env-2e02 energy resources 2004 - 2005 5. non-fossil fuel obligation: renewable obligation keith...
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ENV-2E02 Energy Resources
2004 - 2005
5. Non-Fossil Fuel Obligation: Renewable Obligation
Keith ToveyН.К.Тови М.А., д-р технических наук
Energy Science Director
CRed Project
• NFFO-1 Introduced at time of privatisation, levy on all energy generated from fossil fuels.
• used to subsidise the non-fossil fuels.
• REC's expected to purchase a minimum percentage of their electricity from such sources.
• original proposal seen as solely a subsidy for the nuclear industry as there was little renewable energy
• …………………………….(but needs qualification)
• changed to a separate section for Renewables and Nuclear,
• Renewables section was subdivided further by technology type.
5.1 Non-Fossil Fuel Obligation: Introduction NFFO-1
• The NFFO-1 (1990) required a minimum contribution of 102 MW from new "renewables".
Fixed price per MWh was paid for renewable energy. Price paid per unit varied significantly with technology Wind energy had the highest price at 11p per kWh compared to a typical consumer price of 6 – 7 p and a generating
cost from fossil fuels of around 3 – 4p per kWh. a substantial subsidy for wind.
Potential generators had to submit applications for the subsidy, many did not receive planning permission, or failed through lack of finance.
Subsidy was paid until 31/12/1998 –limit placed by the EU
5.1 Non-Fossil Fuel Obligation: Introduction: NFFO-1
As with NFFO-1 a fixed price was paid to all generating capacity
NFFO-2 (1991) was further divided by technology type
5.2 Non-Fossil Fuel Obligation: NFFO-2
TechnologyGroup
NFFO-2Requirement
ActualContracts
AvailableNovember 2000
price perkWh
(MW)` (MW) (MW)WASTEMunicipal/industrial
261.48 271.48 31.5 6.55
Other Waste 28.15 30.15 12.5 5.9Landfill 48.0 48.45 46.4 5.7Sewage 26.86 26.86 19.1 5.9Hydro 10.36 10.86 10.4 6.00Wind 82.43 84.43 53.8 11.00Total 457.28 472.23 173.7
The payments under NFFO-2 expired on 31/12/1998
5.3 Non-Fossil Fuel Obligation: NFFO-3
TECHNOLOGY RequirementDNC (MW)
Available(Nov: 2000)
(MW)
Energy Crops Gasification 19.056Energy Crops Residues 103.805
46.5
Hydro 14.480 11.7Landfill 82.071 82.1Municipal and IndustrialWaste
241.765 77.4
Wind - large 146.916Wind - small 19.707
44.7
Total all schemes 627.800 262.5
Note: substantial shortfall again
• Many schemes failed through planning permission etc.
• DTI "size capped" schemes
• Ensured a sensible spread between Technologies.
• Clearance given from EU for NFFO-3 to extend beyond 1998,
(to 30th November 2014,
• NOTE: this excludes NFF0-1 and NFFO-2 projects.
• Unlike NFFO -1 and NFFO-2, price paid for renewables was NOT a fixed price.
• Different bids for each supplier within each technology band
• Lowest bids got subsidy
• Declared intention of 627.800 MW
• but only 292.584MW by end of 2002.
5.3 Non-Fossil Fuel Obligation: NFFO-3: January 1995
• NFFO orders 4 and 5 came into force in 1996 and 1998
• given subsidy for 20 years to finish in 2016 ande 2018 respectively
• bids significantly lower than for NFF0-3
• Overlap with Renewables Obligation - some schemes still coming on line
• Delays in inplementation even after subsidy available.
5.4 Non-Fossil Fuel Obligation: NFFO- 4 & 5
5.5 Non-Fossil Fuel Obligation: General Comments• In 1995 declaration made by Government to have 1500MW of
new renewable generation by 2000
• by December 31st 2003, figure was only 1058.37MW
• a total of 97.92MW under NFFO 1 & 2 are no longer operational
Hydro 9 7.63 Landfill gas 17 29.32
Municipal and industrial waste 4 40.63
Other 2 25.38 Sewage gas 6 5.98 Wind 2 5.81 Total 40 114.74
NFFO - 1 (1990)
Number of Projects
Capacity (MW)
ORDER Technology
Hydro 2 2.78 Landfill gas 26 46.39 Municipal and industrial waste 2 31.50 Other - - Sewage gas 17 18.39 Wind 21 52.20 Total 68 151.26
NFFO - 2 (1991)
NFFO Projects in Operation on 31st December 2003
NFFO Projects in Operation on 31st December 2003
Energy crops and agricultural and forestry
2 69.50
Hydro 8 11.74 Landfill gas 42 82.07 Municipal and industrial waste 7 89.12 Wind - large 10 41.02 Wind - small 13 11.86 Total 82 305.31
NFFO - 3 (1995)
Number of Projects
Capacity (MW)
ORDER Technology
BUT: 142 projects with a total of 626.90MW were contracted
Actual installation of Wind is only 28% of contracted figure in 1996.
