On Tuesday, the Government issued a consultation on
certain changes it intends to make to the Renewables Obligation
(“RO”) and Renewable Energy Guarantees of Origin
(“REGOs”), as well as a response to the consultation on
grandfathering for Dedicated Biomass, Anaerobic Digestion and
Energy from Waste. We have summarised the key points
from the consultation and the response below.
Note that the closing date for the section of the
consultation relating to the RO is 19 October, while the closing
date for the section on REGOs is 7 September.
1. Changes to the
Offshore Wind: In order
to account for the longer construction periods associated with
building offshore, it is proposed to allow the operational capacity
of offshore wind generating stations to be registered in phases,
with each phase receiving 20 years’ support (subject to the
2037 end date of the RO). This should help developers, who are
otherwise faced with a dilemma about the best time to obtain RO
accreditation (with the benefit of receiving ROC income sooner at a
known banding being weighed against the disadvantage of some
turbines receiving a reduced period of support).
Sustainability criteria for biomass and
biogas: Sustainability criteria for biomass and
biogas (which is at the discretion of each member state) would be
introduced, with certain exemptions including for generating
stations with a capacity of less than 1MW and for biomass or biogas
made from waste (or consisting of waste). This will encourage
the use of waste for energy, such as manure and domestic food waste
in anaerobic digesters.
Sustainability criteria for
bioliquids: The Government has set out its proposals
for implementing the sustainability criteria for bioliquids
required by the Renewable Energy Directive.
Support for refurbishment and
replacement of existing generating stations: Views
are sought on whether to introduce additional support for existing
generating stations where there is a major refurbishment or
replacement of parts, including converting existing co-firing
generation to dedicated biomass.
Renewable heat support:
The Government proposes to offer a one-off choice between the CHP
uplift or any future renewable heat support for CHP stations
accrediting under the RO between 15 July 2009 and 31 March
2013. This would be implemented in the banding review
starting in October and therefore the Government is seeking views
to inform that review.
Mutualisation: Views are sought on
amendments to the mutualisation cap as a result of the change from
a fixed renewables obligation to a renewables obligation set by
reference to headroom. Mutualisation is the mechanism
introduced in England & Wales and Scotland to ensure investor
confidence in the RO is maintained. It requires suppliers to
make additional payments to Ofgem in the event of a shortfall in
the buy-out fund (which is most likely to arise from a supplier
becoming insolvent). Any changes are likely to result in an
increase in the potential liability of suppliers.
The consultation does not give any further
indication of what was meant by the commitment in the Coalition
Programme for Government to maintain a banded RO alongside the
implementation of a full feed-in tariff. This should become
clearer in the autumn when a consultation on electricity market
reform is expected.
2. Changes to REGOs
The changes are being proposed in order to ensure
technical compliance with the Renewable Energy Directive by
amending The Electricity (Guarantees of Origin of Electricity
Produced from Renewable Energy Sources) Regulations 2003. They
involve tweaking the definition of “renewable energy
sources”; changing the measurement unit from one KWh to one
MWh; imposing a time limit on the use of REGOs; including further
information about the energy to which they relate and changing the
circumstances in which Ofgem may refuse to recognise a REGO from
another member state.
3. Response to Consultation on
Grandfathering Policy for biomass, AD and EfW
Also on Tuesday DECC published a response to the
consultation on the grandfathering policy of support for Dedicated
Biomass, Anaerobic Digestion and Energy from Waste under the
Renewables Obligation, which closed on 28th May 2010. The
response states that DECC have decided to grandfather RO support at
the point of accreditation for Anaerobic Digestion
(“AD”) and Energy from Waste (“EfW”) with
CHP, dedicated biomass and advanced conversion technologies.
This news was welcomed by the industry as it provides a much needed
degree of certainty sought by investors and financiers.
However, bioliquids and the energy crop uplift will
not be grandfathered. Support for bioliquids will be considered in
the forthcoming RO banding review, which is due to start in Autumn
Briefly, grandfathering is a policy intention to
maintain a fixed level of support from the point of accreditation
for the lifetime of a plant’s eligibility for the
To view the consultation on DECC’s website,