Renewables Obligation

6 February 2012:  RENEWABLES OBLIGATION BANDING REVIEW CONSULTATION – UPDATE

The consultation on the UK Renewables Obligation Banding Review proposals closed on 12 January.  Around 4,000 responses have been received and we are analysing these carefully to ensure that we take into consideration all comments and new evidence received.

We aim to publish the UK Government’s response to the consultation this Spring and legislate in the Summer.  The regulations setting the new bands in law will take effect on 1 April 2013. 


12 JANUARY 2012: RENEWABLES OBLIGATION BANDING REVIEW CONSULTATION - UPDATE

A report by Pöyry is published today. This report presents the results of analysis that Pöyry has undertaken for the review of bands to take effect under the Renewables Obligation from 1 April 2013. The key results of the analysis were set out in the consultation stage Impact Assessment published on 12 November.


9 November 2011: Renewables Obligation Banding Review consultation - update

A draft Impact Assessment and draft Renewables Obligation Order 2012 to accompany the public consultation on the Renewables Obligation Banding Review are published today. Also published is a questionnaire which we encourage stakeholders to use when submitting evidence of full-life generation costs of renewable electricity technologies as part of their consultation response. These documents are available on the Renewables Obligation Banding Review consultation web page.

Consultation on the Northern Ireland RO

On 27 October, the Department of Enterprise, Trade and Investment Northern Ireland published its consultation paper on proposals to change the Northern Ireland Renewables Obligation. The consultation will close on 19 January 2012.


20 October 2011: Renewables Obligation Banding Review consultation

Proposals for the levels of banded support available for renewable electricity generation under the Renewables Obligation for the period 2013-17 in England and Wales were published on 20 October 2011. The consultation will run until 12 January 2012.

Please use the response form provided to submit your response or you can respond online using the DECC e-consultation hub. 

Scottish Government's consultation

On 21 October 2011, the Scottish Government published its consultation paper on changes to the Renewables Obligation (Scotland) Order 2011 (the ROS). The consultation will close on 13 January 2012.

A separate consultation on banding changes to the Northern Ireland Renewables Obligation will be published by the Department of Trade, Enterprise and Investment Northern Ireland shortly.


30 September 2011: Calculating the obligation

Article 12(4) of the Renewables Obligation Order 2009 requires the Secretary of State to publish, by 1 October preceding an obligation period, the number of Renewables Obligation certificates a designated electricity supplier is required to produce in respect of each megawatt hour of electricity it supplies to customers in England and Wales during that period in order to discharge its renewables obligation for that period.

The Department can today confirm the obligation level for suppliers to customers in England and Wales for the period running 1 April 2012 to 31 March 2013 has been set by using Calculation B and will be 0.158 ROCs per MWh (megawatt hour).

The obligation level for supplies to customers in England and Wales for the period running from 1 April 2011 to 31 March 2012 is 0.124 ROCs per MWh.


10 June 2011: Publication of report by Arup on Renewable electricity technologies in the UK

DECC published an independent study on projected costs and deployment potential for different renewable electricity technologies up to 2030.

The aim of the study – undertaken by Arup - is to provide baseline data to inform a consultation this summer on support levels for a range of renewable electricity technologies for the period 2013-17 under the Renewables Obligation. The study is an independent assessment of scope and potential of technologies, and not a statement of government policy.


16 December 2010: Government response to the statutory consultation on Renewables Obligation Order 2011

The Government response to the consultation on changes to the RO (which would come into effect on 1 April 2011) has now been published. Full details are available on the Statutory Consultation on the Renewables Obligation Order 2011 (ROO 2011) web page.


8 December 2010: Renewables Obligation Banding Review 2013 – acceleration of review timetable

Energy Minister Charles Hendry announced today the timetable for the 2013 RO Banding Review is being sped up. The original timetable set out in the RO Banding Review Process document below indicated the Government would launch a statutory consultation on new banding proposals in spring 2012 and announce its decision on banding levels by autumn 2012. DECC now intends to consult on new banding proposals in summer 2011 and confirm the new bands by autumn 2011 – one full year ahead of schedule. The new bands will still come into effect as planned on 1 April 2013 (1 April 2014 for offshore wind), subject to Parliamentary and State Aids approval.

Under the previously announced timetable, investors would not have known for certain what support they could have expected to receive until autumn 2012 at the earliest. The Government was concerned this might delay early investment in certain technologies and hinder the UK’s ability to meet our EU target for 15% of energy to come from renewable sources by 2020. We believe the accelerated timetable for the banding review will give investors and developers greater certainty and confidence to help bring forward the scale of renewables developments needed to deliver the target and other important energy and climate change objectives.

The current review started in October this year with the appointment of Arup and Ernst & Young to review the market costs and potential of eligible renewable electricity technologies to provide the economic and technical evidence to underpin the revision of the RO bands. The report of this first phase of work is due to be delivered to DECC at the end of February 2011. We are today also inviting expressions of interest from qualified companies to undertake a project to model the impacts of different banding scenarios. This phase of the work will draw on the results of the Arup and Ernst & Young work and inform the development of DECC’s consultation proposals, which we aim to publish in July 2011.


