UK Govt launches consultation on 20% renewables target for 2020

London (Platts)--9Oct2006

The UK Government launched Thursday a consultation "seeking views from
industry, investors and other stakeholders" on how to reach the target in the
July energy review report of getting 20% of the UK's electricity from
renewables by 2020.
Secretary of state for trade and industry Alistair Darling said there was
"no doubt that reaching 20% will be tough." He said: "It means we must get
more power from offshore wind farms and other emerging technologies like
biomass and wave and tidal, while maximizing the contribution from those
technologies that are already being deployed."
The government said a "key question" for the consultation was whether the
Renewables Obligation system should be amended to include "banding." The RO
requires suppliers in the UK to present Renewables Obligation Certificates
covering a given proportion of their power. ROCs are given to renewables
generators, and suppliers can either acquire them by buying power from
renewable generators, or by acquiring the certificates direct.
The new banding proposal would differentiate between different
technologies, giving more ROCs to emerging technologies, such as marine power.
The government said this would give "a greater economic incentive for the
renewables sector to generate more power from emerging technologies such as
offshore wind farms and biomass plants while tailoring support to cheaper
technologies like landfill gas and co-firing."
The consultation will also look at the government's commitment to
increase the level of the RO from its current limit of 15.4% by 2015 up to a
maximum of 20% by 2020, the government said.
The government said it has also proposed freezing the buyout price in
2015 by removing the annual increase in line with the Retail Price Index.
Individual suppliers can also choose to buy out their RO commitment at a set
price that currently increases each year by the RPI. Freezing this price would
gradually decrease the value of economic incentives for renewable power. The
government added that it may introduce a mechanism to ensure future ROC prices
"taper smoothly down rather than falling steeply if obligation levels are
exceeded."
As well as looking to expand the renewables, the government said it was
also "looking to increase the amount of smaller-scale, localized electricity
production." The consultation proposals include some changes to RO legislation
in line with this, which would come into force from April 1, 2007.
The legislative changes include allowing agents "to act on behalf of
small generators for example, in completing accreditation forms, claiming ROCs
etc" and "to amalgamate the output of two or more small generators for the
purposes of claiming ROCs." The changes would also remove "an administrative
process where all generators are required to have what are known as sale and
buyback agreements," the government said.
On bio-energy, the consultation will also look at removing the caps on
co-firing of energy crops from April 1, 2007, while retaining the 10% cap for
co-firing of other forms of biomass, the government said.
But the government's proposals have already generated some criticism.
David Porter, chief executive of the Association of Electricity Producers
said: "The RO was designed to be "technology blind" so that it would attract
the cheapest renewable energy first. Skewing it to favor schemes which, at the
moment, are more expensive, might damage the prospects for other renewables
and threaten investors' confidence in the regime."
Porter said AEP "would prefer to see the emerging, more expensive
technologies given support outside the RO mechanism." But he added that
producers want to see the momentum for renewable energy maintained, "so, if
the mechanism has to be changed, we shall put a lot of effort into this
consultation, to help the government find the right way to do it."
Darling launched the consultation at the official ground-breaking
ceremony for Scottish Power's GBP300 (Eur446) million, 322-MW Whitelee
Windfarm south of Glasgow. The windfarm will be Europe's largest onshore wind
farm when completed, the government said.

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