Renew On Line (UK) 29

Extracts from the Nov-Dec 2000 edition of Renew
These extracts only represent about 25% of it

DTI Plans get clearer

Waste Combustion to be excluded from RO?

The Department of Trade and Industry’s New and Renewable Energy Programme seems to be attracting criticism given that many observers are convinced that the existing programme will not meet the 10% by 2010 or the 5% by 2003 targets for renewables. The uncertainly surrounding the level of extra support for renewables from the Spending Review 2000 allocations has not helped.

While the DETR has announced some more general financing (see later), the DTI’s plans for renewables are only now becoming clear. Various figures had been circulating - one was ‘£40m over three years’ as reported in Renew 127, but there has also been mention of a £17m p.a. share of the £50m to be raised for energy projects from the Climate Change Levy. However, in a new Consultation Paper on the Renewables Obligation (RO), published in Oct., DTI Minister Stephen Byers says that the DTI has been allocated £39m from the Climate Change Fund ‘for those renewables most in need of an extra boost’, and that MAFF has also received £12m for energy crops. Details of how these monies will be spent have yet to emerge, but the DTI says that there will be ‘capital grants to help early offshore wind and energy crops projects compete’, and offers some proposals (see below) for comment.

Maybe the initial uncertainty had something to do with the fact that Godfrey Bevan, the DTI civil servant who almost singlehandedly pioneered the NFFO through in the dark days of 1989/90, has now retired. Let’s hope that John Doderell, his successor as the person responsible for the DTI’s New and Renewable Energy programme, will get things sorted.

At least we are a little clearer about the future of projects supported under the Non Fossil Fuel Obligation in the Renewables Obligation. We noted in Renew 127 that DTI minister for energy, Anna Walker, had said at the recent PRASEG meeting (see our reviews)‘new contracts will be in place from November 2000, and just as a demonstration of the commitment that exists under the existing arrangement, those contracts will run to 2018 and they will represent expenditure on the part of government of about £150million per annum, that's over and above the supply obligation’. It turns out however that it won’t actually be the government that pays (i.e. taxpayers). The £150m figure, you may recall, was the maximum level set for the NFFO cross-subsidy when it was originally set up in 1990. It was, oddly, labeled as ‘public expenditure’ by the Treasury, but in reality of course was charged via the REC’s to consumers through the fossil fuel levy. That Levy will in effect continue - allowing NFFO 3, 4 and 5 projects to continue with the same contract prices. However, new supply contracts are to be negotiated via an auction scheduled for Nov, with, it seems, 400kW on offer.

But what about new projects and new technologies? The capital funding promised by the DTI should help offshore wind and energy crops- even though the DTI only proposes to offer 40% grants, and only for the extra cost over and above the cost of an equivalent (DNC) capacity combined cycle gas turbine plant (put at £400/kW). But no other technologies will be included. It seems that, after lobbying by British Biogen, the NFU and the Country Landowners Association, there was a possibility that the DTI might set up a special ‘technology band’ for energy crops (as in the NFFO). And if so, then why not bands for other new options - PV, wave etc. In the event, the DTI has decided against this: it says it doesn’t want to distort the market.

The DTI has however proposed a quite high 3p/kWh buy out price for the Renewables Obligation, which will, in effect, set contract prices at quite reasonable levels. But, the big shock is that it has proposed that waste combustion be excluded from the Renewable Obligation- since it is now a mature and competitive source. It also notes that the new EU Draft Directive on Renewables does not at present include waste combustion as a renewable source. But the DTI may also want to avoid its energy programme getting tangled up with the battles that will surely lie ahead over the 165 new waste incinerators said the be needed soon for waste disposal. However, while removing the combustion of municipal waste from the Obligation may be good if you are worried about emissions (and the undermining of waste recycling), it will make it even harder to meet the 5% and 10% RO targets. With Greenpeace also taking direct action at the Edmonton waste plant , expect a major row!

Details in Renew 129. Meanwhile see; http://www.dti.gov.uk/renew/ropc.pdf

STOP PRESS:

After Renew 128 went to press Tony Blair made a ‘green policy ‘ speech to a CBI/Green Alliance Conference on the Environment (24 October 2000) in which he announced proposals ‘for £50 million from the New Opportunities Fund to support offshore wind and biomass’

He added . ‘The DTI is already providing £39 million for new offshore wind turbines, and the first are about to go into operation off Blyth. Helen Liddle has set up a task force to examine ways of promoting solar energy. And I have also asked the Performance and Innovation Unit to undertake a comprehensive study into the future of renewable energy, with a view to increasing substantially our long-term investment.’