MARKETS I UK
that these technologies are already more competitive. Less established technologies, such as offshore wind and marine, will share in up to £235 million, demonstrating the Government’s commitment to helping these technologies become as competitive as the more established low carbon generation sources.
The projected spend of the budget remains within the Levy Control Framework, which caps the costs to consumers of Government energy policies.
Energy Secretary Ed Davey said at the CfD launch, “We are transforming the UK’s energy sector, dealing with a legacy of underinvestment to build a new generation of clean, secure power supplies that reduce our reliance on volatile foreign markets.
“Average annual investment in renewables has doubled since 2010 – with a record breaking £8 billion worth in 2013. By making projects compete for support, we’re making sure that consumers get the best possible deal as well as a secure and clean power sector.”
The budgets for next year’s auction will be confirmed in 2015, but £50 million more has already been indicated for established technologies, with significant further funding potentially available to fund further projects, including Carbon Capture and Storage, by 2020-21.
Davey’s excitement is not shared by the renewable energy industry with Renewable Energy Association (REA) Chief Executive Dr Nina Skorupska stating, “What should really worry consumers and Ministers alike is that the main CfD scheme doesn’t work for many technologies, doesn’t deliver value for money and doesn’t help new entrants enter the market.
“The CfD allocation process is still too risky and complicated for most of the renewable energy independents and SMEs that are trying to break into the UK’s consolidated energy market. Biomass developers in particular are struggling with flawed rules on implementing combined heat and power, whilst solar companies now cannot fall back on the existing Renewables Obligation.
“In both the short term and the long term, Ministers have failed to deliver value for money. In the short term, the cheaper, more established technologies have been given
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www.solar-international.net I Issue V 2014
less than a quarter of the available budget in the first round. In the longer term, the younger, less established technologies will struggle to achieve cost reductions without measures to ensure they can access the market.”
The REA has been urging the Government to implement different financing measures for several months, but Ministers have not listened, so they are now encouraging political parties seeking a renewable future to commit to long term reforms in their manifestos.
Budget changes
The Government is able to increase the CfD budget because the latest estimates of the overall costs of other policies, in particular the Renewables Obligation (RO), are lower than expected. This was a surprise to many in the solar industry as it was the reason given for cutting short the RO programme.
The Government has stated some money has also been held back to manage the risk of overspending from other policies and for future auctions. This further indicates the difficulty in providing accurate assessments for future costs.
The Government also confirmed that the Renewables Obligation will close to new large-scale solar above 5MW from 1 April 2015. There will be a grace period to protect projects that had made significant financial commitments by 13 May, when the consultation on the change began. They intend to consult on an additional grace period to protect projects on track to commission before 1 April 2015 against the risk of missing the RO closure date due to delays in getting connected to the grid.
After consulting the industry, the eligibility criteria have been amended so that they are better aligned with the practicalities of solar project development processes. The Government is also changing the way it supports rooftop-mounted solar power, in line with the Solar Strategy. This includes changes to the Feed-in Tariff
Scheme (FiTs), with a new degression band for solar installations over 50KW, which will help to protect existing levels of financial support for this type of rooftop-mounted solar, as well as consulting on changes that would enable businesses and other organisations to take their panels and FiTs with them when they move premises.
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