UK releases new Renewables Obligation subsidy levels

By Anna Simet | July 25, 2012

Following an 18-month, comprehensive review of its Renewables Obligation subsidies, the U.K. Department of Energy and Climate Change has published levels of financial support that will be available through the RO for large-scale renewable electricity generators from 2013-2017.

Because of an altered definition of biomass conversion and co-firing, existing plants will have more incentive to use more biomass.

The RO is the main support mechanism for renewable electricity projects in the U.K., and places an obligation on U.K. electricity suppliers to source an increasing proportion of electricity they supply to customers from renewable sources, much like the renewable portfolio standards established by several states in the U.S. The program issues Renewables Obligation Certificates to operators of accredited renewable generating stations for the eligible renewable electricity they generate, and operators can then trade the ROCs with other parties, ultimately being used by suppliers to demonstrate that they have met their obligation.

In the newly-announced banding levels, support level for conversion of coal-powered plants to biomass electricity has been maintained at one Renewables Obligation Credit per megawatt-hour, but support for co-firing has been modified to stepped levels that the DECC said better reflect the cost elements of different co-firing levels and what is affordable for both enhanced and standard co-firing.

Existing plants will gain credit for cofiring and conversion on a generating unit-basis opposed to a facility-wide basis, in order to provide more flexibility to generators to move to full conversion over time. New-build biomass plants will maintain 1.5 ROC, digressing to 1.4 in the final year.

The DECC plans to perform further consultation on a dedicated biomass cap, and admitted that though future developments of the markets are extremely difficult to predict, there’s a risk that increased demand from bioenergy could lead to price increases for certain biomass feedstocks. “We will therefore be working with large power generators on a voluntary disclosure process on the future demand for domestic feedstocks in order to give confidence to the wood products industry and its investors that domestic supplies of feedstocks will continue to be available,” said the DECC.

The revised banding levels could spur between £20 billion and £25 billion of new investment in the economy between 2013 and 2017, the DECC estimated, supporting jobs, delivering more clean power and reducing consumer costs between 2013 and 2015. 

Along with the RO subsidies, the DECC released some results of a public attitude tracking survey on renewable energy. A few of the statistics include that eight in ten (79 percent) people said they supported renewable energy for providing our electricity, fuel and heat, with 32% strongly supporting; nearly eight in ten (78 percent) agreed that renewable energy developments should provide direct benefit to the communities in which they are located; and biomass energy had a positive perception of 64 percent, compared to on-shore wind at 66 percent and solar at 83 percent.