NFFO Projects in Operation on 31st December 2003Number of
ProjectsCapacity
(MW)ORDER Technology
Hydro 9 2.49
Landfill gas 57 146.00 Municipal and industrial waste - CHP
4 33.48
Wind - large 4 12.97 Wind - small 5 3.27 Anaerobic digestion of agricultural waste
1 1.43
Total 80 199.64
NFFO - 4 (1997)
Hydro 3 0.64
Landfill gas 67 137.26 Wind - small 6 4.85 Total 76 142.75
NFFO Total
England and Wales 346 913.70
NFFO - 5 (1998)
NFFO Projects in Operation on 31st December 2003Number of
ProjectsCapacity
(MW)ORDER Technology
Biomass 1 9.80 Hydro 9 8.81 Waste to Energy 2 3.78 Wind 7 25.13 Total 19 47.52 BiomassHydro 2 1.46 Waste to Energy 6 17.65 Wind 5 31.29 Total 13 50.40 Waste to Energy 7 16.04 Wave 1 0.20 Wind - large 1 8.29 Wind - small 5 4.28 Total 14 28.81
SRO Total 46 126.73
SRO - 2 (1997)
SRO - 1 (1994)
SRO - 3 (1999)
NFFO Projects in Operation on 31st December 2003Number of
ProjectsCapacity
(MW)ORDER Technology
Hydro 8 2.33 Sewage gasWind 6 12.66 Total 14 14.99 BiogasBiomass 2 0.30 Hydro 1 0.08 Landfill gasMunicipal and industrial wasteWind 2 2.57 Total 5 2.95
NI NFFO Total
19 17.94
NI NFFO - 1
(1994)
NI NFFO - 2
(1996)
NFFO Projects in Operation on 31st December 2003
ORDER Number of Projects DNC (MW)
NFFO - 1 40 114.74
NFFO - 2 68 151.26
NFFO - 3 82 305.31
NFFO - 4 80 199.64
NFFO - 5 75 142.75
TOTAL NFFO 346 913.7
SRO - 1 19 47.52
SRO - 2 13 50.4
SRO -3 14 28.81
TOTAL SRO 46 126.73
NI NFFO -1 14 14.99
NI NFFO -2 5 2.95
TOTAL NI NFFO 19 17.94
TOTAL ALL ORDERS 411 1058.37
Electricity Generation by Renewables 1990 - 2003
-
2,000
4,000
6,000
8,000
10,000
12,000
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
GW
h
solarwind/waveother biofuelsWasteSewagelandfillhydro
Solar 3 GWh
Electricity Generation by Renewables 1990 - 2003
0
50
100
150
200
250
300
350
400
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Ele
tcir
icty
Gen
erat
ed (
TW
h)
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
% R
enew
able
Gen
erat
ion
Electricity Generated
% Renewables
15.7 Renewables Obligation• First Consultation - 1999• Second Consultation - 2000• Implementation on 1st April 2002
– (one year after NETA implemented)– NETA favour flexible generators and had adverse effects on
renewables until RO was implemented
• Aim to replace NFFO and provide a long term mechanism to stimulate renewables
• Initial target: 10.4% renewables by 2010 • later increased to 15.4% by 2015• aspiration of 20% by 2020.
15.7 Renewables Obligation
• On whom should the Obligation be?• The Generators?• The National Grid Company?• The Distributors (e.g. EDF in this region)?• The Suppliers (not generators) (e.g. nPower,
PowerGen, etc).?• The Consumers?
