Extracts from NATTA's journal
Renew, issue 148 March-April 2004

2. BETTA , RO and Carbon trading

Not BETTA ?

The proposal in the new British Electricity Trading and Transmission Arrangements,  to allow electricity supply companies to charge generators extra for long distance transmission, have been seen, in a new ILEX report for Scottish Power, as likely to significantly increase the costs of the often remotely sited renewables in Scotland- possibly increasing the transmission costs for a typical wind farm in the south of Scotland from 5% of generation costs to 25%, thus making it economically unviable. But OFGEM says that BETTA should help generators by giving them access to a larger market and will cut Scottish consumers bills by, on average, £13 p.a. It estimates transmission losses from power lines as equivalent to half a million tonnes of carbon emissions each year.  But in Feb. the poposal were dropped, due to lack of time to negotiate the details- but OFGEM came out in opposition to a government proposal to amend the new Energy Bill, to provide some subsidies for transmision of power from remote wind farms.

RO &CCA gains  

Under the terms of the Renewables Obligation and  Renewables Obligation(Scotland), licensed electricity  suppliers in Great Britain are required to supply specific proportions of their sales from renewables- with the  aim of reaching the target of 10.4 per cent. in the period 2010-11, this target having recently been expanded to 15% by 2015 (see below).

For the year to April 2003, the RO was set at 3% and the proportion of that met by the actual supply of renewables was 58.9%- 5.5 terawatt hours against a target of about 9TWh. 41% of suppliers met their obligation fully; 23% met their obligation in part, and 36% failed to meet any of their obligation target through the supply of renewables.  The level  for 2003-4  is 4.3%,  so the pressure will be even higher on the companies to deliver- or to either buy in the necessary Renewables Obligation Certificates or pay a fine.

In parallel, the Climate Change Agreements, which give some energy intensive companies a discount of up to 80% on the Climate Change Levy, delivered three times the expected CO2 savings. The DTI recently extended eligibility for these negotiated agreements to other energy intensive firms facing international competition.

New RO target

The DTI’s expansion of the Renewables Obligation to 15% by 2015, announced last Dec., was welcomed by the renewables community. This new target will be a legal requirement on utility companies and should create a significantly bigger market for green energy, and should make individual projects much more bankable.  It also partially makes good the No 10 veto of a 20%/2020 target in last years Energy White Paper. The Obligation will now increase in stages for the next five years as follows: 2011-12: 11.4%; 2012-13: 12.4%; 2013-14: 13.4%; 2014-15: 14.4%; and 2015-16: 15.4%.

The British Wind Energy Association, commented that ‘the increased certainty provided by this higher target will be vital in securing the necessary financing for building large-scale wind projects, especially those proposed offshore’.  Marcus Rand, BWEA’s CEO, said: ‘Our industry can now get on with the job of turning these percentages into real projects, delivering clean electricity to millions of UK homes’. 

The BWEA noted that the UK wind industry ‘already had planning consents in place for new wind farms, on and offshore, equivalent to some two and half percent of the UK’s total electricity needs,’ and more were expected ‘potentially equivalent to a further 6% of supply’.   It added ‘An increase in the Renewables Obligation to 15% of total electricity supply by 2015 would require the installation of an additional 5,000 MW of new renewables capacity. Electricity generation from this would meet the needs of providing electricity for a further 3 million homes in the UK. Using the latest turbine technology, only 2000 machines installed onshore would be sufficient to met this target, or a fewer number installed offshore.’

The RO and wind story so far...

The BWEA provided this potted account of progress so far- highlighting the role of the RO: ‘The Renewables Obligation (RO) has been described as the cornerstone in delivering the Government’s target for renewable energy. Introduced in April 2002, it has prompted an unprecedented level of interest in the renewables, and particularly wind power, sector. By way of illustration, in the first year of the Obligation, the UK wind industry effectively doubled, with consents won for a further 525 new megawatts of capacity- equal to the combined total built during the previous eleven years. This success was repeated in the first quarter of 2003 when a further 567 megawatts of capacity was granted permission, and planning consents have been steadily won throughout the year, such that the UK wind industry now has just under 650 megawatts of capacity installed, but an amazing 2,257 megawatts of consented schemes awaiting construction. Meanwhile a further 5,000 MW of onshore projects are under active consideration, while an additional 500 MW is progressing through the consenting regime under what is commonly referred to as ‘Round One’ of offshore wind development. The announcement of ‘Round Two’ of offshore development is likely to see no less than 6,000 MW of development rights awarded. Based on current activity then, wind power alone is capable of meeting the 2010 target and contributing significantly to the new 2015 target.’

Draft Carbon Trading rules

The UK is currently committed under the Kyoto accord to reducing its greenhouse gas emissions by 12.5% in the commitment period 2008-2012. But it has also adopted a national target of reducing CO2 emission by 20% by 2010. There were fears that this target would be reduced in the UK’s version of new EU carbon trading scheme, which is scheduled to come into force in 2005.  However in its draft proposals, published in Jan, the government has compromised with a two phase approach- a target of 16.3% up to 2008, followed by a  strengthened commitment ‘consistent with the 20% goal’  afterwards. 

Next.. the new Energy Bill

The new Energy Bill which emerged in Dec. seeks to  implement the commitments in the Energy White Paper.  It lays out details of the new GB-wide British Electricity Trading and Transmission Arrangements (BETTA) which, unlike NETA, cover Scotland, and it also implements the proposal for Managing  the UK’s Nuclear Legacy outlined in the White Paper- i.e. setting up the Nuclear Decomissioning Authority (with a £48bn budget).  The Bill also tidies up the legislation for offshore wind zones, e.g. in terms of access and navigation rights, and interestingly, includes regulations for for eventual offshore wind farm decommissioning.

..and the UK Energy Research Centre

The Research Council Committee responsible for choosing which group of Universities should run the new £12m UK Energy Research Centre has still not chosen a consortium to take on this role.  But the Centre is supposed to be established in April, so a decision should emerge soon!

In parallel the Research Councils have been gathering bids for a £16m programme of research to link in to the Centre.  It’s all part of their £28m ‘Towards a Sustainable Energy Economy’ programme.

Given that a new DTI/RAB report says that investment in renewables could create up to 35,000 jobs  by 2020, it looks like it really could be a sustainable economy : more in Renew 149.