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Supporting Emerging Technologies without Affecting the Renewables Obligation

This proposal outlines a strategic approach to support emerging renewable technologies while preserving the integrity of the Renewables Obligation (RO). It addresses the challenges identified in the RPA Routemap from May 2003 and subsequent workshops. Key proposals include raising buy-out prices, increasing quotas, and offering flexible, bankable contracts that foster innovation without undermining established renewable sources. The aim is to create transitional arrangements that ensure a diverse and sustainable energy market, ultimately leading to a more robust and dependable renewable energy sector.

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Supporting Emerging Technologies without Affecting the Renewables Obligation

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  1. Proposals for supporting emerging technologieswithout undermining the Renewables Obligation

  2. The context • RPA Routemap identifies the issue in May 2003 • Workshops and seminars of industry, financiers etc. starting October 2003 • Biomass grant-holder meetings in early 2004 • CCC study for BWEA in April/May 2004

  3. Biomass Biogas Hydro Wave Wind Solar Tidal R,D&D Build (ROC) Market (ETS) Developing Proving Maturing Free-market Diversity needs a ‘bridge’ Bridge Transitional arrangement Valley of Death

  4. Key support requirements • Bankable contracts • Flexibility to cater for falling prices over transition period • Don’t damage prospects for established renewables

  5. Possible support measures Within the RO • Raise the buy-out price • Increase the quota • Banding e.g. award multiple ROCs Alongside the RO • Complementary mechanism Would make the RO much more expensive Wouldn’t help new technologies much Would undermine investor confidence in RO Gives guaranteed revenue stream, and works with RO

  6. Current NFFO contracts Money Power Renewable generators ROCs Fixed price NFPA Levy surplus Auction Electricity Suppliers Electricity customers

  7. Surplus supports price differential RPA Transitional support Money Power Renewable generators ROCs Fixed price Purchasing agency Levy surplus and ‘grant’ support Auction Electricity Suppliers Electricity customers

  8. Proposal meets key requirements • Bankable contracts • Flexibility to cater for falling prices over transition period • Don’t damage prospects for established renewables Fixed term, fixed price contracts let by secure counter-party Orders made over time, in response to the requirements of technology/resource Leaves the RO intact, acts as a complementary measure

  9. Enabling the proposal • At present £60m from NFFO surplus by Sustainable Energy Act • SRO contract surplus similarly accessed in Energy Bill • Aim to use the Energy Bill to access the remainder of the surplus (~£80m per annum)

  10. Presentation is everything! (sadly) • The RO is sacrosanct • Don’t mention the war; or anyway: • Picking winners • Banding • Feed-in tariffs • NFFO

  11. Conclusion For best results: • Undertake to address diversity outside of the 2005/6 review, and • Sooner rather than later For the RO review itself: • State now what the scope is • No more reviews!!

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