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Presentation to Sustainable Energy Ireland 6 May 2003

Presentation to Sustainable Energy Ireland 6 May 2003. The Renewables Obligation. Catherine Murray Renewables Policy Department of Trade & Industry. The Basics. What is it? a legal duty on everyone with a GB electricity supply licence To do what ?

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Presentation to Sustainable Energy Ireland 6 May 2003

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  1. Presentation to Sustainable Energy Ireland 6 May 2003 The Renewables Obligation Catherine Murray Renewables Policy Department of Trade & Industry

  2. The Basics What is it? • a legal duty on everyone with a GB electricity supply licence To do what? • sell specified amounts of renewable electricity to customers in GB (or get someone else to) For how long? • every year (April-March) until 2027 How much? • 3% of (licensed) sales in 2002/3, rising to 10.4% in 2010/11 and every year from then until March 2027

  3. How Much?

  4. How Does It Work? • developers build plant • Ofgem accredits eligible generating stations • stations generate • Ofgem certifies eligible output monthly 3 months in arrears • generators sell output • market trades ROCs • suppliers produce evidence to Ofgem by 1st October

  5. What is a ROC? • represents 1 MWh of eligible renewables generation • the only evidence of supply accepted • issued by Ofgem • an entry in Ofgem electronic register • tradable with, or separately from, the electricity • traceable back to generating station and month • supplier must be registered holder of ROC to use it • suppliers can meet 25 % of Obligation from last year’s ROCs • once used cannot be revoked or re-used

  6. Eligibility • all renewable sources • and only renewable sources • except peat • but not all generating stations

  7. In: wind wave hydro tidal tidal stream solar (but need 0.5 MWh/month) geothermal landfill gas/sewage gas all biodegradables other Out: oil gas coal/coal mine methane nuclear Sources

  8. Generating Stations Exclusions • outside the UK, its territorial waters or Continental Shelf • existing large hydro (commissioned before 1st April) • commissioned before 1990 and not refurbished since • unless co-fired • or micro hydro (1.25 MW or less) • co-fired from 1st April 2011 • and from 1st April 2006 if less than 75% energy crops in the biomass • NB: suppliers can only meet 25% of obligation from co-firing in any year • fuelled by waste unless: • waste is “biomass” • or converted to fuel using “advanced conversion technology” • NB: “biomass” may be waste but must be 98% biomass

  9. The Buy-Out What is it? • a fee payable to Ofgem for each ROC a supplier is short • an alternative means of compliance with the Obligation - not a fine Price? • £ 30/MWh (ROC), indexed by RPI (£30.051p/MWh for 2003/04) What happens to the money? • recycled to suppliers in proportion to ROCs

  10. Prospective Changes? During consultation Government stated: • no plans to reduce level of Obligation – proposed constant until at least 2027 and may well increase • no plans to lower buy-out price during the life of this initial Obligation • no plans to curtail duration of Obligation Nor is there any intention to exclude any of the eligible sources Planned changes? • Mutual recognition of ROCs – GB and Northern Ireland- after Obligation introduced in Northern Ireland • EU certificates of origin for those who are not eligible NB: all changes require prior consultation before legislation is introduced Reviews? • Are reviewing technical drafting for clarity currently • Energy White Paper issued – longer term aspirational target for 2020

  11. Prospects? MW Now 2010 2020 Biomass 200 1500 4000 Wind – onshore 500 3500 5500 - offshore 3500 7500 Landfill gas 400 1000 1000 Photovoltaics 3 100 100 Small hydro 100 100 100 Others 1 50 1000 Total 1200 9750 19600

  12. How well is the Renewables Obligation working? • Working smoothly and well; well received • Strong demand for renewables electricity and ROCs • Shortage of supply – as anticipated • ROC price held up well • January 2003 auction of Scottish ROCs – £47.46/MWh • Level of planning applications • Problems – energy crops important for 10% target but much more planting of energy crops needs to take place.

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