On 18 December 2012, DECC published its response in relation to the remaining consultations that form part of the Government's banding review under the RO. A summary of the responses can be found below:

1. Solar PV

  • Level of support – DECC have decided to move away from the FITs equivalence policy for solar PV under the RO. DECC instead have proposed to introduce two separate levels of support for solar PV (distinguishing between ground-mounted and building-mounted), for all new accreditations and additional capacity installed during the banding review period (1 April 2013 – 31 March 2017):

Click here to see table.

  • Cost control - DECC has decided to rely on the mechanisms that already exist under the RO to ensure that support levels for solar PV remain sustainable and as such, no ‘solar-pv specific’ cost control measures will be introduced.
  • Sustainability Criteria – DECC have decided not to implement ‘solar-pv specific’ sustainability criteria in relation to the deployment of large-scale ground-mounted solar PV and land use. Instead, the Government proposes to work with industry to encourage best practice.

2. Biomass

  • Supplier Cap – DECC have decided not to introduce a supplier cap which sought to limit the percentage of a supplier’s obligation that could be offset using dedicated biomass ROCs. However, instead DECC are going to introduce a non-legislative cap, set at 400MW, on the total new build dedicated biomass generating capacity that can expect to be supported at 1.5 ROCs/MWh (or 1.4 ROCS/MWh in the case of full accreditations after 31 March 2016). Such a cap will not be set in regulation, but once the cap is triggered, the Government will consider issuing a consultation paper on proposals to restrict further biomass deployment through the removal of grandfathering rights from additional dedicated biomass power coming forward. Plants that deploy within the 400MW trigger point will be unaffected by any review of grandfathering rights, as will the grandfathering policy towards other renewable technologies under the RO. A notification register will be set up and managed by Ofgem. As proposed, CHP plants will be fully excluded from the cap and notification process.
  • Level of support for co-firing – support levels for standard co-firing of biomass and co-firing of regular bioliquids will be reduced to 0.3 ROCs/MWh in 2013/14 and 2014/15. Support levels for standard co-firing with CHP and co-firing of regular bioliquids with CHP will be reduced to 0.8 ROCs/MWh in 2013/14 and 2014/15 respectively.
  • Energy crop uplift – DECC have decided to remove the energy crop uplift for standard co-firing, with the exception of existing supply contracts for energy crops which will be supported until 31 March 2019 or the life of the contract, whichever is earlier.

3. Retaining a minimum gross calorific value requirement in the RO

  • DECC have decided to retain the requirement for gaseous fuel produced by means of gasification or pyrolysis to have a GCV of 2MJ/m3 or above in order to be eligible for support under the RO.

Timing

All changes are due to come into effect from 1 April 2013 except the notification process for new dedicated biomass power plants and the criteria for registration which are expected to be introduced within a separate Renewables Obligation Order for implementation from October 2013.

Whilst the solar industry can take some comfort from the fact that the banding level as at 1 April 2014 shall be higher than originally proposed, it is unclear whether projects will be viable at the decreasing level of support in later RO years.

It is encouraging to see that industry’s concerns have been listened to in relation to DECC’s decision not to proceed with implementing a supplier cap in relation to dedicated biomass, however, the net effect of introducing a non-legislative cap

may have a similar impact to those concerns expressed in relation to the previously proposed legislative supplier cap – this is due to the long lead times arising in respect of biomass and the uncertainty as to whether a facility can be built in time prior to any caps being brought into effect.

DECC's response to the consultation can be found by clicking here.

Our original briefings on the consultations can be found by clicking here (Biomass) and here (Solar PV).