MSPs asked to back Renewable Energy Order that will push electricity bills higher

Scottish Energy Minister Fergus Ewing will this week urge parliament to approve the government’s Renewables Obligation order – which will push up household electricity bills.

Renewable Obligation Orders create additional costs for electricity suppliers which they can then pass through to industrial, business and domestic consumers as part of their electricity bills.

These orders impose an obligation on electricity suppliers to provide an increasing percentage of their supply to customers in Scotland from qualifying renewable energy sources.

The market for renewable obligation certificates (ROCs) is created by imposing an annual and increasing obligation on licensed electricity suppliers to provide a number of ROCs.

This means that those suppliers who are unable to produce ROCs effectively reward their competitors, driving the market-value of ROCs and thus providing income for renewable generators.

While the Scottish Renewables Obligation Order – which Ewing will ask MSPs on the Scottish Parliament’s Energy committee to approve on Wednesday (19 March) – largely mirrors counterpart legislation in England, it will also create two new bands which will apply to Scotland only i.e. they will not be mirrored within the other UK amendment Orders. These are:

• A band set at 2.5 ROCS aimed at supporting generation from offshore test and demonstration sites deploying innovative, new to market turbines; and
• A band set at 3.5 ROCS for pilot projects consisting of turbines which are not fixed directly to the seabed – e.g. floating turbines or those deploying ‘tension’ deployment systems.

 The government estimates that the cost of the RO across the UK during 2012/13 was £1.9 billion, adding around £27 to the average annual household electricity bill.

The Department for Energy and Climate Change estimates this will increase to around £63 in 2020.

The Scottish government estimates that, if expected potential under the enhanced ROC bands for offshore wind is fully met, the additional annual cost to the RO will be £26.5 million per year.’

A government spokesman said: “Scottish Ministers are committed to the promotion of renewable energy in Scotland. As part of this, they have set a target that the equivalent of 100% of the electricity generated in Scotland (as a proportion of gross consumption) should come from renewable sources by 2020, with an interim target of 50% by 2015.

“This commitment is an important part of a package of initiatives aimed at tackling climate change. The Renewables Obligation (Scotland) Order (ROS) is a key measure in terms of increasing the amount of renewable electricity generating capacity in Scotland.”

Scotland’s energy industries will also be considered again by MSPs on the Parliamentary Energy and Enterprise Committee next month as part of its investigation into Scotland’s economic future. The Committee will take evidence on Oil and Gas (in Aberdeen) on 28 April and on 30 April from the Renewable energy industry.