United Kingdom

United Kingdom

Support maintained and increased -- New British energy policy provides much of that asked for

In an energy White Paper that delivers nearly all of the concessions demanded by the wind business during a three month consultation, Britain's Department of Trade and Industry (DTI) confirms its plan to increase the Renewables Obligation (RO) to 20% in 2020 from its current goal of 15% in 2015/16. It will also "band" the RO to deliver different levels of support to different technologies. The RO requires electricity retailers to demonstrate through the acquisition of Renewables Obligation Certificates (ROCs) that a rising proportion of their power comes from renewable energy, or pay a penalty to "buy out" of their obligation. For the current year 2007/8, the buy-out price stands at £34.30/ROC.

At present, each renewable generator receives one ROC per megawatt hour of electricity produced. Under the banding proposal, less commercial technologies will be awarded more than one ROC for each MWh while those able to generate electricity close to market prices will receive less. To provide more certainty to investors, the bands will be fixed up to 2013.

To the relief of the wind industry, which had feared that RO support for onshore wind would be reduced, the DTI proposes that it continues to receive one ROC/MWh. Offshore wind will receive 1.5 ROCs/MWh. These allocations, however, are subject to a further period of consultation with industry and other stakeholders before potentially coming into force. In addition to the longer term market created by banding, the DTI also proposes some form of targeted support, such as capital grants, for emerging technologies like wave and tidal power.

The government has also accepted the arguments of the renewables lobby and ditched its earlier proposal that from 2015 the RO buy-out price should no longer automatically increase in line with inflation. Without this basket of reforms, the DTI calculates that the RO would deliver only 11.4% of electricity from renewables by 2015/16 -- well short of its 15% goal.

That goal could still move. The government points out that at the moment it does not know the size of the expected UK contribution to meeting the EU's new 20% European targets for renewable energy by 2020. National contributions to meeting the overall EU target are to be thrashed out in discussions between the EU Commission and member states over coming months. Once the UK's share is agreed, the government says it will bring forward "appropriate measures," beyond those in the White Paper, for meeting its EU goal.

Nuclear fuss

Much emphasis is put on energy saving in the White Paper, which the government calls the starting point for its policy. But the large number of pages devoted to arguing the case for keeping the door open to nuclear power was what stole the headlines last month. A separate and new consultation on nuclear power was launched alongside publication of the White Paper. The new consultation is a High Court requirement after Greenpeace successfully argued that the result of an earlier consultation is so seriously flawed it cannot be used for forging an energy policy.

Despite the attention the government pays to nuclear, it stresses that it is up to the private sector to fund and build new nuclear plant -- and to meet the full costs of decommissioning and waste management. It will not subsidise nuclear directly. Nuclear's domination last month of the debate surrounding the government's future energy plans indicates, however, that a tough battle is ahead for any investors willing to dig deep into their pockets to fund new nuclear build.

More confidence

The British Wind Energy Association (BWEA) says the changes to the RO will boost confidence in the offshore wind sector. And it welcomes the commitment to maintain existing levels of support to onshore wind. "We have long been calling for political and economic stability for our industries, and there is much in the White Paper that will help achieve this," says BWEA's Maria McCaffery.

But BWEA is "deeply disappointed" that the government did not take the opportunity to turn its aspiration for 20% of electricity from renewables by 2020 into a firm target, she says. "This undermines long term confidence in our sector. BWEA member companies are ready to build, but we need that confidence to drive the major investments that will drive down the costs of renewables significantly and build new industries for the United Kingdom." Moreover, key problem areas of site permitting and grid access still need to be resolved, says BWEA.

The Renewable Energy Association (REA) dubbed the White Paper as "isolated initiatives in search of a policy." It calls on prime minister-in-waiting Gordon Brown to appoint a cabinet-level energy minister. Tony Blair has never had an energy minister in his cabinet -- and downgraded the role in his last government reshuffle, the REA points out.

Permitting process

Just the day before releasing its energy plans on May 23, the government also published a White Paper on physical planning policy. It proposes that climate change and energy security be given priority in planning decisions by authorities with jurisdiction over land use in England and Wales. The policy paper contains plans to streamline the permitting process for major infrastructure projects, such as nuclear plant and large wind farms, speed up decisions at a local and national level and shorten the public inquiry process in cases of controversy. The government also plans to cut red tape for householders wanting to install small renewable energy devices, provided there is no impact on their neighbours.

"We need to streamline the procedures so that people can have their say at the same time as reducing delays and uncertainties," says Trade and Industry Secretary Alistair Darling. "Currently major energy projects, including wind farms, can take many years going through the planning system which is confusing and unpredictable for both industry and communities. With a third of our power stations needing replacing by 2020 these new proposals will help industry make the investments that the country needs, and provide communities with clarity on how they can take part in the decision making process."

But BWEA is unimpressed. The planning White Paper's proposals may help in the longer term, but there are not many sites for large onshore wind projects -- of over 50 MW -- in England and Wales, it points out. The few that there are have already been identified and will be in the planning system by the time the new rules take effect, it says.

More important, says BWEA, is to enforce existing government planning policy and speed up decisions on projects already in the planning system. The next three years are critical to meet the UK's renewable targets for 2010, explains BWEA's Chris Tomlinson. "Robust national planning policy is already in place and if it was simply implemented in a timely fashion, the wind industry could deliver the renewable energy target and set the UK on its way to realising a sustainable energy future."

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