A new consultation sets out the Government’s proposals for levels of banded support under the Renewables Obligation for the period 2013-17 - the Department for Energy and Climate Change CC is inviting stakeholders to submit comments and evidence in response to the proposals by 12 January 2012.
The consultation proposes new support levels for large scale renewable electricity from 2013-17 (2014-17 for offshore wind) under the Renewables Obligation (RO).
Commenting on the proposals, Chris Huhne, Secretary of State for Energy and Climate Change said:
“The renewables industry can bring in billions of pounds of investment into the UK economy. Our ambitions for these technologies reflect our desire for the UK to be the number one place to invest.
“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.”
"By 2017, as a result of these proposals, we expect to see 70-75 TWh of renewable electricity in the UK. This is 70% of the way towards the 108TWh of electricity needed to meet the UK’s 2020 renewable energy target."
The proposals cover a wide range of renewable technologies – including anaerobic digestion, sewage gas, tidal and wave.
The Government is proposing to reduce support for hydro-electricity, standard pyrolysis and gasification, energy from waste with Combined Heat and Power (CHP), and landfill gas. It is also proposing to reduce support for onshore wind by 10% to 0.9ROCs/MWh, in order to reflect long term cost movements, and to deter poorly sited projects which are more expensive to develop.
Enhanced support for wave and tidal technologies
On wave and tidal stream technologies, the Government said it recognises that while these are not currently ready for commercial-scale deployment there is significant potential for them to help meet longer term decarbonisation goals. Without investment now, the opportunity to tap into the technologies cost effectively in the future would be lost. The Government is proposing support at 5 ROCs for capacity up to 30MW per generating station in order to help bring the technology into mainstream deployment.
However, support at this level would only be available for capacity that is accredited and operational before 1 April 2017.
Up till now UK Government support for wave and tidal stream technologies has mainly been in the form of grants, with over £100m of funding to date from UK Government and Devolved Administrations.
DECC’s £22m Marine Renewables Proving Fund has taken six of the leading device developers to a point where they are ready to test full-scale prototypes in the marine environment. Financial modelling carried out by DECC has shown that the first demonstration arrays (ranging in size from 5 to 10MW) will require both grant and market instrument support to generate the internal rates of return necessary to justify investment from funding partners such as utilities and large industrial organisations
Capital costs for demonstration-stage wave devices are estimated to be in the range of £3.9m and £5.6m/MW, whilst the capital costs for demonstration-stage tidal stream (shallow) devices range between £3.0m and £4.6m/MW41. However, costs are expected to reduce dramatically as the first deployments of arrays come forward,
In-house DECC analysis of marine projects currently in the pipeline suggests that up to 160MW of wave and tidal generation could be deployed by 2017, before considering non-financial barriers to deployment that could reduce deployment potential.
The Government said that deployment of around 50-150MW during the banding period should enable developers to demonstrate viability of the technology at commercial scale, paving the way for cost reduction which will allow them to compete with other low carbon technologies in the future.
UK marine energy industry could be worth £6.1bn p.a. by 2035
Marine energy is identified in the UK Renewable Energy Roadmap as one of the technologies which have “either the greatest potential to help the UK meet the 2020 renewables target in a cost effective and sustainable way, or offer great potential for the decades that follow”.
The consultation paper states:
"As one of the few renewable energy technologies which offer the potential for new bulk electricity generation in the period beyond 2020, the Government considers it worthwhile to maintain investment in marine energy as a ‘hedge’ against under-performance of other forms of generation out to 2050."
In the Government’s view the UK’s global lead in wave and tidal stream technology development provide a unique opportunity to develop an indigenous industry which has the potential to secure significant inward investment, drive an export market and create economic growth.
Recent figures published by RenewableUK suggest that by 2035 the marine energy industry in the UK could employ 19,500 people, bring an annual value of £6.1bn and support a UK share of the UK domestic market of 71% and a global export market share of 14%.
Marine developer welcomes proposals
Andrew Tyler of MCT, the developer of the world’s only operational full-scale commercial tidal current turbine, has welcomed the proposals. He said:
“We welcome the Government’s decision to offer the marine industry the level of support that it has committed to in today’s announcement, which comes at a crucial time for the sector. Investors need a clear signal that they will see a return on their investments, which 5 ROCs provides. This decision will ensure that the marine energy industry can begin to move towards commercial scale exploitation and that the UK can retain its position as a global leader."
"Presently, there are a number of technologies that are entering their development phase and they all need a large amount of new capital investment to take these projects to the commercial stage. MCT have already completed the development stage. Indeed, our SeaGen-S technology has been successfully delivering electricity to the grid since 2008 (in Strangford Lough, Northern Ireland).
"To date the 1.2MW device has delivered close to 3GWh and is ready for commercial deployment. Today’s statement is a very positive step in our ambitions for us to roll out our tidal technologies in the UK and to see a marine industry take hold in the UK.”
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