U.K. Changes Support for Renewable Energy

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) -- The coalition government in the U.K. has reworked its financial support framework for renewable energy projects.

In its long awaited review of the current Renewable Obligation Certificate (ROC) scheme, which covers the period 2013 to 2017, the government has revealed cuts to the level of support for solar, hydropower and onshore wind projects while dramatically boosting the financial support for wave and tidal schemes. The government claimed that the reductions in certain areas were due mainly to the falling costs of the technologies involved and said it expected to save up to €1.5 billion ($2.1 billion) against the current subsidy bandings.

According to the Department of Energy and Climate Change (DECC), by 2017 there will be 70-75 terawatt hours (TWh) of renewable electricity in the U.K. -- 70% of what the country needs to hit its 2020 renewable energy target of 108TWh.

"The renewables industry can bring in billions of pounds of investment into the UK economy," explained Chris Huhne, Secretary of State for Energy and Climate Change, on launching the new support structure proposals. "Our ambitions for these technologies reflect our desire for the U.K. to be the number one place to invest. 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."

Today, wave and tidal projects receive 2 ROCs but this will rocket to 5 ROCs from 2013. Support for hydropower projects will drop from 1 ROC to 0.5 ROC, solar power projects will drop by 5-10% from 2014 onwards and onshore wind can expects a 10% decrease in support. The other big losers are energy from waste (EfW) projects, which will have support cut by 50%, from 1 ROC to 0.5, and anaerobic digestion which sees its subsidy cut from 2 ROCs by 5-10% from 2014 onwards. Geothermal will also have its support reduced gradually from 2013.

Earlier this year, the government was accused of 'strangling the solar industry at birth' by industry groups, when it slashed the feed-in-tariff (FiT) for large-scale solar projects by 70%. For additional information, see March 25, 2011, article - U.K. Solar Industry 'Strangled At Birth'.

Offshore wind remains a government favourite, with just gradual cuts to its 2 ROCs expected from 2014 onwards, as prices for equipment and installation fall.

Gaynor Hartnell, Chief Executive of the industry body, the Renewable energy Association (REA) commented: "There is great relief that this document has finally been published. The delay had put billions of pounds worth of investment on hold. Developers will need to see these new numbers in legislation before they can resume development activity, however. We welcome the broad thrust of the proposals, although we have views on some of the details, which we'll feed in to the consultation".

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