Renewables Obligation is ending: what's next for small-scale biomass?
Find out how Good Energy can help you protect your income
For almost 20 years, Renewables Obligation payments have provided an important source of income for biomass generators.
In September 2026, the government confirmed it would not introduce a replacement subsidy for small-scale biomass generators when their existing RO support expires.
For generators relying on these payments to keep their plants profitable, this is a significant challenge. But it doesn’t have to mean the end of your plant’s commercial life.
At Good Energy, we’re here to help you understand your options and make the most of the electricity you’re generating.
Author, Kate Ryder, leads the renewable energy origination team at Good Energy, where she drives bold and innovative contracting that supports the growth of UK renewables. Her team works directly with generators and developers to structure funding and long-term Power Purchase Agreements (PPAs) for both new and existing renewable projects.
What is the Renewables Obligation scheme, and when is it ending?
The Renewables Obligation (RO) is a government support scheme introduced in 2002 to encourage investment in renewable electricity.
Under the scheme, eligible generators receive Renewables Obligation Certificates (ROCs) for the electricity they produce. These provide an additional source of income on top of the money they earn from selling their power.
The scheme has played a major role in growing Britain’s renewable energy industry, helping make wind, solar, hydro and biomass projects financially viable.
The RO closed to new generating capacity in 2017, but existing accredited generators have continued receiving support.
RO payments will start ending for some generators from 31 March 2027, with the scheme closing completely on 31 March 2037. Most projects receive support for around 20 years, so exactly when your payments stop will depend on when your project was accredited.
Will there be a replacement subsidy for small-scale biomass?
Unfortunately, no. In September 2026, Energy Minister Michael Shanks confirmed that the government doesn’t intend to introduce a replacement subsidy for small-scale biomass generators when their RO support expires.
This is particularly challenging for biomass generators, who often face higher running costs than other renewable technologies.
Unlike wind and solar, biomass plants need a steady supply of fuel. They also require regular maintenance and, in many cases, dedicated staff to keep everything running smoothly.
For some generators, RO payments can be worth more than the electricity they sell. Losing that income could make the difference between a profitable plant and one that struggles to cover its costs.
And for farmers who’ve invested in biomass to diversify their income, the impact could be especially significant. Without another way to earn revenue, some may face difficult decisions about whether to keep their plants running.
How can Good Energy support biomass generators after RO payments end?
Losing RO support doesn’t mean you have to stop generating. But it does mean taking a fresh look at how your plant earns money.
At Good Energy, we’ve worked with independent renewable generators for over 25 years. We understand the challenges of running a generation business, and we’re here to help you find the right route to market.
Here are three options worth exploring.
1. Earn additional revenue through licence-exempt supply
Hourly Matching Credit (HMC) is our licence-exempt supply scheme, offering eligible generators an opportunity to earn additional revenue from the electricity they already produce.
HMC rewards generators when their renewable electricity production matches customer demand in the same half-hour period.
For eligible generators, this creates an additional income stream on top of their existing Power Purchase Agreement (PPA), without needing to generate more electricity.
For biomass generators approaching the end of RO support, HMC could help replace some of the lost subsidy income and make your asset more financially secure.
2. Start PPA conversations early
Wholesale electricity prices have been volatile, making the timing of your next Power Purchase Agreement (PPA) particularly important.
The generators best prepared for the end of RO support are those who start exploring their options early, rather than waiting until their final few weeks of subsidy payments.
Our advice? Don’t leave it until the last minute.
Speaking to Good Energy early gives you time to understand your pricing options, explore different contract arrangements and choose the right moment to fix a price.
3. Look beyond 12-month contracts
A longer-term Corporate PPA could give you greater certainty over your future electricity income.
Good Energy’s Corporate PPAs connect renewable generators with businesses looking to buy renewable electricity, often over several years rather than months.
For generators, this can mean more predictable income, making it easier to plan ahead and potentially invest in existing plants or new renewable projects.
The right arrangement will depend on your asset’s output, running costs and the price a buyer is willing to pay. Our team can help you explore what works for your site.
Planning for life after Renewables Obligation
At Good Energy, we’ve always supported farmers and independent generators using renewable energy to diversify their income. We believe sustainably sourced biomass has a role to play in Britain’s energy mix, and we don’t want to see perfectly functioning plants shut down because their subsidy has ended.
The end of RO support presents a real commercial challenge. But with businesses increasingly looking for credible renewable electricity, there are opportunities still to explore.
Our advice is simple: start planning now. Review your running costs, explore your options and talk to potential electricity buyers well before your RO payments stop.
If your subsidy support is ending in the next few years, please get in touch with our origination teamto talk through your options. We’re here to help you plan for what comes next.
Renewables Obligation FAQs
It depends on when your project was accredited.
Projects accredited on or before 25 June 2008 generally stop receiving ROCs for generation after 31 March 2027.
Projects accredited after that date generally receive support for 20 years from accreditation, or until 31 March 2037, whichever comes first. Some exceptions apply.
Check your Ofgem accreditation details to confirm your project’s end date.
When the RO was introduced in 2002, renewable electricity was still a developing industry. The scheme helped make renewable projects financially viable, giving generators and investors the confidence to invest in technologies like wind, solar, hydro and biomass.
And it worked. The RO helped grow Britain’s renewable generation industry into what it is today.
But the scheme comes at a cost, which is ultimately passed on to customers through their electricity bills. As renewable technologies have developed, the government has introduced other ways to support investment, including Contracts for Difference (CfDs).
Yes. The RO is being phased out for all renewable technologies, not just biomass.
The difference is that technologies like wind and solar can compete for support through other government schemes, including CfDs. Some hydro projects may also be eligible.
And because wind, solar and hydro don’t have the same ongoing fuel costs as biomass, losing RO support can present a different commercial challenge.
Whatever technology you generate with, we’d recommend reviewing your revenue options well before your subsidy ends.
Absolutely. Losing your RO payments doesn’t mean you have to stop generating renewable electricity.
But it does mean taking a fresh look at your plant’s finances. Without subsidy income, you’ll need to make sure the money you earn from selling your electricity is enough to cover your operating costs.
At Good Energy, we work with independent renewable generators to help them find the right route to market. From Power Purchase Agreements (PPAs) to additional revenue opportunities through Hourly Matching Credit, there may be ways to make your existing asset work harder.
We certainly hope so. We believe sustainably sourced biomass has an important role to play in Britain’s renewable energy mix, particularly in helping farmers diversify their income.
But without government subsidy, financing new projects could become more challenging. Biomass plants often have higher fuel and operating costs than other renewable technologies, making a reliable income from electricity sales particularly important.
Longer-term Corporate PPAs could help. By connecting generators with businesses looking to buy renewable electricity, they can provide greater revenue certainty and potentially strengthen the business case for new projects.
Our advice is simple: don’t wait until your payments stop.
Start by checking your RO end date and reviewing how much your plant costs to run without subsidy support. Then explore your options for earning more from the electricity you’re already generating.
The earlier you start conversations with potential offtakers, the more time you’ll have to understand your options and make the right commercial decisions.
At Good Energy, we’ve been working with independent renewable generators for over 25 years. If your RO support is coming to an end, our origination team can help you explore your options and plan for what comes next.
