United Kingdom

United Kingdom

Market lift off set for April -- UK Renewables Obligation

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The UK's new renewable energy support mechanism -- the

Renewables Obligation -- is to come into effect on April 1, rather than at the beginning of January 2002 as the government had originally hoped. The obligation will require electricity companies to buy a proportion of power from renewable sources, rising to 10% by 2010. At present, less than 3% of UK electricity is generated by renewables.

Implementation of the obligation is dependent on approval by parliament and clearance by the European Commission under its rules governing the granting of "state aid" to industry by member countries. Both had been expected in autumn 2001. Brussels gave its state aid clearance in November, but Department of Trade and Industry (DTI) officials did not admit until the end of that month that they would be unable to meet the January start.

The delay is understood to be due to administrative difficulties in co-ordinating the legislation for the Renewables Obligation in England and Wales with the Renewables Obligation Scotland that will go before the Scottish Parliament. The government now says it expects to lay the order for the obligation in parliament during this month.

Gaynor Hartnell of the Renewable Power Association (RPA) says the delay is bad news for renewable energy developers who have waited three years for a new policy. "Everyone is just waiting for the starting gun to fire so they can start planning and get finance laid out," she says. The RPA's David Byers adds: "We do not doubt that the legislative process has been complex and that determined efforts have been made to meet proposed timetables. But the fact is that renewable generators are facing bankruptcy or seriously curtailed activity because of NETA [New Electricity Trading Arrangements] and the further delay in introduction of the renewables obligation."

Aiming high

Despite the delay, energy minister Brian Wilson predicts that 2002 will be the year of renewables. The renewables obligation will transform the market for alternative generation, guaranteeing a £750 million market for electricity from renewables, he says. But he warns that it is pointless to set more ambitious targets which in the short term are not capable of being met. "I certainly want to see us aiming higher than 10% in the years beyond 2010. However, the reality is that we are starting from a low base."

He adds that regional targets for renewable energy are to be established throughout the country to ensure reasonable expectations for renewables in different regions are set and monitored. Government will act to ensure that renewables projects are treated fairly by the planning system, he says. Wilson stresses that renewables can create a substantial manufacturing sector. He says: "It should never be forgotten that we had world leadership in wind power 20 years ago but did next to nothing with it. The Danes took a different view and now have a four billion per year manufacturing industry."

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