On 25 July 2012, the UK Government (through the DECC – the Department of Energy and Climate Change) published its long awaited response to its October 2011 to January 2012 consultation on future levels of banded support under the UK Renewables Obligation (RO).
The RO is currently the main UK mechanism aimed at giving developers of more expensive renewable generation technologies grid parity with fossil-fired generation. Under the RO, renewables developers receive a subsidy per megawatt hour of electricity generated. This comes in the form of certificates (ROCs) that can be sold to electricity suppliers, who are obligated by law to supply a certain minimum level of green power in the UK market. ROCs are currently traded at about £45 each. Although current plans are for the RO system to be closed for new entrants in 2017, with a Feed In Tariff Contract for Difference approach to apply subsequently, projects already subject to the RO system are to be “grandfathered”; therefore, the levels of RO support will remain critical for the lifetime of those projects accredited to the scheme before it closes.
The report contains much that was expected based on last year’s consultation proposals, but also contains some surprises, particularly in respect of future levels of support for onshore wind projects after April 2014 and for all projects under 5MW after April 2013.
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