is experiencing difficulties in nearly all technologies. It is hoped the CSR will unlock as many areas as possible, although the scope of announcements and depth of detail remains unclear. REA
represents all technologies through 10 active sector groups.
As a general principle REA
does not support a short-term narrow focus on the 'cheapest' technologies. This approach failed when applied to the Renewables Obligation (before banding) and would result in an opportunity cost to the UK as we miss out on developing promising technologies. REA
is also looking for the principle of longevity and certainty in policy support, to secure industry and investor confidence, which in turn reduces the cost of delivery.
Key policy requirements in each technology area are as below;
· Onsite Renewables
(Renewable Heat and FITs)
The sleeping giant of renewables, heat is the largest use of energy in the UK but the last to benefit from a coherent development framework. This new framework is expected to be confirmed in the CSR. REA
will be looking for support for renewable heat to;
o adopt a long-term 'tariff' model
o ensure a wide range of technologies are supported (including Deep Geothermal)
o be applicable to a wide range of investors from domestic to large industrial heat consumers.
REA will also be looking for early clarity to enable the market to start promptly, allowing business before the official start date. This is essential to safeguard SME firms in renewable heat who are already in serious difficulty after protracted policy delay.
There has been speculation the RHI could be paid for out of general taxation, at least initially.
· Biogas and Biomethane Injection into the Gas Grid
(FITs and Renewable Heat)
Biogas is expected to feature strongly given its prominence in the coalition agreement - and its role in transforming the management of problematic wastes.
Proposed support levels in the Renewable Heat consultation were too low for commercial injection of biomethane. REA
will be looking for an increase in support levels. The UK's first two pilot biomethane injection plants started this month, but further development will not roll out without adequate support.
Biogas FITs urgently need revision as Anaerobic Digestion plants using farm-derived wastes are not commercially viable at current rates. Further consultation has been commissioned but the industry was clear what was needed from the outset.
· Woodfuels and Biomass Heating
(Renewable Heat, FITs)
is confident biomass will feature strongly in the Renewable Heat proposals, given its cost-effectiveness and potential to transform UK management of much neglected forests.
Biomass needs to be included in FITs, having been surprisingly dropped last April.
· Deep Geothermal
(Grants, FITs, Renewable Heat)
is fighting for inclusion of this technology in the Renewable Heat framework - and FITs. Technology breakthroughs mean it can be used to generate heat and power all over the UK. Grant support was recently reduced - but the industry needs to graduate from grants to revenue based rewards in order to attract serious investment.
· Solar Power (PV)
(Feed in tariffs)
Negative speculation has destabilised this popular scheme just 6 months in and after years of stop-start grants. The Installation rate is on track with Decc's modest projections and there is no quantitative evidence of the market over-heating. Any attempt to revise Tariffs ahead of schedule risks undermining investors’ confidence. It could also create a 'dash for solar' as customers attempt to get in before any revision kicks in. In practice if an immediate change is announced the Government is obliged to consult and before laying the new legislation before Parliament, creating damaging uncertainty for months. REA hopes the government will stick to reducing the Tariff 9% in 2012 and reviewing it, as scheduled, in 2013.
The trajectory was slowed in 2008. Despite its concerns over sustainability, the UK is delaying implementing the sustainability standards that have already been set across Europe, so that unsustainable biofuels will continue to be rewarded in the UK, despite being outlawed elsewhere - a perverse outcome for a country that has always said it wants to lead on this issue. Government delay hurts mainly project developers in the UK, who have demonstrated consistently excellent performance over the last two years. The Government needs to set a clear trajectory to meet the legally binding 10% target set out in the Renewable Energy Directive.
· Large scale Power and Heat
Investment in large-scale biomass and energy from waste plants remains blocked, due to there now not being sufficient time to commission projects before the 2013 review. They will therefore be at risk during the construction phase and cannot obtain finance on that basis.
There is widespread concern about the new planning regime, particularly in relation to wind.
On renewable heat, the incentive needs to work for large-scale projects. Among other things, this will require:
o avoiding unnecessary complication in the treatment of biomass in general and the biomass content of waste in particular
o prompt decisions on the treatment of combined heat and power and the interactions between the Renewables Obligation and the Renewable Heat Incentive
Following rejection of the Severn Barrage any commitment to marine technologies will be welcome. Particularly in England and Wales where support levels need to be raised to match Scottish levels. FITs have been mooted as future support for this area.