Among the government’s key aims for these proposals was to maximise “cheaper” renewable generation, in particular conversion of coal plants to biomass and co-firing of biomass in coal plants.
The support is in the form of ROCs (renewables obligation certificates), which are earned per renewable MWh generated. ROCs are tradeable, providing additional income for renewable generation over and above revenues from electricity sales, thereby creating an incentive. The buyers of ROCs are electricity suppliers who need to have a mandated number of them per MWh supplied (currently 0.124 in England and Wales), reflecting government renewables targets, with costs passed on to consumers.
The renewables technologies are banded, according, roughly speaking, to their maturity, with mature technologies attracting less ROCs, but also with the aim of encouraging investment in the most cost effective types of renewable, and it is alterations to this banding scheme – see http://www.decc.gov.uk for details - that the government is putting forward for consultation, with a closing date of 12 January 2012.
Announcing the new banding proposals, which will have a decisive effect on the viability of renewables projects, Chris Huhne, Secretary of State for Energy and Climate Change, said: “We have studied how much subsidy different technologies need. Where new technologies desperately need help to reach the market, such as wave and tidal, we’re increasing support. But where market costs have come down or will come down, we’re reducing the subsidy.”
Among the key changes proposed to the banding scheme are the following:
• Reduced support for hydro, from the current 1 ROC/MWH to 0.5 ROC/MWh.
• Greatly increased support for tidal stream and wave below 30MW, from 2 to 5 ROC/MWh for schemes operating before 1 April 2017 (2 ROC/MWh remains for schemes over 30 MW).
• A new band, “biomass conversion”, 1 ROC/MWh. Biomass conversions would be excluded from the “dedicated biomass band”, currently 1.5 ROCs/MWh, which they currently qualify for, as this would lead to “over subsidy”. Dedicated biomass would drop slightly to 1.4 ROC/MWh as from 1 April 2016.
• A new band, “enhanced co-firing”, meaning co-firing at least 15% of generation, 1 ROC/MWh (co-firing below 15% stays at 0.5 ROC/MWh).
• Removal of the “co-firing cap”, which limits the number of “co-fired ROCs” a supplier can present to 12.5% of the total.
• Reduced support for onshore wind, by 10%, to 0.9 ROC/MWh.
• Offshore wind to receive 2 ROC/MWh in 2013/14 and 2014/15, 1.9 in2015/16 and 1.8 in 2016/17 (compared with current support of 2 ROC/MWh in 2013/14, 1.5 ROC/MWh from 2014/15 onwards.
• Reduced support for “standard” (ie steam cycle based) pyrolysis and gasification, energy from waste with CHP and landfill gas.
• New band for “advanced” pyrolysis and gasification, 2 ROC/MWh.
