DECC announcement on Renewable Obligation review

Posted on 25 July 2012

Bandings were today set for renewable technologies under the Renewables Obligation – the Government’s main mechanism for supporting large-scale renewables – for the period 2013-17 (2014-17 for offshore wind).

The Renewable Obligation applies to installations in England and Wales. The Scottish Renewable Obligation and Northern Ireland Renewable Obligation are devolved matters and may differ. However Alex Salmond has already announced that the support for onshore wind in Scotland will be reduced to 0.9ROCs from April 2013.

The Renewable Obligation banding review sets out that:

  • Support for onshore wind from 2013-17 will be reduced by 10% to 0.9ROCs, as consulted on in Autumn 2011. This level is guaranteed until at least 2014 but could change after then if there is a significant change in generation costs. A call for evidence on onshore wind industry costs will be launched this Autumn and report in early 2013. If the findings identify a significant change, the Government will initiate an immediate review of ROC levels with any new support arrangements taking effect from April 2014, with grandfathering and grace periods for projects already committed.
  • Further consultation will take place to remove support from April 2013 for technologies up to 5MW including new solar PV, AD, hydro and onshore wind which are already supported by the Feed-in-Tariff;
  • Rates of support for offshore wind will reduce as the cost of the technology comes down during the decade;
  • Support levels for certain marine energy technologies will more than double from 2ROCs to 5ROCs per MWh, subject to a 30MW limit per generating station;
  • There will be a new band to support existing coal plant converting to sustainable biomass fuels. This will increase the amount of renewable energy produced at less cost to consumers; and
  • There will be no immediate reduction in support for large-scale solar, but there will be a further consultation this year on reduced support levels given recent dramatic falls in costs;
  • Implementation of the announcement is subject to Parliamentary Approval and State Aid Clearance set to take place in the Autumn.

Greenspan believe this announcement comes mostly in line with expectations from the consultation phase. Particularly with regards to onshore wind which was rumoured to be cut further than it has.

We are now waiting for the Scottish Government to make an announcement further to confirmation on Monday (23/7/12) that onshore wind will receive 0.9ROCs.

Our hope is that AD will receive an uplift in support from 2ROCs to 4ROCs for installations up to 500kW, and 3ROCs above. This will give the industry the boost needed to role out AD, delivering a good base load supply of electricity necessary to balance our energy portfolio.

Northern Ireland have already implemented these levels of support for AD with great success.

The proposal to remove support for technologies already supported by the Feed-in-Tariff will remove the current option to decide between mechanisms.

For more information on the announcement please contact Greenspan.