subsequently split the ...

s to purchase on the supplier's behalf. The purchasing agency is based in Newcastle upon Tyne. Since the introduction in 2001 of the New Electricity Trading Arrangements, electricity suppliers bid for the electricity and ROCs in competitive auctions held by the Non-Fossil Purchasing Agency, with any shortfall in price being funded by the Levy. As a result of these arrangements, the Non-Fossil Fuel Obligation has been generating a trading surplus, expected to have reached £500m by 2008. The government have been criticised for siphoning off funds from this surplus to contribute to the exchequer, instead of using it to support renewable energy in other ways.

References

{{Energy in the United Kingdom, govreg Electric power in the United Kingdom Renewable energy in the United Kingdom

Background

Funding

See also

References