Action Needed to Restore & Accelerate Renewables Growth

REA below sets out the key actions necessary to ensure the UK meets its binding EU target of 15% renewable energy by 2020.  The UK has recently scored :-( for renewable electricity and :-I for renewable transport in the European Commission's report on progress.  Nearly half of EU countries are set to exceed their 2020 targets. 

There is concern about the current pace of deployment across the renewables industry, with major changes to the planning system and proposals for fundamental and complex reform of the UK electricity market.  Renewable heat has recently been given a major boost with the announcement that the RHI will start in July.  However the UK's emerging solar PV industry is still reeling from DECC efforts to constrain the sector’s growth to fit a Treasury-imposed cap.  The proposals impact on all but the smallest solar schemes and have created instability across the solar industry, leading to redundancies and loss of confidence.

Key actions to secure renewables growth;
  • The current review of the banding levels for the Renewables Obligation is critical to bringing forward more diversity in renewable power technologies.  In England and Wales, the upper limit is 2 ROCs per MWh, which is not sufficient for wave and tidal energy and deep geothermal.  The RO could also be used for the largest Solar PV projects, if the Feed-In Tariff regime is too constrained, but more than 2 ROCs/MWh would be required.
  • The FIT 'cap' should be lifted and a more ambitious approach taken to decentralised renewables consistent with the Coalition Government's objective of supporting community scale schemes.
  • It is essential that a wider range of sites are used for renewables projects.  Factories and warehouses, for example, need straightforward financial incentives, such as a simple feed in tariff. The owners of these sites are not specialist project developers.  If the Electricity Market Reform results in complex arrangements, these entities will not engage with renewables.
  • Higher Carbon Saving biofuels should driven by the Fuel Quality Directive and unsustainable imports of biofuels should be banned.  This will result in a better market share for UK-produced biofuels, which are top performers in carbon and sustainability terms.

In addition there are systematic failures in assessing the economic value of investment in renewables that REA wants to see addressed as soon as possible.

  • Full appraisal and quantification is needed of the benefits of renewable energy policies.  Currently cost/benefit analyses focus almost exclusively on direct costs, and do not seek to evaluate benefits such as employment, economic value creation, tax revenue, energy security and other direct economic benefits of investment.
  • Realistic assessment of conventional energy prices going forwards is essential. DECC's mid-range energy cost projections are routinely used in modelling and as the basis for policy-making but these projections grossly underestimate the future likely price of oil.  The result is that the value of investing in alternatives is systematically misrepresented.

Gaynor Hartnell said;

"The solar experience has been sobering and has exposed worrying failures in our approach to new technologies and green growth. The full economic value of investment is not being routinely analysed and estimates of future energy prices are always too low.  It’s in the UK’s interest to bring forward a diverse array of renewable technologies, even if they are initially more expensive or more risky.  We must have a stake in a massive global market and protect our economy and householders from the increasingly volatility of fossil fuels."

The REA is also supportive of an innovative Green Investment Bank targeted at the renewables sector.  The bank should be complementary to, and not a substitute for public support or private finance.  REA wants to see consistency in the approach to energy generation technologies.

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