The government is proposing halving subsidies for large-scale solar installations under the Renewables Obligation (RO) by 2016 and placing new restrictions on support for biomass and biogas plants from April 2013
After confirming future subsidy levels for the majority of renewable technologies under the next phase of the RO in July, the energy department has launched two further consultations proposing changes to the regime that will tie support for biomass to sustainability requirements and significantly cut subsidies for solar photovoltaics (PV).
In DECC’s original consultation on the RO, launched in October 2011, it proposed maintaining support for solar PV at the current level of 2 ROCs (RO certificates) per MWh up until March 2015, and then gradually cutting support to 1.8 ROCs for 2016/2017.
In its latest consultation, however, DECC argues that the costs of solar PV have fallen so dramatically as to significantly reduce the amount of support needed by installers. It now suggests that support should be cut to 1.5 ROCs/MWh from 1 April 2013, and then reduced by a further 0.2 ROCs a year to just 0.9 ROCs/MWh for 2016/17.
The changes would bring RO subsidies in line with support for PV installations of between 250kW – 5MW under the feed-in tariff (FIT), according to the consultation document, which acknowledges that it is taking a “cautious approach” to PV because “the pace of cost reduction has been consistently underestimated” in the past and that it was crucial not to over-reward the technology.
The Solar Trade Association (STA) has criticised the plans, saying that the 25% cut was too big, too soon.
“We once again face having the rug pulled from under us,” said Paul Barwell, STA’s chief executive. “We understand DECC have concerns about how solar will influence the RO budget, but deliberately under-rewarding solar to curtail the industry is definitely not the solution.
“The alignment with the deliberately ineffective 7.1p FIT is not a credible basis for setting support for RO solar. It is vital that industry provides the supporting information to DECC, and that DECC really listens to the evidence on this consultation.”
However, energy secretary Ed Davey said: “It is vital that our support for solar PV projects under the RO reflects the fall in the cost of the technology. Our proposals are designed to encourage the most economically sound solar PV projects under the RO and ensure value for money for the consumer.”
DECC has also confirmed that it is still considering whether to remove solar PV installations generating less than 5MW from the RO, leaving them to be supported only by the FIT, and will issue a separate consultation if needs be.
In a second two-part consultation on subsidies for biomass, DECC proposes that all biomass power and CHP (combined heat and power) plants generating 1MW of energy will have to meet sustainability requirements in order to qualify for the RO.
Plants will have to demonstrate that wood fuels are sourced in line with the government’s public procurement policy on wood and ensure that plants do not exceed set carbon emissions limits – ranging from 240kg–285kg kg of CO2 per MWh depending on the technology.
The second part of the consultation focuses on the support available for biomass plants and aims to ensure that an increase in the number of new plants does not result in the RO going over budget. Proposals include restricting the amount of energy from new installations that suppliers can use to meet their RO requirements.
Under the proposals, suppliers would only be able to use new, dedicated biomass to generate 19% of renewable energy in 2013/14, 17% in 2014/15, 14% in 2015/16 and 12% in 2016/17.
Other proposals include reducing support for co-firing plants to 0.3 ROCs per MWh, down from 0.5 ROCs as proposed last October, and removing the subsidy uplift currently available for co-firing plants burning energy crops.