This consultation seeks views on two mechanisms to provide financial incentives for the generation of low-carbon and renewable electricity; the renewables obligation (RO) and feed-in tariffs (FITs).
The RO is currently the main financial support scheme for renewable electricity in the UK. In order to ensure that the RO stimulates deployment of new renewable generation to the extent needed to meet our 2020 target for renewable energy, we plan to make certain changes to the RO by means of the next Renewables Obligation Order (ROO) which will come into effect on 1 April 2010. In summary, these are:
- Extension of the life-time of the RO to at least 2037;
- Introduction of a 20 year limit on support under the RO;
- Removal of the 20 Renewable Obligation Certificate (ROC)/100MWh limit in the RO;
- Retention of the existing fixed targets until 2015/16, with a headroom only mechanism after that date;
- An increase in the level of headroom from 8% to 10%; and
- Opening up the RO to include renewable generation outside the UK that meets specific criteria to help meet our EU target in the most cost effective way.
We are also consulting on whether to introduce, at a later date, a mechanism to reduce or remove the risk of fluctuations in the wholesale price of power (and possibly the ROC price).
The 2008 Energy Act contains powers for the introduction of FITs in Great Britain to incentivise renewable electricity installations up to a maximum capacity of 5 MW. We intend to implement FITs by April 2010 and this consultation sets out how we intend the FITs scheme to work, including the proposed tariff levels. These proposals have been developed with input from our stakeholders - energy industry trade associations, energy suppliers, Ofgem and NGOs - and this consultation constitutes a more formal opportunity for all interested parties to have their say on the details of the FITs mechanism.
Elements of the consultation include:
- Scheme design;
- Tariff setting;
- Eligibility;
- Supplier Issues; and
- Reviews.
There is also a section within the consultation that covers aspects that overlap between these two incentives and other policies relating to small-scale renewable electricity.
As with the changes to the RO, these proposals are contingent on obtaining State Aid approval from the European Commission and parliamentary approval.
Please note that in section 3.94 of the consultation document as originally published, we stated that tariffs will be paid for 20 years for new projects. This is inconsistent with the tariff lifetime assumptions elsewhere in the FITs analysis.
We have therefore corrected, through the addition of a footnote, the text of the documents below to reflect that the tariff lifetime for PV projects is proposed at 25 years.
The deadline for responses to this consultation is 15 October 2009. Details about submitting a response, including the relevant e-mail and postal addresses, can be found in the ‘How to Respond’ section of the consultation document.
The links below include documents related to this consultation: impact assessments for FITs and the RO and reports prepared during the development of our proposals.
Final draft of 2010 amendments to Renewables Obligation Order
Please find below a final revised draft of the Renewables Obligation Order 2009 showing amendments in track changes following publication of the Government Response on 11 December 2009.
Please note the Consultation on Renewable Electricity Financial Incentives closed on 15 October 2009. The Government Response, below, sets out our decisions in relation to the Renewables Obligation; a second Response will be published early in the New Year detailing decisions for the Feed-In Tariffs (FITs).
This consultation seeks the views of electricity suppliers and other interested parties on the modifications we propose to make to supply licence conditions which will allow for the delivery of the FITs.
This consultation is not seeking views on the policy supporting the FITs scheme but on the key aspect of how the FITs scheme will be delivered.