the uk renewable energy incentives 2011 2012

THE UK RENEWABLE ENERGYINCENTIVES

AN UPDATE:

STEVE Last

[email protected]://anaerobic-digestion.com

THE UK RENEWABLE ENERGY INCENTIVES STEVE

The UK Renewable energy Incentives

An Update: Including Changes For 2011/12

THE UK's Coalition Government is committed to establishing improved

long-term energy security for the nation by incentivising an increase in the

implementation of renewable energy throughout the UK.

Their stated aim is to increase renewable energy output in the of

electricity, heat and transport sectors; to achieve 15 percent of its energy

demand being met from renewable sources by 2020, and it has pledged to

do this in the most cost-effective way.

In addition to the UK target, the devolved administrations have also set

themselves more ambitious national targets:

the Scottish Government has introduced a target to deliver 100

percent renewable electricity by 2020;

the Northern Ireland Executive has a target to deliver 40 percent

STEVE

[email protected] - HTTP://ANAEROBIC-DIGESTION.COM

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renewable electricity and 10 percent renewable heat by 2020;

and the Welsh Government has indicated that it has the potential to

produce twice the amount of electricity it currently uses from

renewable sources by 2025 and to deliver 4GVV of this from marine

energy.

So, how are they doing this?

Renewables Obligation

THE RENEWABLES Obligation (RO)

This scheme is designed to incentivise renewable electricity generation. It

is currently the main mechanism to enable renewable electricity

generation to compete effectively with fossil fuel generation, by providing

support in addition to the electricity price.

The RO obligates licensed electricity suppliers to source a specified and

increasing percentage of their electricity sales from renewable sources.

The RO is administered by the Gas and Electricity Markets Authority (the

day-to-day functions of which are performed by Ofgem).

Every operator of a qualifying renewable energy power source applies for a

ROC (Renewables Obligation Certificate).

The Renewables Obligation Certificate (ROC) is a certificate, issued by

Ofgem, to accredited renewable electricity generators, for any eligible

renewable electricity that is generated.

To meet their obligations, suppliers can present Ofgem with enough ROCs

or make a buy-out payment. The buy-out price sets the rate which

suppliers need to pay if they do not present sufficient numbers of

Renewables Obligation Certificates (ROCs) to meet their obligations under

the scheme. They can also use a combination of ROCs and buy-out to meet

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their obligations. The buy-out price was £30 per MWh in the base year,

2002/03. In 2011/12 it is £38.69.

Since being introduced in 2002, the RO has increased the level of

renewable electricity generation in the UK from 1.8 percent to 6.64

percent. During 2009/10 the scheme was valued at approximately £1.42bn

per year in support to the electricity industry.

In April 2010, the Government extended the end date of the RO from 2027

to 2037, providing increased long-term certainty for investors.

In July 2011 the Coalition Government published a UK Renewable Energy

Roadmap, setting out its approach to unlocking renewable energy

potential.

What Renewable Sources are Eligible for ROCs?

Under the Renewables Obligation the following energy sources are

eligible:

landfill gas

sewage gas

hydro (for installations exceeding 20MW declared net capacity only

those commissioned after 1 April 2002 are eligible)

on-shore and off-shore Wind

co-firing biomass

other biomass

geothermal power

tidal & tidal stream power

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http://6.64


wave power

photovoltaics

energy crops

energy from waste (see Table for clarification).

In addition to being an approved source, all installations must be located

within the UK, its territorial waters or the Continental Shelf. Also, only

stations initially commissioned or re-equipped on or after 1 January 1990

(apart from micro-hydro and co-firing stations) are eligible.

All combined heat and power (CHP) installations must be accredited under

the CHP Quality Assurance Scheme to be eligible. Schemes that comply

fully with the Good Quality benchmark receive ROCs on the electricity

generated from the biomass fraction of the waste. For schemes that

comply partially, this is scaled back depending on their efficiency.

Banding

The rules of banding have been changed.

