United Kingdom

United Kingdom

Defending the status quo

The UK's policy for support of renewables after the next round of Non Fossil Fuel Obligations (NFFO) must be able to be implemented without changes to existing legislation, believes Catherine Mitchell of the Science Policy Research Unit of Sussex University. The new Labour government has many calls on its parliamentary time; legislative changes to support clean energy would be low on its list of priorities, she warns.

Mitchell favours a "realistic and achievable" policy in the UK after the next -- and last scheduled -- round of NFFO. "It may be that major change occurs in the future but this possibility should not be allowed to create uncertainty or stall renewable deployment in the near term," she says. Mitchell is preparing a report for the Council for the Protection of Rural England (CPRE) to be submitted to the government's review of renewable energy policy. Its manifesto commitment for 10% of electricity to come from renewables by 2010 is a major plank of its strategy for reducing UK CO2 emissions by 20% from 1990 levels by the same year.

Mitchell believes consumer demand will offer the best long term future for renewables. But in its early days from 1998, the emerging market for green electricity will not by itself be able to deliver the 10%. She argues that if this target for renewables is to be reached, it needs an obligation based promotion mechanism, like the present NFFO system. Preferably though, with an ability for renewable generators to opt in and out between the system and the market place.

Credits dismissed

She dismisses, however, the option of a percentage obligation on suppliers, with tradable renewable energy credits. This mechanism would need new legislation in the UK, she says. Moreover, it would favour, in the short term, only the cheapest forms of renewables and be at odds with the goal of diversity in technologies, locations and developers. "It would undervalue renewable electricity," she adds. To protect weaker technologies, "banding" would be needed, but then the simplicity of the percentage obligation -- its main merit -- disappears.

"A percentage obligation with bands is too similar to the NFFO to attract the necessary time and effort of civil servants and parliament to promulgate the legislation," she says. Mitchell concedes, however, that where renewables have no choice but to develop in a least-cost manner, such as in the United States, the percentage obligation is an "elegant mechanism."

By contrast, the model she puts forward bears many similarities to the ideas promoted by the British Wind Energy Association (Windpower Monthly, October 1997). Like the BWEA, she calls for an annual rolling programme of contracts -- but running for 12 years -- with a pre-known price and capacity for each technology. There should also be an "open technology band" offering a fixed kWh price for wind. This price should be pegged at the average value of distributed generation "embedded" in the local grid network, but only as an interim measure until regulatory and tariff reform ensures that market price reflects the benefit of embedded generation.

Mitchell maintains that renewable generators should not be forced to sell their electricity for less than its value. Indeed, she argues strongly against least-cost policies for renewable energy, pointing out that NFFO has not been successful in supporting renewables such as hydro and energy crops. The ability of generators to opt out of the open band to contract direct with suppliers would help a green electricity market to develop, she claims.

The "opt in" clause provides generators with important security enabling them to obtain financing for projects, since it is unlikely that suppliers would offer a contract as long as 12 years. It would also ease the development of the market for green electricity by reducing the risk on the companies involved in it. This policy would encourage a diversity of technologies and project size, Mitchell claims. She points out that public support for the 10% target will be more likely if the 2500-3500 MW of new renewable plant needed to meet it is made up from a wider range of technologies and developers in a wide range of situations.

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