Technology

Government responds to the Renewables Obligation (RO) scheme

By Resource | 25 July 2012 | Add a Comment

The government’s response to the consultation on the Renewables Obligation Banding Review, setting out support levels for renewable electricity technologies for the period 2013 to 2017, was published today (25 July).

The Renewables Obligation (RO) scheme requires UK energy suppliers to increase the share of sustainable energy they supply as part of the UK’s goal of transferring 15 per cent of its energy consumption to sustainable resources. A programme of subsidies, to be paid in the form of Renewables Obligation Certificates (ROCs), will be available until 2017 to support renewable energy projects fulfil this target.

Davey “The support we’re setting out today will unlock investment decisions, help ensure that rapid growth in renewable energy continues and shows the key role of renewables for our energy security”, said Edward Davey, Secretary of State for Energy and Climate Change.

“To protect the consumer and ensure the industry is increasingly competitive we have been tough on costs – working with industry to drive down the costs of investment and ensuring the most cost-effective package for consumers. “

“Because value for money is vital, we will bring forward more renewable electricity while reducing the impact on consumer bills between 2013 and 2015, saving £6 off household energy bills next year and £5 the year after”, added Davey.

Changes to subsidies for renewable electricity could incentivise £20-25 billion of new investment in the economy between 2013 and 2017, which say ministers, will support jobs and deliver more clean power with a reduction in costs to consumers between 2013 and 2015, ministers said.

The announcement comes ahead of the government's Global Investment Conference and summits, which aim to secure further investment into the UK.

The Banding Review sets out that:

  • Support for onshore wind from 2013-17 will be reduced by 10 per cent to 0.9ROCs, guaranteed until at least 2014;
  • Rates of support for offshore wind will reduce as the cost of the technology comes down during the decade;
  • Support levels for certain marine energy technologies will go from 2ROCs to 5ROCs per Megawatt hour (MWh), subject to a 30MW limit per generating station;
  • New band to support existing coal plant converting to sustainable biomass fuels.
  • No immediate reduction in support for large-scale solar
  • Energy from waste with CHP will remain at 1 ROC.
  • ROC support available for landfill gas projects at closed landfill sites at 0.2 ROCs, but support for most open landfills projects ends.

By 2017, this package could deliver nearly three-quarters of the 2020 renewable energy target for electricity, according to the government response.

Matthew Farrow, Director of Policy at the Environmental Services Association (ESA), welcomed the response, saying: “Today’s RO banding announcements contains some good news for the EfW [Energy from waste] sector and in some areas shows the Government has listened to the evidence provided by ESA and others.”

“It must be remembered that EfW projects are often complex with many different risks attached to them, including planning issues, or finding suitable offtake customers for heat or AD digestate. Government and the industry need to continue to work together if the full potential of EfW is to be realised.”

The high status EfW has been given by the RO has been criticised by some quarters. 

schlomo"Incineration is a bad technology and we already have more capacity than genuinely residual feedstock. The government should not be subsidising the incineration of what is in essence compostable material... [it] should be focusing on supporting the separate collection of food waste for anaerobic digestion and on introducing an incineration tax to promote reduction, re-use and recycling.

"Of course, these RO subsidies are not a big boon for the burner boys as most incinerators fail to use even a modicum of heat for CHP, and because gasification/pyrolysis technologies do not appear to work", Shlomo Dowen, National Coordinator of the United Kingdom Without Incineration Network (UKWIN) told Resource.

The government has also today revealed that the role of gas will not be ‘restricted to providing back up to renewables’ but will ‘play an important part in the energy mix well into and beyond 2030’ as a £500 million field allowance for large shallow water gas fields has been created.

Friends of the Earth’s Head of Campaigns, Andrew Pendleton, questioned the cost of the Treasury’s apparent U-turn on subsidies for onshore wind turbines, which fell from their suggested 25 per cent to just 10 per cent: "Ed Davey has won the battle over wind subsidies - but at what price?

"Treasury arm-twisting has forced him to give his backing to new gas-fired power stations - which is completely at odds with his fuzzy rhetoric on clean British energy. The government's climate advisors warn that UK climate targets won't be met unless our electricity system is almost entirely decarbonised by 2030 - Ed Davey must insist that this target is included in the Energy Bill when it enters Parliament later this year.

"George Osborne's plans for more gas-fired power stations would be a costly disaster for households, businesses and the environment - it's time for David Cameron, the self-styled leader of the greenest government ever, to intervene", added Pendleton. 

The full government response can be found on the DECC website.