Renewables Obligation banding not ‘a good idea’

The Business Department’s proposals to “band” the Renewables Obligation have been criticised again by Ofgem – this time for providing some renewables with too much support and others with too little.

Several of the government’s proposed “bands” for supporting renewables are set at the wrong level, according to the energy regulator Ofgem – a situation that will “undermine confidence” in the market.1Under the proposed changes to the Renewables Obligation (RO), wave and tidal power would receive too little support to make them competitive, Ofgem says. “Post-demonstration technologies” – offshore wind and dedicated biomass plant – will get too much.

Ofgem makes the claims in its response to the latest consultation on the changes.

The Business Department (BERR) proposed banding the RO last year to make it more efficient and give emerging technologies more renewable obligation certificates (ROCs) per megawatt hour than others (ENDS Report 381, pp 42-43 ). In June, BERR released further details of the proposals, including details of how many ROCs each renewable technology would receive (ENDS Report 389, pp 42-43 ).

Ofgem chastised the original proposals, saying it would be difficult to set bands accurately (ENDS Report 385, p 42 ). A more radical overhaul of the RO was needed, it said. Companies should bid for long-term renewables contracts with fixed rates of return linked to the wholesale electricity price. Under this system, the level of support would drop as electricity prices rose, preventing developers making excessive profits.

Its views were echoed by a report from the House of Commons Environment Committee on the government’s climate policies in September (see pp 5-6 ). However, both agree with Ofgem that wave and tidal power need more support. The BWEA says these technologies should receive three ROCs/MWh or around £150 million additional support outside the RO. It questions whether such technologies will be developed in England without this.

Support should also be increased for micro-renewables, according to the BWEA. Micro-wind turbines will only receive one ROC/MWh and this is “inadequate”. It is “deeply concerned” that other support measure for micro-generation will either “finish in the near future” – referring to the low carbon buildings programme, which ends in 2009 – or “not provide sufficient incentives” – a reference to the carbon emission reduction target.

The Environmental Services Association, the waste industry’s trade body, is “extremely disappointed” with BERR’s proposal to “deem” the biomass content of waste for the purpose of claiming ROCs.

BERR has chosen a level of 35% to avoid too many ROCs being claimed for the co-firing of refuse-derived fuel. However, the ESA says the level is unjustified given the government assumes a biodegradable content of waste of 68% for the landfill allowance trading scheme (LATS).

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