The Department of Energy and Climate Change (DECC) has announced the results of the banding review for the Renewables Obligation (RO). The new proposals set out the level of support for large scale renewable developments between 2013 and 2017.
The department has decided that support for solar PV will stay at 2 ROCs with no immediate reduction. However, DECC states that due to “a dramatic fall in costs” there will be a further consultation this year on reduced support levels for the technology.
DECC is also considering plans to close the band to new PV projects at or below 5MW from 2013, subject to consultation.
As rumoured support for onshore wind will only be reduced by 10 percent to 0.9ROCs in 2013, an announcement that will be seen as a major Lib Dem victory after an embittered row between the Chancellor and the Secretary of Climate Change over wind subsidy levels led to the cancellation of the initial RO banding announcement.
Although onshore wind’s RO level is guaranteed until 2014, it could change after then because DECC is launching a call for evidence over onshore wind industry costs this autumn in order to ready a report for early 2013.
Edward Davey, Secretary of State for Energy and Climate Change, said: “Renewable energy will create a multi-billion pound boom for the British economy, driving growth and supporting jobs across the country.”
“The support we’re setting out today will unlock investment decisions, help ensure that rapid growth in renewable energy continues and shows the key role of renewables for our energy security.”
“Because value for money is vital, we will bring forward more renewable electricity while reducing the impact on consumer bills between 2013 and 2015, saving £6 off household energy bills next year and £5 the year after.”
The solar industry has reacted angrily to the prospect of yet another consultation and the level of uncertainty that it brings with it. Seb Berry, Head of Public Affairs for Solarcentury said: “The last thing this industry needs is yet another consultation on support levels. Ministers keep promising this industry “TLC” – transparency, longevity and certainty – but today's decision does the very opposite.
“The consultation response confirms that PV is already a more cost-effective technology than offshore wind and yet investors in the cheaper technology are now in limbo land awaiting yet another consultation and unable to commit to projects beyond March 2013.”
Berry added: “Government's proposal that the ROC level for large-scale PV should be slashed to that of the equivalent feed-in tariff rate from April 2013 suggests that DECC is not serious about its 22 GWp ‘ambition.’ The reduced FIT rates for large-scale PV have delivered precisely zero installations in the whole of May and June and we see no prospect of the FIT rate for “large-scale” PV being attractive to investors in eight months time.”
Martin Wright, Chairman of the REA said: “We are concerned about the further reviews facing many technologies, which is likely to inhibit investment. Business confidence is essential to realise the vast potential of this industry, in which the UK still lags behind the rest of the world. Companies will not invest without stable Government policy delivered in a timely manner. At such a critical time for the economy, this country cannot afford any further political wrangling that puts at risk future investment and job creation.
“The Chancellor’s recent letter to the Energy Secretary showed a serious misalignment between the attitude of Treasury and other Government departments charged with delivering a growing, low carbon economy. The Treasury appears to be frustrating the creation of a comprehensive energy policy for short-term economic and political gain. It is time energy policy properly reflected the long-term interests of the nation.”
Gaynor Hartnell, CEO of the REA added: “The proposal to remove solar PV, and other FiT technologies, from the RO under 5MW is very worrying. We expressed our concern about this to the Secretary of State in early June.”
Davey’s department believes that the announced changes will help provide the necessary platform to attract between £20 billion and £25 billion new investment in the economy between 2013 and 2017. By 2017, it is hoped that the revised package could help deliver as much as 79TWh of renewable electricity every year. A move that would account for 74 percent of the 108TWh target required to meet the UK’s 2020 renewable energy target.