Ultimately it was decided that Suppliers should be liable and that they would be required to demonstrate comnpliance
15.7 Renewables Obligation
Source Needed for10%
Target
RenewablesObligation
ClimaticChange LevyExemption
CapitalGrants
Available
Landfill Gas
Sewage Gas
Energy from Waste
Large Hydro > 10 MW
Small hydro
On shore Wind
Offshore Wind
Agricultural andForestry Residue
Energy Crops
Wave Power
Photovoltaics
5.9 Renewable Obligation Certificates -Operation
The Regulator
OFGEM
SUPPLIERS
Trader and Brokers
Renewable Generator
Notifies Regulator how much generated.
ROC’s issued
Sells ROCs to Trader
Sells Electricity with or without ROCs
Notifies OFGEM of compliance -i.e. ROCs or pays FINE
Buys ROCs from Trader
FINES recycled in proportion to ROCs held
• £12 - 18 per MWh Recycled fines
• £1.50 per MWh Embedded benefits - less losses
• £4.30 per MWh Climatic Change Levy
• £31.39 per MWh Value of ROC
• £20 - £22 per MWh Wholesale Electricity Price
Less Neta Imbalance charges ~ £2 per MWh
Value of Renewable Generation £56- £70 per MWh i.e. 2.5 to 3 times of normal price.
5.9 Renewable Obligation Certificates -Operation
5.9 Renewable Obligation Certificates -Operation
42
43
44
45
46
47
48
49
50
51
52
53
Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05
£ pe
r M
Wh
Auction Prices by Non Fossil Purchasing Agency
This are prices paid for ROC’s generated under NFFO-3, 4 ,and 5 which by themselves do not qualify for ROC’s.
Buy out Prices
April 2002
3p per kWh
April 2003
3.059p per kWh
April 2004
3.129p per kWh
15.10 Renewables Obligation: B & B
• Banking up to 50% of certificates in any one year• Borrowing up to 5% of certificates in any one year.• Since Certificates available fall well short of
demand, these have not really been an issue.
15.11 Banding
• Some Technologies are more cost effective than others.
• Government rejected idea of different level of banding for different technologies
• Capital Grants available for 2 technologies
15.13 Renewables Obligation: Amendments• Amendments: 1st April 2004• Two issues were addressed:• Co-firing• This involves firing power stations with both fossil fuel and
biomass (Ironbridge Power Station)
• Threshold for ROCs• Prior to Amendment, a minimum of 0.5 MWh had to be
generated in each and every month.• One ROC was allocated for each 1MWh, but an odd 0.5 - 1
MWh would qualify.
15.13 Renewables Obligation: Amendment• Co-firing
– Until 31/03/ 2006 all biomass co-firing qualify for ROCs– From 01/04/2006 to 31/03/2011, 75% of biomass must come from crops specifically grown for
purpose– Co-firing not eligible for ROCs after 31/03/2011
• i.e. agricultural wastes do NOT come into this category
• Problem: Not sufficient development in crops• Amendment
– Until 31/03/ 2009 all biomass co-firing qualify for ROCs– From 01/04/2009 to 31/03/2010, 25% of biomass must come from crops specifically grown for
purpose– From 01/04/2010 to 31/03/2011, 50% of biomass must come from crops– From 01/04/2011 to 31/03/2016, 75% of biomass must come from crops
– Co-firing not eligible for ROCs after 31/03/2016
15.13 Renewables Obligation: Amendment
• Co-firing Amendment
• To prevent abuse with most ROCs coming from Co-firing
– from 01/04/2006 to 31/03/2011 a maximum of 10% of ROCs can be obtained by co-firing
– from 01/04/2011 to 31/04/2016 a maximum of 5% of Rocs can be obtained by co-firing
• Many species can be harvested every 3 years
• proposals allow 3 crop cycles during eligibility for ROCs
15.13 Renewables Obligation: Amendment
• Threshold for ROCs– ZICER could not qualify as output in November > February could not be
guaranteed to exceed 0.5 MWh
• Amendment– Average over whole year to be in excess of 0.5 MWh per month.
– ROCs based on annual output
– based on number of MWh (odd 0.5 MWh and above qualifying)
– Available only for generators < 50 kW peak
Further amendments under discussion late 2004– Renewables Obligation Review: 2005 - 2006 terms of Reference Published
– One suggestion: offset CHP against Renewable Obligation
– Would make target more likely to be achieved,
– Would considerably water down renewables
see DTI Energy Group WEBSITE www.dti.gov.uk/energy/renewables