Today DECC has unveiled the widely anticipated consultation on the Renewables Obligation (RO) banding review. The consultation sets out the proposed levels of support for generating stations from 2013-17 (2014-17 for offshore wind) under the RO. The consultation demonstrates an overall commitment by the Government for its ongoing support of the Renewable Energy industry. In particular, the consultation shows great support to the biomass industry based on the acknowledgment that the UK Renewable Energy Roadmap identifies biomass as ‘one of the technologies that has the greatest potential to help the Government achieve it’s 2020 target’. As anticipated, the consultation proposes a reduction to onshore and offshore wind.
Please note the following key proposals:
- Cutbacks for onshore wind and offshore wind: Onshore wind is proposed to be reduced to 0.9 ROC/MWh from 1 ROC/MWh from 1 April 2013 and offshore wind is proposed to be reduced from 2 ROC/MWh to 1.9 ROC/MWh in 2015/16 and 1.8 ROC/MWh in 2016/17;
- New Biomass Support: DECC have proposed the introduction of two new bands for biomass; Biomass Conversion and Enhanced Co-firing. Both of the new bands are proposed to receive support of 1 ROC/MWh from 1 April 2013. Enhanced Co-firing generating stations must use at least 15% biomass in any one month. There is also a proposal to remove the current 12.5% co-firing cap completely from 1 April 2013.
- Increased support for marine and tidal technology: the proposal is to offer support at 5 ROC/MWh for wave and tidal technologies up to 30MW per generating station. This can only be claimed by projects that are operational before 1 April 2017 and will, according to DECC, “help bring this technology into mainstream deployment.”
- Solar support reduced: The support of 2ROC/MWh to remain until 2014 thereafter it will be 1.9 ROC/MWh in 2015/16 and 1.8ROC/MWh in 2016/17.
- CHP Uplift: the proposal is to end the CHP uplift under the RO for generating stations accredited after 1 April 2015. Support will then be under a combination of the RHI for the heat element and under the RO for the electricity element. The proposal is that new generating stations accredited between 1 April 2013 and 1 April 2015 will have a one-off choice to opt for support under the CHP uplift in the RO or under the RHI.
- Reductions will also be made for hydro, advanced conversion technologies (pyrolysis and gasification), energy from waste, and landfill gas.
Energy and Climate Change Secretary Chris Huhne notes that the rationale for the proposed changes to be "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."
The changes directly impact England and Wales and will put pressure on the existing and devolved ROC regimes in Scotland and Northern Ireland to follow suit. Separate announcements are due from Edinburgh and Belfast.
The proposals are broadly similar to, or better than, what was anticipated and the consultation reiterates the Government’s commitment to supporting long-term investment in the UK’s renewables industries. The impact of this support is to promote growth in renewables which will in turn drive investment and promote employment in this ever-growing sector. The consultation closes on 12 January 2012.