Greater subsidies for electricity generated through wave energy have been proposed in DECC's long-awaited consultation on Renewables Obligation (RO) certificates.
The proposals, which would take effect from 2013, see support for tidal stream and wave projects under 30MW more than double, while subsidies for offshore wind energy are cut more gradually than expected.
Under the RO, electricity suppliers are required to buy a proportion of the electricity they sell from renewable sources. To meet any shortfall they have to buy certificates (ROCs) from renewable energy companies, which are awarded a set amount for every MWh of electricity they generate.
The consultation outlines DECC’s suggestions for the number of ROCs different renewable technologies can expect to receive from 2013.
While wave and tidal stream projects will receive up to 5 ROCs compared to the 2 ROCs they are able to claim currently, most renewable technologies will see a gradual decline in their subsidies.
Support for offshore wind, solar photovoltaic, geothermal and anaerobic digestion projects, for example, will be cut steadily from 2 ROCs to 1.8 ROCs, as subsidies halve for hydro-electric and energy-from-waste (EfW) plants.
According to DECC’s calculations, the proposed bandings cut the costs of the scheme by at least £400 million, but will still help to ensure the UK is on track to meet its 2020 renewable energy targets.
Energy secretary Chris Huhne said: “We have studied how much subsidy different technologies need. Where new technologies desperately need help to reach the market, such as wave and tidal, we’re increasing support. But where market costs have come down or will come down, we’re reducing the subsidy.”
The announcement of the consultation was welcomed by much of the renewables sector, which had been expecting its launch since July following an announcement from DECC last December.
“There is great relief that this document has finally been published,” confirmed Gaynor Hartnell, chief executive of the Renewable Energy Association. “The delay had put billions of pounds worth of investment on hold.”
While she warned that development would remain on hold until the new numbers were confirmed in legislation, she welcomed the direction of the proposals, saying that with the cost of rewewables coming down they made sense.
The UK’s trade body for marine and offshore wind, Renewable UK, was more cautious in its reaction to the proposals.
“Any reduction in support will have an impact on the industry, reducing deployment, and potentially jeopardising momentum as we strive to reach our carbon reduction targets,” warned Maria McCaffery, chief executive of RenewableUK. “However, we recognise the need to drive down costs across the sector, especially offshore.”
McCaffery warned, however, that any changes to the support levels for onshore wind had to be carefully considered so as not to have a disproportionate impact on smaller community-based projects.
Meanwhile Hartnell, argued the proposed bandings would be disappointing for firms working with geothermal technologies and EfW.
“If the government wants to encourage a greater contribution from the very cheapest technologies, this is the wrong way to go about it,” she said. “New landfill gas projects are now out of the RO, and EfW plants with CHP, have had ROC levels halved. No new projects have been built since 2009, at the existing levels. Reducing them further cannot help.”
Matthew Farrow, director of policy at the Environmental Services Association agreed: “The Renewables Roadmap recently published by DECC emphasises the great potential of EfW in helping the UK hit its renewables targets. The proposals to reduce RO support for the main EfW technologies therefore need to be treated with caution.”
The consultation, which covers only England and Wales, will run until 12 January 2012. DECC has confirmed that separate consultations will run in Scotland and Northern Ireland.
