Renew On Line (UK) 55

Extracts from NATTA's journal
Renew, issue 155 May-June2005

5. Renewables hit by new tax

New business rates set by the government will raise bills for green generators by up to 700%, while the equivalent rates for nuclear and fossil fuel plants are set to fall dramatically, according to the renewables industry.  This situation has  arisen because of the way in which business rates are now calculated- basically they are a tax on receipts.  In the case of renewable generators, this includes the incentive payments to companies under the Renewables Obligation scheme.  Marcus Rand of the British Wind Industry Association said “This seems a classic case of un-joined-up Government. We will be seeing a ridiculous situation where with one hand the Government is giving financial support to renewables while with the other it is taking some of that support away.”

Estimates suggested that the change could inhibit the development of wind power by about 33%. And according to Philip Wolfe from the Renewable Power Association the effect on many other renewables technologies will be even more acute. He predicted that new biomass energy developments would be “stopped in their tracks”.

Rates for all generating stations were previously assessed on a so-called ‘prescribed formula’ whereby they were set at a fixed uniform level per megawatt of capacity. The new system, which is meant to run for five years before a review,  assesses each site individually using the ‘receipts and expenditure’ method, where the ratable value is calculated as a percentage of the notional profit of the plant calculated by subtracting its expenditure from its income. The income from Renewable Obligations Certificates has been included. Based on the preliminary assessments, the maximum increase for wind generation stations was 708% and the average about 100%. The maximum increase for biomass plants was 145%, while hydropower suffered one increase over 1000% with the others up to 650%.  Renewable energy from biogas from landfill sites is to be assessed on an entirely different basis, still under discussion. 

* The buy-out price for the fourth year of the  Renewable Obligation is £32.33/MWh

… and Wind hit by the Guardian!

The Guardians’ front page on Feb 26th  claimed that wind farms are an expensive and inefficient way of reducing carbon emissions, based on a study by DENA, Germanys’ energy agency, which puts the cost per tonne of CO2 saved at £28-£53. They note that the National Audit Office came up with £70-£140/tonne of carbon saved for the UK- but there may be some confusion about tonnes CO2 and tonnes of C, which could  make the UK figures less than Germanys.  Even so,  energy efficiency is  cheaper, at least initially, while we are able to benefit from the quick & easy savings. But longer term it gets more expensive. We need both to deal with climate change.

More on the DENA report- which, despite the initial a portrayals, actually comes out quite favourable to wind,  in Renew 156.