Banding review suggests modest RO support reduction from 2013 Tidal stream and w ...

Banding review suggests modest RO support reduction from 2013 Tidal stream and wave energy schemes will receive considerably more support under the government’s Renewables Obligation (RO) programme from 2013, if the government sticks to its newly-proposed changes to banded support levels for large scale renewable electricity from 2013-17 (2014-17 for offshore wind). However, the proposed changes would see support for onshore and offshore wind fall by relatively small amounts from 2014. Projects based on solar, biomass, geothermal and anaerobic digestion technologies would also see support being reduced by similar amounts. The modest size of the proposed support reductions - for onshore wind this means a reduction fromone1 renewable energy certificate (ROC) per MWh to 0.9 ROCs - meant that the renewables industry mainly welcomed the proposals. Deputy Prime Minister Nick Clegg said: ‘We have studied how much subsidy different technologies need. Where new technologies desperately need help to reach the market, such as wave and tidal, we’re increasing support. But where market costs have come down or will come down, we’re reducing the subsidy.’ ‘By 2017, as a result of these proposals, we expect to see 70-75 TWh of renewable electricity in the UK. This is 70% of the way towards the 108 TWh of electricity needed to meet the UK’s 2020 renewable energy target,’ added Huhne. The proposals are expected to cost between £0.4 and £1.3bn less than retaining current bandings and drive a higher level of deployment than leaving bandings as they are, according to the Department for Energy and Climate Change (DECC), which also suggested that the proposals provide industry with the certainty needed to make investment decisions and will mean a lower overall impact on consumer bills. Gaynor Hartnell, Chief Executive of the Renewable Energy Association made the general comment: ‘There is great relief that this document has finally been published. The delay had put billions of pounds worth of investment on hold. Developers will need to see these new numbers in legislation before they can resume development activity, however. We welcome the broad thrust of the proposals, although we have views on some of the details, which we’ll feed in to the consultation.’ ‘The degression pathway is a new refinement to the Obligation. Renewables costs in the main are coming down, so it does make sense,’ added Hartnell. Speaking for the wind industry, Maria McCaffery, Chief Executive of RenewableUK, said: ‘Any reduction in financial support will have an impact on the industry, reducing deployment, and potentially jeopardising momentum as we strive to reach our carbon reduction targets. However, we recognise the need to drive down costs across the sector, especially offshore.’ Research by RenewableUK suggests that the proposed cut of 0.1 of a ROC for onshore wind could reduce deployment from 12 GW to 10.4 GW by 2017. Consumer bills are likely to remain unaffected by the proposed changes, adds RenewableUK. In the average annual domestic electricity annual bill of £581, the total cost of the RO is just £20. Wind receives less than half of that £20 (or 1.8% of current consumer bills). By 2017, the RO will cost some £50, with the cost of support going up to around £30 a year, or 60p per week. Comments on the proposals are invited by DECC up to 12 January 2012.

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