UK launches review of Renewables Obligation
LONDON, England, 2004-08-11 (Refocus Weekly)
The British government has launched a review of its policy to require electricity suppliers to source 10% of their electricity from renewables by 2010.
The Renewables Obligation was introduced in April 2002 and directs licensed
power suppliers in England and Wales to supply a growing proportion of their
sales from a choice of eligible green power sources. Suppliers must demonstrate
their compliance through a system of Renewables Obligation Certificates, and the
RO is the key policy mechanism by which the government will encourage the growth
that is needed to reach the national target of 10% of electricity from renewable
sources by 2010.
Last year’s Energy White Paper committed to a review of the RO, to examine the
effectiveness of the regulation, levels beyond 2015, the potential impact of the
EU Emissions Trading Scheme, energy from mixed wastes, and the prices and the
future cost competitiveness of renewable energy technologies.
“These proposals demonstrate our commitment to the Renewables Obligation as
the central part of our policy for stimulating the expansion of renewables in
the UK,” says energy minister Stephen Timms. “Maintaining confidence in the
stability of the RO is crucial at a time when we are witnessing very substantial
renewables investment plans being developed.”
He reiterated the government's long-term commitment to the RO and invited
comments on the terms of reference until the end of September, with the final
version to be published this fall. The review will be completed by December
2005.
“This is an excellent opportunity to assess with industry how well the RO is
working two years on and to help provide the right business environment in which
renewable energy can prosper,” he says. “Our proposals for the review show
clearly that the Renewables Obligation is here to stay and that we are building
on the firm foundations we have put in place. Confidence in the RO framework is
a top priority for us, and wherever we consider possible changes to the
Obligation during the review, maintaining that confidence will be a key
consideration.”
The supply level was 3% when the RO was introduced, it is 4.9% for 2004/05, and
will increase each year to reach 10.4% in 2010/11. Legislation will be
introduced to increase the level to 15.4% by 2015/16.
“We recognise that the very existence of this Review may raise concern in some
quarters and we are keen to put minds at rest wherever possible,” the document
explains. “We must use the opportunity the Review offers to consider amending
the Obligation where there may be a strong case for doing so, for example to
improve the effectiveness of the Obligation in achieving our renewables targets.”
“The Obligation has already provided, and will continue to provide, an
incentive for the development of the new renewable generating capacity that will
be needed to meet the UK’s current target of 10% of electricity from renewable
sources, subject to the costs to consumers being acceptable, and our aspiration
to double renewables share of electricity from our 2010 target by 2020,” it
adds. “We now have two years’ operational experience of the Obligation; it
appears to be meeting the original policy intent well, with developers and
suppliers bringing forward significant projects.”
The Review will not consider replacing the RO with an alternative mechanism such
as a feed-in tariff or other form of fixed-price mechanism, nor will it amend
the obligation on electricity suppliers. Proposals for supporting green heat
will be considered separately by the government.
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