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United Kingdom

United Kingdom

UK government moves to tackle PPA fears

UK: Fears that proposed changes to renewables subsidies will unfairly punish independent developers forced the government yesterday to announce a further consultation under its electricity market reform (EMR) process.

Under current proposals, the UK's current Renewables Obligation (RO) subsidy would be replaced in 2017 by feed-in tariffs with contracts for difference (FIT CfD).

Wind developers and bankers have been lobbying the Department of Energy and Climate Change (DECC) over the bill on the ground it would make it difficult for projects such as onshore wind farms to secure finance.

They have argued that the removal of utilities' obligation to purchase renewable electricity under the RO mechanism would make it difficult for independent developers to secure long-term power purchase agreements (PPAs) at rates deemed acceptable to banks.

In response, yesterday's publication of a Draft Energy Bill - which will move the proposed EMR changes towards becoming law when introduced to Parliament this autumn - included a commitment by DECC to issue a call for evidence in June that would "seek to understand any barriers to a competitive PPA market in the current arrangements and in the future when EMR measures are implemented".

"Independent generators have been saying they there are real problems with bankability for their PPAs, even before these reforms," said Energy and Climate Change minister Ed Davey, speaking at yesterday's launch of the draft bill.

"We want to make sure that this process will improve their position, and that is why we have made this call for evidence."

Industry body RenewableUK welcomed the fact that DECC had listened to its members' appeals, but warned that no promises had yet been made and there was little time to address the issue before the Energy Bill is put before Parliament this autumn.

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