Reform of aid to UK renewable electricity generation
DTI consultation (96 pages, PDF) on proposed changes to the renewables obligations in the UK. The main long-term proposals are:
- to band the obligation by varying the number of certificates issued for each MWh according to the technology used;
- to link future levels of the obligation to growth in actual generation, thus "guaranteeing headroom" (i.e. ensuring that the obligation will not normally be fully met);
- to introduce a system to maintain the overall level of aid to renewables even if the obligation level is met or exceeded;
- to stop RPI indexation of the buy-out price;
- to uncap aid to co-firing, but pay it at a lower rate (through the banding arrangements); and
- to allow Ofgem to recover its administration costs from the buy-out fund (i.e. deduct them from the aid provided to generators).
This consultation runs in parallel to the Scottish Executive consultation on aid to wave and tidal power. The DTI paper notes the different approach to banding adopted by the Scottish Executive (separate obligation levels for different technologies, rather than the DTI's proposed fixed multipliers) and argues that the Scottish proposals do not leave enough for the market to decide.
Responses by Friday 15 December 2006 (for changes to be implemented in April 2007) or Friday 5 January 2007 (for changes after 2009).
See Renewable cat out of bag | viewpoint: Franck for a comment on aspects of the long-term reform proposals.
For further information or advice please contact Franck Latrémolière.
Filed under DTI, Electricity, State aid.
