Among the suggestions, the Carbon Trust recommends a move in the UK toward
a feed-in, or tariff-based approach, as the support mechanism for
renewable energy. Spain and Germany have both seen considerable project
implementation under their feed-in schemes.
The Carbon Trust estimates that under the current framework of the
Renewables Obligation, renewables will only meet 10 percent of the UK's
electricity needs by 2020, half the Government's aspiration of 20 percent
by 2020. Not only are targets being missed, but the cost of installed
renewable energy is higher than necessary.
Based on this research, the Carbon Trust believes that the Renewables
Obligation (RO) should be reformed or replaced. It outlines a number of
options in its report, "Policy Frameworks for Renewables," and suggests
that with changes, renewables can meet up to 13 percent of the UK's
electricity needs by 2015 and 19 percent by 2020, nearly double current
projections if the status quo is maintained (see link to report below).
Of the carbon-free energy options available in the UK that can be deployed
at scale by 2015, the Carbon Trust believes that beyond the continued
development of onshore wind, offshore wind offers significant potential to
help fill the emerging capacity gap.
The full potential of renewables will only be achieved through a policy
framework that supports several different renewable technologies at the
same time. The RO in its current form cannot achieve this. The Carbon
Trust believes that a switch to a Renewable Development Premium would
deliver the most renewable electricity at the lowest cost. This would
offer a fixed tariff on top of the wholesale electricity price to each
technology depending on their level of commercialization, which would be
reduced over time as the technology matures and costs decline.
"Our report highlights that the current RO is not working as efficiently
as it should and to maximize the delivery of renewables, urgent change is
needed," said Tom Delay, Chief Executive of the Carbon Trust. "If we get
the right framework in place we can reap the benefits of reduced carbon
emissions and strengthened energy security, as well as develop leadership
in low carbon technologies. Switching to the Renewables Development
Premium as a part of the ongoing Energy Review would ensure that
renewables play as full a role as possible in the UK's low carbon
economy."
The Carbon Trust's analysis also looks at developing renewable
technologies in the longer term, recommending that the UK focus on low
carbon technologies where it has a natural lead and is likely to achieve
economic benefits, such as marine. The report suggests that if the UK
gives wave power the support it requires, it could develop an export
industry worth up to GBP 4 billion per annum by 2050. The Carbon Trust
believes that a 'pull-through' revenue mechanism, such as the Renewables
Development Premium, would be best suited to support early stage low
carbon technologies including marine.