Summary and implications

After months of delay, the Department of Energy and Climate Change (DECC) have today launched their consultation on the banding of the Renewable Obligation Certificates (ROCs) available under the Renewables Obligation (RO) scheme. DECC claim that this review of the renewable incentives will “bring forward a surge of investment in our energy infrastructure.”

Despite Nick Clegg’s claim that the review “makes clear the Government’s commitment to supporting long-term investment in the UK’s renewables industries”, proposed support for renewable energy production from 2013-2017 has in most cases decreased. The new banding rates are set out below (all figures expressed in ROCs/MWh):

  • Wind: onshore wind will receive 0.9ROCs down from 1ROC, offshore wind will face a staged reduction down to 1.8ROCs from 2ROCs.
  • Waste: most waste technologies will see their incentives halved:
    • Energy from waste: 0.5ROCs down from 1ROC;
    • Landfill gas: 0.25ROCs down from 0.5ROCs;
    • Gasification/pyrolysis: 0.5 down from 1ROC;
  • Solar: photovoltaics will face a staged reduction down to 1.8ROCs from 2ROCs.
  • Wave and Tidal: one of the few beneficiaries of the proposed changes, wave and tidal will receive 5ROCs up to a size of 30MW.

To access the consultation click here.

The deadline for consultation responses is 12 January 2012.

Other key changes

Liquid Biofuels: those technologies (such as CHP) which use liquid biofuels, will be subject to a cap on the amount of ROCs they can use from this fuel source. This results in an anomalous situation where technologies will be subject to ROC banding, whilst also being subject to different ROC values depending on whether the ROCs are from liquid biofuel (with a value that drops to zero as the cap is approached) or an alternative fuel source (where there is guaranteed headroom above the targets). 

Co-firing: co-firing (the use of biomass, alongside coal in traditional coal fired power stations) will have increased support under the proposals, with the previous cap (which recognised that that RO support for this technology didn’t encourage new forms of renewable generation) removed from 2013. Further, rights to ROCs will be grandfathered (where the right to ROCs was previously time limited). This will result in coal fired power stations being able to co-fire biomass for longer, with the use of biofuels helping them to remain within their Large Combustion Plant SO2, NOx and particulates limits so they can operate longer.

Industry response

The launch of the consultation is welcome, given the uncertainty in the current renewable energy market. However, the decreased support for wind and for energy from waste technologies, will be met with disappointment from these industry sectors. Indeed, Centrica managing director Mark Hanafin is reported to have said that the cut to subsidies would mean the company will “re-examine the economics” of its project pipeline, including its next two offshore wind projects.

The solar industry is also disappointed, having hoped that the RO review would see incentives increased, rather than decreased, to offset the Feed-in-Tariff cuts. The director of the solar panel technology providers, Kingspan, has stated that: “this is the way to kill, not support, UK growth and manufacturing…We constantly hear from politicians about rebalancing the economy and the value of green growth and new manufacturing – but it is not being supported by these policies.”