The UK government yesterday published four new consultation papers aimed at ‘maintaining the growing momentum behind renewable electricity investment in the UK, while continuing to deliver value for money for consumers’:
Simultaneously, DECC also launched a consultation under Energy Market Reform on proposals to treat biomass conversions as a separate technology group, and Scottish Islands onshore wind projects as either part of the “less established” technology group, or as a separate technology group – as well as a minimum allocation for wave and tidal stream to ensure that budget is available for at least 100 MW to be deployed.
However, they have been criticised as creating a huge cloud of uncertainty over the offshore wind and solar power sectors by the Renewable Energy Association – the UK’s largest industry association.
DECC confirmed that the budget for Contracts for Difference renewables spending will be divided into groups including (a) established technologies and (b) less established technologies.
A number of criteria were used to select the appropriate grouping of each technology including: the maturity of the technology and industry; levels of UK and global deployment now and in the future; the potential for further cost reductions; and contribution to future decarbonisation.
Included in this category are: onshore wind greater than 5MW; solar photovoltaic greater than 5MW; energy from waste with combined heat and power (CHP); hydro between 5MW and 50MW; landfill and sewage gas. These technologies will compete with each other for support from the first allocation of Contracts for Difference, helping to reduce costs and ensure that consumers get good value for money.
Less established technologies
Less established technologies have a range of characteristics including significant potential for cost reduction and delivery of low-cost renewable generation in the future. Included in this category are: offshore wind; wave and tidal stream; advanced conversion technologies; anaerobic digestion; dedicated biomass with combined heat and power and geothermal.
Support will be provided to create investment that enables cheaper competitive development in the longer term. These technologies will only move to auctions if there are more applicants for Contracts for Difference than are affordable within the budget.
The Renewable Energy Association represents renewable energy producers and promotes the use of all forms of renewable energy in the UK across power, heat, transport and renewable gas. It is the largest renewable energy trade association in the UK, with approximately 1,000 members, ranging from major multinationals to sole traders.
Dr Nina Skorupska, REA Chief Executive, said: “Clear, stable policy attracts investment, creates jobs and drives growth and cost reductions in renewable energy technologies. However, there is not much clarity or stability on show in these new proposals.
“The piecemeal approach to the CfD scheme leaves a lot of questions still unanswered, and the lack of capacity ring-fencing for most technologies compounds that uncertainty.
“Without knowing what the Department for Energy (DECC) intends to do in terms of setting out the budget, making sense of CfD proposals is like trying to complete a jigsaw puzzle without seeing the picture on the lid.
“The consultations on the Renewables Obligation (RO) and Contracts for Difference (CfDs) create more uncertainty and instability for most renewable power industries.
“Some CfD proposals, such as the treatment of biomass conversions and onshore wind on the Scottish Islands, will remain unclear until the government publishes details of CfD budgeting arrangements.
“Meanwhile, solar power meanwhile is subjected yet again to devastating instability. Government must ensure that policy drives and rewards technology cost reductions with a stable trajectory of gradually declining financial support, not the cliff edge the Government is proposing for solar.”
“Proposals to close the RO for 5MW+ solar farms simply create very damaging instability to existing policy.
“The only silver lining in this set of proposals is the bold move to look at raising the community energy Feed-in Tariff threshold to 10MW. But lingering questions of how all these proposals will interact with new State Aid rules creates a perfect policy storm for renewable electricity developers.”