Last Wednesday, the Department for Energy and Climate Change (DECC) published its long-awaited response to the Renewables Obligation Banding Review consultation launched in October 2011 (see our e-bulletin of 25 July 2012).
In this e-briefing we now set out in more detail the key outcomes of DECC's review together with a summary table setting out the levels of banded support for the period 2013 to 2017.
DECC has made a number of changes to the proposals in its initial consultation, some of which will require further public consultation. This includes plans to scrap RO support for bands also covered by the small-scale FIT regime.
1. Table of changes by generation technology
Please click here to view a table that summarises the impact of the policy measures on different generation technologies.
2. Removal of choice for small-scale generators between RO and FIT
Small-scale generators of solar PV, onshore wind, anaerobic digestion and hydro (ie, with projects at or below 5MW) are currently able to choose whether to accredit under the RO or to apply for a Feed-in Tariff (FIT) subsidy. DECC plans to consult on whether this overlap should be removed, so that small-scale generators will only be eligible for FIT support. DECC considers that this would ensure a consistent policy for small-scale projects, and cites the reduction of administrative burden on Ofgem (the scheme administrator for both the RO and the FIT scheme) as a key benefit.
3. No changes to proposals for offshore wind support
DECC renewed its support for offshore wind, stating that "of all the renewable technologies, [offshore wind] is the best scalable, mass deployable option." The consultation response confirms that the proposals for support levels for offshore wind remain unchanged from the original consultation: 2 Renewable Obligation Certificates (ROCs) up to 31 March 2015, reducing to 1.9 in 2015/2016 and 1.8 in 2016/2017 to reflect falling costs of deployment. A decision has been made not to differentiate support for installations according to distance from shore or depth of water, or for floating offshore wind.
4. Onshore wind proposals to go ahead but subject to re-review
DECC has also indicated that it will implement its initial proposal to reduce the onshore wind subsidy from 1 ROC to 0.9. But, it will guarantee this level until March 2014 only. In the meantime, it will issue a Call for Evidence on onshore wind industry costs in September this year. This apparent compromise with the Treasury will mean that support levels for onshore wind may decrease again from April 2014, if the review process finds evidence of a significant change in generation costs.
DECC has indicated that even if onshore wind support is reduced, it will put in place grace periods to allow consented projects with a pre-existing grid connection and turbine order in place (or potentially even projects which had already undergone significant investment) to receive the 0.9 ROC level.
5. New bands for co-firing and dedicated biomass
Co-firing biomass – new enhanced band
A new enhanced co-firing band for plants which co-fire a higher percentage of biomass will be introduced. This will be further subdivided into:
- a mid-range co-firing band (for plants which co-fire 50% < 85% biomass), which will receive 0.6 ROCs; and
- a high-range co-firing band (i.e. for 85% < 100% biomass), which will receive 0.7 ROCs during 2013-14 and 0.9 during the 2014-15 period.
Plants operating under the enhanced co-firing band will not be able to benefit from the energy crops uplift for biomass plant; the Government is also considering abolishing the uplift for standard co-firing plant. In addition, the Government will consult on a cost control mechanism which aims to reduce the risk of the Levy Control Framework being exceeded.
Cap on Dedicated biomass
Support for dedicated biomass will remain at 1.5 ROCs/MWh. However this rate will reduce to 1.4 ROCs/MWh from April 2016. Further, DECC will consult on plans to introduce a cap on the proportion of ROCs which suppliers can source from dedicated biomass plants without CHP to satisfy their obligation. This cap would not affect plant accredited before April 2013.
A consultation will also be launched on whether biomass plants should be subject to a minimum greenhouse gas standard.
6. Re-consultation for solar PV
DECC has decided to re-consult on its banding proposals for Solar PV. This follows new evidence it has gathered during the FIT comprehensive review about falling costs of the technology.
7. New bands for generation using gas from closed landfill sites and waste heat to power
Responses to DECC's consultation indicated that landfill gas was a mature technology, which no longer required RO subsidy. Accordingly, from 1 April 2013, newly accredited generating stations (or additional capacity installed from this date) that use gas from an open landfill site will no longer receive support under the RO. However, two new bands for generation from landfill gas will be created:
- Plants using gas from closed landfill sites will still be eligible for support at 0.2 ROCs/MWh. This takes into account the fact that older landfill sites require a higher level of investment, do not have access to an income stream from waste disposals, and have a shorter generation life than open landfill sites.
- Waste to heat power plants which generate using landfill gas will be entitled to 0.1 ROCs/MWH, in order to encourage the deployment of more efficient landfill gas generation.
8. Useful links