CRC could leave renewable energy in the doldrums

Companies cannot claim emissions savings from renewables under the CRC but this could change when feed-in tariffs are introduced, says Alex Marshall

The energy and climate change department (DECC) is unlikely to provide clarity on the role renewables can play under the Carbon Reduction Commitment until the autumn, ENDS has learned.

In recent months, the department has drawn fire for its ap­proach to renewables under the CRC. DECC says firms cannot report CO2 savings from on-site renewables unless they forgo subsidy from the Renewables Obligation (RO). Under the RO, generators receive certificates for each megawatt hour of electricity they produce. These can be sold to electricity suppliers to meet renewables targets, currently fetching about £53 each. If bodies covered by the CRC sell RO certificates (ROCs), DECC says there is a risk emissions savings will be double-counted.

However, firms and renewables trade bodies say this could stop renewables projects from going ahead. The Aldersgate Group, a pro-environment coalition of firms and NGOs including Tesco and BT, says firms are unlikely to build on-site renewables unless they are financially viable and can report carbon savings from them.

“DECC’s view isn’t going to stop all companies investing in renewables but it puts another barrier in the way,” said Gary Freedman of electricity supplier Ecotricity, which develops on-site renewables for Sainsbury’s and Ford among others. “A lot of firms’ main interest in renewables is the carbon savings.”

According to a government-funded study by consultants Element Energy, potentially 5 gigawatt peak capacity for wind energy and 11.7GW solar photovoltaics could be installed on-site by firms by 2020 – equal to several big coal-fired or nuclear power stations.

The picture is complicated by the organisations affec­t­ed by the CRC that are going ahead with schemes in spite of DECC’s pos­­­ition. These include East Midlands Airport, which plans to build four 225 kilowatt wind turbines this year. Bristol City Council has also received planning permission in January for two 3MW turbines.

DECC could overcome this obstacle by removing the link between ROCs and carbon savings, Mr Freedman said. For example, another certificate could represent the carbon savings from renewables. DECC could also say that renewables receiving support outside the RO will be able to count emissions savings under the CRC.

Last year the Energy Act gave the government powers to introduce feed-in tariffs to boost smaller renewable projects up to 5MW peak capacity, thereby setting a guaranteed price for zero- and low-carbon power from such installations.

Feed-in tariffs for electricity projects are due in April 2010, with those for renewable heat to follow in 2011. These will not be related to the RO so DECC should have few concerns about letting emissions savings from them count under the CRC. However, DECC has made no comment, and it told ENDS it may not make its position clear until its response to the current consultation in the autumn.

“We disagree with the current approach, but it’s even more difficult for DECC to justify it when feed-in tariffs come in,” said Susan Pelmore, policy adviser at the Renewable Energy Association.

The Carbon Reduction Commitment

A special report, sponsored by RPS(energy and environmental consultants)