United Kingdom

United Kingdom

Minister pledges action on NETA penalties

In good news for British wind plant operators, energy minister Brian Wilson says he will now consult with the renewables industry on proposals to mitigate the damaging effects of the country's new electricity trading arrangements (NETA) on small generators. By requiring generators to deliver exact amounts of power to a predetermined schedule -- or offload excess power at rock bottom rates and buy in shortfalls at a premium -- NETA acts as a severe financial penalty on wind power.

Speaking during a parliamentary debate on the effects of NETA on renewable energy, Wilson said he was just about to respond to a report by electricity regulator Ofgem. This shows that small generators -- particularly wind and combined heat and power (CHP) -- have seen a dramatic drop in sales and income since the start of NETA. Wilson agreed with member of parliament Andrew Robathan, who raised the subject in an adjournment debate, that NETA's effect on small generators was a big issue and must not get in the way of the country meeting its renewable energy targets.

Wilson said that although he had only come to the issue recently, he had a long-standing record of supporting renewables. "So I have no interest in paying lip service to targets if events on the ground are running contrary to their fulfilment. If there is a problem we must tackle it."

Robathan, who is vice chair of the Parliamentary Renewable and Sustainable Energy Group (PRASEG), criticised Ofgem boss Callum McCarthy for setting up NETA to penalise unpredictable energy producers, like wind. McCarthy appeared to exclude any consideration of renewable energy in his pronouncements, he said. "He seems to take the view that his sole intention is to organise the arrangements so that reliable and cheap electricity is provided." Robathan dubbed the arrangements as "arcane" in their complexity. "This makes it all the more difficult for small operators and generators to find their way around them." The good intentions of the government's renewables support program did not seem to be leading to more renewable capacity, largely because of NETA, he warned.

Wilson said that NETA had been a success on its own terms. "I am keen to advance the development of NETA in an open and inclusive way, but I am also totally committed to renewables. We must somehow synthesise those two objectives and make them compatible." He noted that Ofgem's report had revealed that consolidation services, which could group small generators into mixed generation portfolios to evade imbalance penalties, had not yet emerged. That could be a partial solution, he said.

The consultation process would not be long and bureaucratic, Wilson promised. "We will respond quickly with our views about what has to be done, and await the generators' response. The process will be concluded within the next two or three months."

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