3. RO bands- no to REFIT  

In January, the Government announced its response to the consultation on reform of the Renewables Obligation (RO)- backing the idea of a banded RO. The consultation was just of reform to the RO, but of course many people see it as hopeless and would prefer to switch over to the very successful Feed In Tariff approach used in Germany and most other EU countries. The government however is having none of it.  During the House of Commons debate on the Nuclear White Paper, Secretary of State John Hutton commented: ‘The renewables obligation is a genuine market mechanism and that is why it has been successful. It has overseen a rapid increase in renewable energy in the UK and we should stick with what works. The feed-in-tariff in Germany has undoubtedly incentivised microgeneration in particular, but a significant extra cost has been borne by consumers as a result.’

He seems to have been mislead. The German renewable feed in tariff’s main success has been in supporting large scale wind projects- 22GW so far, and at much less cost/kW and even per kWh than the UK’s paltry 2GW. Micropower projects have done well too, but only represents a tiny part- about 0.4%- of the German programme so far. Interestingly the Tories ‘Power to the People’ report (see Renew 172) made the same error.  

RO revised- with Bands 

So we’re stuck with just relatively minor reforms to the Renewables Obligation (RO). The government response to the consultation on the reforms confirms that it will  go ahead with the introduction of technology banding  in order to give more support to emerging renewable technologies. Subject to parliamentary clearance, from April 2009, Renewables Obligation Certificates (ROCs) entitlements will therefore be adjusted as follows :

Established Band 1 (Landfill Gas): 0.25 ROC/MWh;

Established Band 2 (Sewage gas, co-firing of non-energy crop ‘regular’ biomass): 0.5 ROC/MWh;

Reference Band (includes onshore wind, hydro-electric, co-firing of energy crops and other  established technologies): 1 ROC/MWh;

Post-Demonstration Band (offshore wind, dedicated regular biomass): 1.5 ROCs/MWh;

Emerging Band (includes wave, tidal stream, solar pv and other emerging technologies, with tidal barrages /lagoons under 1GW now added in): 2 ROCs/MWh.

Consultation results  

DBERR says that most of the proposals set out in the RO consultation document ‘were well received by the majority of the 174 companies, organisations and individuals who responded’. They say that there are however ‘a number of changes which we will make in response to the consultation. These changes will not significantly alter the proportion of the UK’s electricity which we expect to come from renewables from the first phase of a banded RO.’

In particular they note that ‘we intend to go forward with plans to group technologies with similar costs’ but they have  made some changes to the initially proposed banding regime- e.g. allocating 0.5 ROCs/MWh to non-energy crop ‘regular’ biomass, and  to sewage gas, instead of 0.25 ROCs as originally proposed. 0.5 ROCs per MWh, ‘following reassessment of their costs’.  However, the cap on the proportion of a supplier’s obligation that can be fulfilled by co-fired ROCs will be retained at a level of 10% of the number of ROCs.

The other big change is that ‘having studied the figures provided by consultation respondents’ the government has raised the guaranteed headroom from 6% to 8% above the number of expected ROCs in the market in any obligation period after 2015/16. In addition, the fossil fuel content of mixed waste will initially be deemed to be 50% and increase over time to 65%; but the overall cap on co-firing is being retained. It also changes its approach to micropower and added in small tidal barrages and lagoons- see below.  

RO- some  key  changes

Tidal Barages and Lagoons.  

Tidal lagoons and barrages of up to one gigawatt are to be included in the two ROCs per MWh band.  DBERR says that the 8GW Severn Barrage would destabilise the RO, which is why barrages over 1GW are to be excluded- but the new DBERR feasibility study (see later) will look at state funding options. Smaller barrages are deemed to ‘present less of a challenge to the RO’, but would seem to need more than one ROC.  ‘In general such support is reserved  for developing technologies where we expect costs to decrease in future. For barrages, the majority of the cost relates to civil engineering, and as there are relatively few sites in the UK for tidal barages and the technology is mature, the scope for learning effects is limited. However a limited period of support would enable barages to pay back their initial cost leaving assets able to continue providing low carbon electricity on commercial terms for succeeding decades.’  As per the Rance barrage in France, still running well 40 years on.

So small barrages will get 2 ROCs/MWh. Similarly for lagoons- and although ‘there may be some scope for learning through development and design and construction approaches, as with tidal barrages, the main rationale would be the lifetime of the plant and its ability to keep generating for decades after any direct support ended’.

Micropower changes  

In addition they say ‘we have decided to reduce the complexity for micro-generators that would have been implied by a banded and grandfathered system. All microgeneration stations (50kW or less) will receive two ROCs per MWh, regardless of technology. Micro-generators will be excluded from any grandfathering provisions placing all microgenerators in this band irrespective of when their plant was installed (including the circa 200 stations accredited in 2006). We also commit to retain this level of support following the first scheduled banding review, planned for 2013.’

Next - the EU target  

BERR noted that the EC’s draft directive for individual countries contribution to  achieving the new EU target of getting 20% of EU energy from renewables by 2020, will ‘be subject to negotiation, with a final decision expected in early 2009’ and said that ‘we will launch a consultation later this year on how to achieve our targets and we intend to publish our full renewable energy strategy in the spring of 2009 once the EU directive has been agreed. It is therefore likely that we will need to introduce further changes, in due course, to further stimulate renewable electricty generation in the UK.’

And, hopefully, also heat?