Please note: the consultation on renewable electricity financial incentives closed on 15 October 2009. The responses, below, set out our decisions in relation to the Renewables Obligation and Feed-in Tariffs (FITs).
Please note: these are draft licence modifications, which are laid before Parliament for 40 days under the procedure provided by section 42 of the Energy Act 2008. If, during that 40-day period House of Parliament resolves not to approve the draft, the Secretary of State cannot make the modifications. If no such resolution is made, the Secretary of State may make the licence modifications in the form of the attached draft.
The Draft Renewables Obligation (Amendment) Order 2010, below, follows the response to the 2009 consultation and sets out the policy in legislation.
This consultation seeks views on two mechanisms to provide financial incentives for the generation of low-carbon and renewable electricity: the Renewables Obligation (RO) and Feed-in Tariffs (FITs).
The RO is currently the main financial support scheme for renewable electricity in the UK. To ensure it stimulates deployment of new renewable generation to the extent needed to meet our 2020 target for renewable energy, DECC plans to make certain changes to the RO by means of the next Renewables Obligation Order (ROO), which will come into effect on 1 April 2010. In summary, these are:
- extension of the life-time of the RO to at least 2037
- introduction of a 20-year limit on support under the RO
- removal of the 20 Renewable Obligation Certificate (ROC)/100MWh limit in the RO
- retention of the existing fixed targets until 2015/16, with a headroom only mechanism after that date
- an increase in the level of headroom from 8% to 10%, and
- opening up the RO to include renewable generation outside the UK that meets specific criteria to help meet our EU target in the most cost-effective way.
DECC is also consulting on whether to introduce, at a later date, a mechanism to reduce or remove the risk of fluctuations in the wholesale price of power (and possibly the ROC price).
The 2008 Energy Act contains powers for the introduction of FITs in Great Britain to incentivise renewable electricity installations up to a maximum capacity of 5 MW. The Department intend to implement FITs by April 2010 and this consultation sets out how it intends the FITs scheme to work, including the proposed tariff levels. These proposals have been developed with input from the Department's stakeholders – energy industry trade associations, energy suppliers, Ofgem and NGOs – and this consultation constitutes a more formal opportunity for all interested parties to have their say on the details of the FITs mechanism.
Elements of the consultation include:
- scheme design
- tariff setting
- eligibility
- supplier issues
- reviews
There is also a section within the consultation that covers aspects that overlap between these two incentives and other policies relating to small-scale renewable electricity.
As with the changes to the RO, these proposals are contingent on obtaining State Aid approval from the European Commission and parliamentary approval.
Please note: in section 3.94 of the consultation document as originally published, we stated tariffs will be paid for 20 years for new projects. This is inconsistent with the tariff lifetime assumptions elsewhere in the FITs analysis.
The Department has therefore corrected, through the addition of a footnote, the text of the documents below to reflect that the tariff lifetime for PV projects is proposed at 25 years.
The deadline for responses to this consultation is 15 October 2009. Details about submitting a response, including the relevant email and postal addresses, can be found in the ‘How to Respond’ section of the consultation document.
The links below include documents related to this consultation: impact assessments for FITs and the RO, and reports prepared during the development of our proposals.