November 2010: Stakeholder information gathering exercise

As mentioned below, DECC has recently launched the scheduled RO banding review. We have commissioned independent consultants Arup and Ernst & Young to assess the deployment potential and generation costs of renewable electricity technologies.

If you would like to contribute to the Arup and Ernst & Young stakeholder information gathering exercise, have not already been contacted directly, and have a strong interest/detailed knowledge in this area (e.g. generation costs for a prospective project in a particular technology), please contact the banding review team at Kieran.Power@decc.gsi.gov.uk by Friday 10 December. In your email, please describe your interests in the issue and outline the nature of the information that you wish to contribute.

If you make contact after this time, we will endeavor to use your input, but we might not be able to do so.


October 2010: Result of competitive tender

DECC is pleased to announce that, following competitive tender, we have selected ARUP to take forward the renewable technology costs project that will inform the 2013 Banding Review.

The project will look at the costs and revenues of eligible technologies to help determine the levels of support these might require going forward.

ARUP will be in touch with stakeholders shortly to discuss costs. We thank you in advance for your cooperation.

The Renewables Obligation (RO) is the current main mechanism for supporting large-scale generation of renewable electricity. The Spending Review of 20 October 2010 announced this will continue, confirming the Government's commitment to the renewables target. Since its introduction in 2002, it has succeeded in more than tripling the level of renewable electricity in the UK from 1.8% to 6.64%1 and is currently worth around £1.4 billion/year2 in support to the renewable electricity industry.

Since its introduction, the RO has been subject to various reforms and improvements. The most significant being in April 2009, with the introduction of banding, where different technologies receive different levels of support, providing a greater incentive to those further from the market with potential to deploy on a large scale.

In April 2010, further changes included the RO being extended from its current end date of 2027 to 2037 for new projects, to provide greater long-term certainty for investors and an increase in support for offshore wind projects meeting certain criteria.

The RO works by placing an obligation on licensed electricity suppliers to source a specified and annually increasing proportion of their electricity sales from renewable sources, or pay a penalty.

The obligation in England and Wales for 2010/11 is 0.111 ROCs per MWh i.e. approximately 11% renewable electricity3.

The RO is administered by Ofgem, which issues Renewables Obligation Certificates (ROCs) to renewable electricity generators. Previously, 1 ROC was issued for each megawatt hour (MWh) of eligible generation, regardless of technology. As of 1 April 2009, the reforms introduced mean new generators joining the RO now receive different numbers of ROCs, depending on their costs and potential for large-scale deployment. For example, onshore wind continues to receive 1 ROC/MWh, offshore wind currently receives 2 ROCs/MWh, and energy crops 2 ROCs/MWh.


Renewables Obligation (Amendment) Order 2010

The Renewables Obligation (Amendment) Order 2010 has been approved by both houses of Parliament and came into force on 1 April 2010. The order introduces changes to the RO including extending it to 2037, providing additional support for offshore wind projects and making provisions for the transition of certain categories of generator to the Feed-In Tariffs scheme.


A consolidated version of the order


Renewables Obligation Banding Review Process

Following the introduction of banding in April 2009, it was agreed the bands for all technologies would be reviewed at regular intervals. The attached document sets out the process for the 2010-13 banding review and the principles to be followed for future early reviews.

RO Banding Review Process Size: [217 KB] File Type: [.pdf]

Review of support for offshore wind

As part of the Budget 2009, the Chancellor announced we would be reviewing the level of RO support for offshore wind.

The decision to launch an early review was based on evidence provided to DECC, including a report produced by Ernst & Young on our behalf. We published this report on 27 April 2009 and it is available below:

Following the conclusion of the review process, including a consultation on proposals to award a higher level of support to offshore wind projects meeting certain conditions, we announced in the Government Response that all offshore wind projects granted full accreditation between 1 April 2010 and 31 March 2014 would receive 2 ROCs/MWh.

Further information on this announcement is set out in the Q&A document below:


Review of the removal of the requirement for ‘sale and buyback’ agreements: 18 January 2010

In April 2007 an administrative simplification was made to the Renewables Obligation (RO) legislation, which removed the requirement for generators who consume their own electricity to enter into ‘sale and buyback’ agreements in order to claim Renewables Obligation Certificates (ROCs). Ministers agreed to conduct a review of the removal of the requirement once the legislation had been in force for two years. The results of the review are set out in the document below.


Microgeneration and the Renewables Obligation

The Feed-In tariffs scheme went live on 1 April 2010 and works alongside the Renewables Obligation, supporting the deployment of small scale and Microgeneration while the RO continues to incentivise large scale renewables deployment.

Additional information regarding the transition of existing eligible generators from the Renewables Obligation to Feed-In Tariffs can be found on the Ofgem website.


1  Department of Energy and Climate Change, June 2010 Energy Trends
Ofgem
3  Published by Secretary of State - Department of Energy and Climate Change

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