The government proposes changing the RO to bring forward less commercial technologies, including offshore wind. The RO requires electricity retailers to buy a proportion of their power from renewable sources or pay a penalty, linked to the rate of inflation, to "buy out" of their obligation. The size of the retailers' obligations is set to rise to 15.4% in 2015 and remain at that level until 2027. The buy out price currently stands at £33.24/MWh, which when paid on top of current high wholesale prices for electricity has led to British wind energy being among the most expensive in the world, despite the high UK wind resource.
So far, the RO has succeeded in stimulating the cheapest technologies: onshore wind, landfill gas and co-firing of biomass in conventional power stations. Now the government proposes moving to a system of "banding" the RO, giving different levels of support to different technologies. It also proposes that the level of the RO should rise to 2020 to give a longer profile of support, but indexation of the buy-out penalty should cease in 2015.
The BWEA says "banding" should not be introduced at the expense of onshore wind's current strong growth. By freezing the buy-out price, the government hopes to get 20% of electricity from renewables for the same cost as 15%, the association points out. "Accommodating the more expensive technologies whilst trying to get to a 20% target in 2020 -- using the same amount of money as a 15% goal -- is like trying to extract a quart from a pint pot," says the BWEA's Maria McCaffery. "It just doesn't add up."
The BWEA also objects to the government's call for "net neutral banding" where, as under the present system, the number of units of renewable electricity would be the same as the number of Renewable Obligation Certificates (ROCs), currently one megawatt hour to one ROC. This change would mean that while more expensive technologies are awarded multiples of ROCs, the cheaper renewables such as wind may be allocated less than one ROC/MWh. The BWEA is calling on the government to abandon its "net-neutrality" proposal and its decision to freeze the buy-out price.