Other UK Green Energy Sector
news NFFO/SRO cut
The Fossil Fuel Levy in England and Wales,
which is used to support renewable energy projects contracted under
under the Non Fossil Fuel Obligation (NFFO) by allowing supply
companies to add a small charge on consumers bills, has been reduce
to zero from the previous level of 0.3%.
Ofgem, the Energy Regulator, explained that it
anticipates that over the coming months there will be sufficient funds
already accrued form previous levy income to make up the difference
between payments which the Renewables Scheme guarantees to generators
and the amount they will be able to secure in the market. NFFO 1 and
2 projects have already lost their levy support, since they were only
contracted up to 1998, and some projects supported under subsequent
rounds of the NFFO have yet to get started.
Under transitional arrangements, existing NFFO contracts
will continue to be honoured, and the levy may yet have to be re-started
to meet the costs, but for new projects the NFFO system is being replaced
by the Renewables Obligation which will require supply companies to
source 10% of the power from renewables by 2010, and will lead to a
surcharge building up in stages to perhaps 4% by 2010.
In parallel, the levy associated with Scottish
Renewables Order has also been reduced, but only down from 1.2%
to 0.6%, presumably reflecting the rapid take up of SRO-3 wind projects.
Like the NFFO, the SRO will soon be replaced, but the proposed new Renewables
Obligation Scotland, has a more ambitions target than the RO - a 18%
from renewables by 2010.
Green Power Guidelines
OFGEM, the energy regulator, has published
proposed guidelines designed to help customers who want to choose an
electricity supply that is more environmentally friendly. The numbers
have at last begun to grow. According to www.greenprices.com UK subscriptions
have risen to over 45,000, still of course dwarfed by the 280,000 in
Germany and the 680,000 in the Netherlands. But we hear that London
Electricity and Powergen have recently been innundated with subscribers
to their schemes
The new draft guidelines set out the criteria that
OFGEM expects company tariffs to meet if they are to be described as
‘green’. They have been prompted by the changes in the regulations for
renewable energy supply, namely the Climate Change Levy renewables exemption
and the Renewables Obligation. The guidelines:
· define key terms of what forms of generation
constitute ‘green energy’
· explain the key features consumers should expect
from a ‘green’ tariff
· clearly describe which rules, regulations and
guidelines apply in this area
Ofgem’s Director of Social and Environmental Affairs,
Virginia Graham, said: "Competition
in the energy market has made it possible for customers to get all or
part of their electricity from suppliers who offer green tariffs. These
guidelines aim to give customers the confidence that a green tariff
is actually contributing positively to the environment. The guidelines,
which are advisory, will also help suppliers to understand the importance
of accuracy and transparency in green supply offerings."
The Guidelines are not in fact very explicit on
what is or isn’t green energy.
They say "it
is not the purpose of the document to set strict definitions for what
technologies constitute ‘green’ energy",
but a little annoyingly they then say ‘however
it is important that there is general consistency in approach’
and add ‘there is a core of technologies
which are generally understood to be renewables. These include landfill
gas, sewage gas, hydro, wind, energy crops and other biomass, geothermal
power, solar, tidal and wave power. Other renewable technologies include
co-firing of biomass and energy from incineration of mixed municipal
and industrial wastes. These technologies are arguably of less environmental
benefit in many peoples perceptions’.
In particular, they note that waste incineration is not eligible in
the Renewables Obligation or the Renewables Obligation Scotland.
The proposed rules themselves are fairly straight
forward, along the lines of ‘legal, truthful and honest trading’
as in the advertising standards, and include a prohibition against the
use of ‘energy which is purchased by suppliers as part of their Renewable
Obligation’. Any premium charged should be directed either to ‘the
additional cost of purchasing renewable energy from non RO/ROS accredited
sources or the cost of obtaining ROCs which are not presented as part
of the RO’.
OFGEMs "Guidelines on Green Supply Offerings.
A Consultation Document" are at www.ofgem.gov.uk
or phone on 0116 277 2617
Secure Energy
The Select Committee on Trade and Industry
recently produced a report on Energy Security, a subject which
had come to the fore after the energy crisis in California. They noted
that, at present, the UK enjoys a high level of diversity and security
of supply, with electricity generating capacity currently exceeding
demand by more than 30%. But, looking to the future, they warned that
consumers, who had been lulled into a false sense of security by the
recent energy prices cuts, had to be made aware that the cost of maintaining
energy supplies in a sustainable fossil free way was going to be expensive,
whether it was the 1p/kWh subsidy that the nuclear industry told them
they would need to be economically viable or the 3p/kwh RO price cap
for renewables.
Even that might not be enough, and the Committee
were not confident that the current 10% by 2010 renewable target would
be met. In particular they felt that NETA was undermining the development
of a diverse range of energy supplies, and felt that the government
needed to play more of a role in ensuring longer term security of supply
‘We have not yet heard any evidence that
leads us to believe that the market is sufficiently far-sighted to guarantee
enough reserve generating capacity without some element of planning
by Government or one of its agents’.
We’ll review the report in Renew 137.
