Government seeks opinions on renewables obligation worth over £1 billion by 2010

The Government’s new Renewables Obligation, part of the UK’s Climate Change Programme, will require electricity suppliers to provide 3% of their electricity sales from renewable sources by March 2003, and 10.4% by March 2011. In the longer term, the Government intends to set more ambitious targets, although actual figures have not yet been set, a DTI spokesman told edie. The Government intends to use the Obligation to form the framework for the development of renewable energy in the UK up until at least 2027.

However, it is expected that the scheme will increase prices to consumers, although by only 0.5% each year until 2010, adding up to a total increase of just under 5%, equal to about £780 million for the country as a whole. This is a price worth paying to address the problems of climate change, says the Government, representing £310 per tonne of carbon.

“Harmful greenhouse gas emissions must be driven down,” said Energy Minister Brian Wilson. “I’ve listened to the comments made in the last consultation and am satisfied that these policies will encourage generation from truly renewable energy sources, minimising all harmful emissions.”

As well as the better known forms of renewable energy, such as wind and solar, the scheme is designed to encourage cleaner technologies such as pyrolysis and gasification as an alternative to mass burn waste incineration. However, electricity from these techniques will only receive support for the biodegradable element of the waste, which is intended to encourage the use of biomass, such as forestry wastes. Large hydroelectric power stations, those over 20 MW, will not be eligible for the scheme.

“This Government will back the generators who invest in green power

plant,” said Wilson, who also confirmed an announcement which he made two weeks ago regarding a new deal for hydroelectricity (see related story). “Energy from all new hydro power stations will be eligible for the Obligation, including those over 20MW. Also those of or under 20MW that have been built or refurbished since 1989 will now qualify, alongside smaller hydro-schemes (under 1.25MW) which do not have to be refurbished.”

Companies will be able to demonstrate their compliance with the renewables scheme by presenting Renewables Obligation Certificates (ROCs) to Ofgem, the gas and electricity markets authority. Alternatively, electricity suppliers can pay Ofgem a buyout price of £30 per MegaWatt hour, which will be adjusted in line with the retail price index after 1 April 2003. The proceeds of the buyout will be returned to electricity suppliers in proportion to the number of ROCs they have been able to produce.

The Government has already announced a considerable amount of funding for renewables over the last year, including a £39 million programme of capital grants for offshore wind, £10 million for a market stimulation programme for solar photovoltaics, and the New Opportunities Fund, which is making £100 million available for renewables (see related story) and a further £50 million available for wind power, energy crops and biomass heat projects.

Comments on the consultation should be sent by October 12 to ro.consultation@dti.gsi.gov.uk. A series of meetings with key stakeholders will also be held in September.