4. NETA moves

In addition to Combined Heat and Power being at long last given full exemption from the Climate Change Levy, bowing to pressure, Brian Wilson, the energy minister, has proposed reforms of the NETA, the New Electricity Trading Arrangements, to help green energy projects. Ideas being discussed include new grants for the preparation of applications for small generators, and a revised cost system for accessing the National Grid, skewed in favour of green generators. Wilson told The Independent: ‘It is increasingly clear that some forms of generation have been adversely affected. CHP is suffering, though Neta is not the only factor. There is no point in having targets if what is happening in the real world is driving investment away. That is not joined-up Government.’ But he added ‘We still have to find a balance with Neta, which helps bring the price of electricity down, and other government objectives such as future investment in new generation and meeting our environmental targets’.

Meanwhile OFGEM has announced a package of short and long term measures aimed at providing a fair and transparent regulatory regime for distributed generation- smaller combined heat and power (CHP) generators and renewable generators. The proposals for immediate action include allowing generators the option of spreading the cost of connecting to the distribution network; making it easier for domestic Combined Heat and Power customers, who have a heating system which can generate its own electricity, to connect to the networks by establishing a standard set of procedures, and providing full and comprehensible information for prospective distributed generators

Copies of the document "Distributed Generation: price controls, incentives and connection charging. Further discussion, recommendations and future action" (26/02) are available from the Ofgem website at www.ofgem.gov.uk/projects/embedgen_index.hm

NETA to become BETTA ?

Maybe all will be resolved by the newly proposed ‘British Electricity Trading and Transmission Arrangements’ (BETTA) which are meant to create ‘a fully-competitive, British-wide wholesale market for the trading of electricity generation’- and draw Scotland fully into the scheme. Under the proposals, a single body would be created to operate the high-voltage electricity transmission system throughout Britain. At the moment, the separate Scottish system is run by Scottish Power and Scottish & Southern Energy. National Grid looks after transmission in England and Wales, and the two systems are joined by an interconnector. But they are very different. The Scottish companies were privatised as vertically-integrated concerns covering the whole process, from generation through transmission to supply. Assuming the necessary legislation is passed during the 2002/03 parliamentary session, the new scheme will operate from April 1 2004. OFGEM told the Scottish Herald that the proposed changes would give renewable generators in Scotland better access to the Anglo-French interconnector, making it easier to sell in continental Europe.

RO bites but may not deliver enough

The Renewables Obligation, imposed in April, requires electricity supply companies to obtain 3% of their power from renewables sources by 2003 and 10% by 2010/11. If they can’t they will in effect be fined 3p/kWh. That means that renewable electricity is attractive to them if even it cost up to 3p/kWh more than conventional power i.e., roughly 5p/kwh at current prices. This 5p/kWh price ceiling has been imposed to stop prices to consumers escalating - the extra cost is passed on the consumers, as with the NFFO, but the aim is the keep the overall price increase down to 3% by 2010. 5p/kWh may be just about high enough to allow some offshore wind projects to go ahead, but it may not allow enough capacity to be installed to meet the 10% by 2010 target. David Byers, chief executive of the Renewable Power Association, has rather wryly claimed that ‘The whole system is actually designed so we’re always short to stimulate green electricity and to attract investment’. But will it stimulate investment in the newer renewables like wave and tidal current energy? It will take time for them to get below 5p/kWh ...

Wave Boost

The DTI has awarded Wavegen £ 2.3m for three new inshore wave devices. Allan Thomson, managing director of Wavegen, said: ‘Marine renewable energy is the next big opportunity in the electricity market. There is potential along the west coast, particularly Scotland and the West Country.’

More in Renew 139

Scotland to go for 30% by 2020?

Not content with its ambitious target of an 18% contribution from renewables by 2010, the Scottish executive is considering setting a target of obtaining 30% of Scotland electricity from renewables by 2020. More in Renew 139