Previously, one ROC was issued for each MWh of eligible renewable

electricity output generated.

However, from 1 April 2009, "banding" was introduced, where different

technologies receive different levels of support dependant on their costs

and potential for large-scale deployment (ie onshore wind receives one

ROC/MWh while energy crops receive two ROCs/MWh).

On 20 October 2011 DECC released a consultation on levels of banded

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support under the renewable obligation banding review 2013/17. Some of

the key changes for the resource and waste management sector are

reduced support for standard pyrolysis and gasification, energy from waste

with CHP and landfill gas.

Bioliquids are being proposed as eligible for the same number of ROCs as

biomass, this includes fossil derived bioliquids. To ensure that bioliquids

are not diverted from other uses of greater priority (eg transport) a cap on

the use of bioliquids is being proposed at four percent of each supplier's

renewables obligation.

There is a proposal to replace the current standard and advanced

gasification and pyrolysis bands with two new bands. This is to distinguish

between more proven steam cycle technologies and those that are more

innovative using more efficient engines or gas turbines.

CHP uplift for new stations on or after 1 April 2015 and new build CHP will

be supported through a combination of RO and Renewable Heat Incentive,

this proposal will be supported with CHP capacity added between 1 April

2013 and 31 March 2015 being able to choose power only RO bands plus

RHI or RO CHP band. There is also a further proposal to grandfather CHP

under the RO from 1 April 2013.

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Further Information

www.ofgem.gov.uk

www.decc.gov.uk

www.energysavingtrust.org.uk

UK Renewable Energy Roadmap:

www.decc.gov.uk/assets/decc/11/meeting-energy-demand/renewable-en

ergy/2167-uk-renewable-energy-roadmap.pdf

Source: This newsletter is based upon the CIWM’s Fact File “Incentivising

Renewables” 2011/12.

Latest News (May 2012)

Government Announces Landmark Green Investment

The Government’s UK Green Investments team (UKGI) is to make its

landmark first investment in green infrastructure.

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http://www.ofgem.gov.uk

http://www.decc.gov.uk

http://www.energysavingtrust.org.uk

http://www.decc.gov.uk/assets/decc/11/meeting-energy-demand/renewable-energy/2167-uk-renewable-energy-roadmap.pdf

http://www.decc.gov.uk/assets/decc/11/meeting-energy-demand/renewable-energy/2167-uk-renewable-energy-roadmap.pdf


A total of £80 million has been committed to two specialist fund managers

who will make and manage investments in the small scale waste

infrastructure sector on behalf of the Department for Business, Innovation

and Skills.

An initial fund of £50 million will be managed by Foresight Group and an

initial fund of £30 million managed by Greensphere Capital.

All BIS investments made by the fund managers will be match-funded,

leveraging in at least £80 million more to the projects. The investment

decisions will be overseen by a new Investment Committee.

The Government is investing directly, on fully commercial terms, ahead of

obtaining state aid approval for the UK Green Investment Bank (GIB).

The fund managers will be responsible for generating and managing

investments in areas such as waste recycling and reprocessing facilities,

pre-treatment projects and energy-from-waste projects.

The appointments have been made following the launch of a competition

in December 2011 seeking experienced fund managers to manage

Government investments in waste infrastructure projects. The

Government will also make a further £100 million available for investment

in the non-domestic energy efficiency sector.

More at: UK Government announces landmark green investment

Disclaimer

Reasonable care has been taken to ensure that the information presented

in this newsletter is accurate. However, the reader by reading this

newsletter shall be deemed to have read and accepted the following

terms:

Terms of Use: No Liability: this book is supplied “as is” and without

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http://www.bis.gov.uk/policies/business-sectors/green-economy/uk-green-investments?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:%20bis-policies%20(BIS%20Policies)&utm_content=FeedBurner


liability. All warranties, express or implied, are hereby disclaimed. The

information provided does not constitute advice of any kind.

© 2012 by IPPTS Associates.

STEVE


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