The Department of Energy and Climate Change (DECC) has indicated that it will be presenting its decisions on Renewable Obligation banding tomorrow after a protracted disagreement over wind subsidies between George Osborne and Ed Davey has apparently come to an end.
The decision was expected last week but was cancelled at the last minute because of a purported rift between the Treasury and DECC. It is believed that Osborne’s department was pushing for a deeper 25 percent cut to wind subsidies, whilst Davey was holding out for cuts in the range of 10 percent.
A letter, dated July 9, from the Conservative Chancellor to the Lib Dem Energy and Climate Change Secretary reproduced in the Guardian, revealed that Osborne was willing to compromise over wind subsidies for a trade-off, he wrote: “We need to find a sensible resolution to the position regarding onshore wind, on balance I am content to start with a reduction of 0.9 ROCs. However, I am only prepared to agree this if we also agree either a further reduction in the ROCs in this parliament or a review point in 2013-14.”
Osborne continued: “We need to set out an approach which puts the cost to consumers at its heart. This would include: a statement which gives a clear, strong signal that we regard unabated gas as able to play a core part of our electricity generation to at least 2030 – not just providing back-up for wind plant or peaking capacity.”
Now that the RO announcement is scheduled for tomorrow, industry is concerned about what concessions Davey has had to concede to the Treasury in order to receive its backing.
The UK is currently experiencing a flood of new large-scale solar applications under the RO scheme after costs associated with the technology have plummeted, rendering the scheme financially attractive for >5MW installations.