Despite improvements to the Energy Bill, the proposals could still make it virtually impossible for community groups to set up renewable energy projects and could hand the ‘Big Six’ electricity suppliers even more control over electricity markets than they have at present. That is what Friends of the Earth are saying alongside a new report just published (written by myself). The Government has spurned pressures to establish a simple system, used in Germany, of ‘fixed’ feed-in tariffs that would give an even playing field to community based renewable projects as well as multinational corporations.
The Government’s proposals mean that full access to incentives for renewable energy may be only available for very big power companies that can directly trade on electricity markets. ‘It would be very complex and difficult for companies like us and community renewable schemes in general to sell power directly onto the market’, said Annette Heslop who is Director of the community wind company Energy4All. The company has a dozen operational or planned projects based on community ownership. They have been working to establish projects under the current ‘Renewables Obligation’ (RO) programme. But the RO will be phased out after 2014 and replaced with a complex ‘contracts for difference’ (CfD) system that many critics argue has been chosen because this system makes it difficult to work out how much subsidies will be earned by nuclear power. Companies can only access the CfDs if they are able to trade directly on power markets, something which requires many millions of pounds start up capital, regular payment of large fees and a trading desk needing staff.
Cooperatives UK says that: ‘With the end of the Renewables Obligation, suppliers will have no incentive to purchase renewable electricity from independent generators’. There are fears that without an obligation, and without serious competition from independent generators, even the Government’s modest plans for renewable generation will not be met.
Following pressure from independent companies the Government have included a clause in the Energy Bill that would give the Government power to make electricity suppliers offer contracts to supply electricity, called ‘power purchase agreements’ (PPAs), to independents. However in practice, when long term PPAs are issued to independents, the electricity suppliers often keep a large share of the market value of the renewable generation. ‘The (long term) PPA is likely to generate a lot less income than would be gained on the short-term power markets’ says Annette Heslop of Energy4All.
Critics argue that the proposed ‘contracts for difference’ (CfD) proposals will allow the Big Six to use the complexity to make extra profits from renewable energy compared to a ‘Fixed’ Feed in tariff system that would be fairer to independents. An independent report published by Cambridge University Professor David Newbery estimated that by 2020 the CfD system is likely to cost £70 million a year more for onshore windfarms alone compared to a ‘Fixed’ Feed in tariff system.
Friends of the Earth has just published my report giving the details of how a 'Fixed' Feed-in Tariff is a far better solution that the 'contracts for difference' proposals. It is called 'A Proven Solution - How to Grow Renewables with a Fixed Feed-in Tariff'. See http://www.foe.co.uk/resource/briefings/david_toke_fits.pdf
Come to the 'Feeding Renewables' Conference on January 18th!
I have been the prime mover in organising a Conference together with the support of the University of Birmingham (and also the collaboration of the Claverton Group of Energy Experts) to discuss what policies are necessary for an effective UK renewable energy programme. This is taking place at Lucas House at the University of Birmingham on Friday January 18th. As can be seen a number of leading speakers and experts on renewable energy are taking part. Although registration fees are payable for corporate delegates, free place are available for individuals upon application to me, at the email address email@example.com. See below for details of the Conference.
This Conference will focus on policies needed to underpin a feed-in tariff system for funding renewable energy and also the sort of policy environment that is needed to ensure maximised expansion of renewable energy. The event coincides with the passage through Parliament of the Energy Bill implementing Electricity Market Reform (EMR) which is concerned with giving priority to a low-carbon electricity strategy. A mixture of expert speakers and participants from industry, government, environmental NGOs, and academia will discuss the details of the issues and options. Attendance fees will be £200 corporate, £50 individual and non-profit groups –free to speakers of course. Booking should be done through the online shop at; http://shop.bham.ac.uk/browse/extra_info.asp?compid=1&modid=2&prodid=546&deptid=17&catid=20
The Conference will be held in the Edgbaston Room,
Lucas House, University of Birmingham, 48 Edgbaston Park Road, Birmingham, B15 2RA, http://www.venuebirmingham.com/venue/edgbaston-room
Note each individual speaker session (apart from the panel session) will comprise a talk for 20 minutes with 10 minutes for discussion