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Renewable energy to bring £25bn of investment into uk economy - Davey

Press Notice 2012/086

July 2012

The support we’re setting out today will unlock investment decisions, help ensure that rapid growth in renewable energy continues and shows the key role of renewables for our energy security.

(Edward Davey, Secretary of State)

Changes to subsidies for renewable electricity could incentivise between £20 billion and £25 billion of new investment in the economy between 2013 and 2017. The Banding Review for the Renewables Obligation will support jobs and deliver more clean power with a reduction in costs to consumers between 2013 and 2015, Ministers said.

Bandings were today set for renewable technologies under the Renewables Obligation – the Government’s main mechanism for supporting large-scale renewables – for the period 2013-17 (2014-17 for offshore wind). This comes ahead of the Government's Global Investment Conference and series of 17 business summits taking place at the British Business Embassy at Lancaster House during the upcoming Games, which aim to secure further investment into the UK.

Edward Davey, Secretary of State for Energy and Climate Change, said:

“Renewable energy will create a multi-billion pound boom for the British economy, driving growth and supporting jobs across the country.”

“The support we’re setting out today will unlock investment decisions, help ensure that rapid growth in renewable energy continues and shows the key role of renewables for our energy security.”

“Because value for money is vital, we will bring forward more renewable electricity while reducing the impact on consumer bills between 2013 and 2015, saving £6 off household energy bills next year and £5 the year after.”

The Banding Review sets out that:

  • Support for onshore wind from 2013-17 will be reduced by 10% to 0.9ROCs, as consulted on in Autumn 2011. This level is guaranteed until at least 2014 but could change after then if there is a significant change in generation costs. A call for evidence on onshore wind industry costs will be launched this Autumn and report in early 2013. If the findings identify a significant change, the Government will initiate an immediate review of ROC levels with any new support arrangements taking effect from April 2014, with grandfathering and grace periods for projects already committed. The call for evidence will also consider how local communities can have more of a say over, and receive greater economic benefit from, hosting onshore windfarms;
  • Rates of support for offshore wind will reduce as the cost of the technology comes down during the decade;
  • Support levels for certain marine energy technologies will more than double from 2ROCs to 5ROCs per MWh, subject to a 30MW limit per generating station;
  • There will be a new band to support existing coal plant converting to sustainable biomass fuels. This will increase the amount of renewable energy produced at less cost to consumers; and
  • There will be no immediate reduction in support for large-scale solar, but there will be a further consultation this year on reduced support levels given recent dramatic falls in costs.

By 2017, this package could deliver as much as 79 TWh of renewable electricity per annum in the UK - nearly three-quarters (74%) of the way towards the 108TWh of electricity needed to meet the UK’s 2020 renewable energy target.

These proposals are expected to bring forward 11 TWh more renewable energy in 2016/17 than current bandings, and stimulate between £20bn and £25bn of new investment. The proposals also provide industry with the certainty needed to make near-term investment decisions.

Gas

Alongside its plans for renewables the Government is also committed to ensuring that the UK is an attractive location for gas investors.

The Government will set out its gas strategy in the Autumn, and is today confirming that it sees gas continuing to play an important part in the energy mix well into and beyond 2030, while meeting our carbon budgets. Through the 2020s, and beyond if gas proves cheap, we expect it to continue to play a key role ensuring that we have sufficient capacity both to meet everyday demand and complementing an increasing amount of relatively intermittent and inflexible generation. We do not expect the role of gas to be restricted to providing back up to renewables, and in the longer term we see an important role for gas with CCS.

This role will be supported by making best use of UK energy resources and the Government is also today announcing the introduction of a £500m field allowance for large shallow water gas fields, to secure investment in marginal gas fields in the UK Continental Shelf.

The gas generation strategy will set out in more detail how the Government, whilst meeting its broad decarbonisation objectives will ensure investment in gas generation plant and how it will fulfil its commitment to ensure that if gas prices fall UK families and businesses will be able to benefit from lower bills.

Notes for editors:

  1. Documents relating to the Government Response on the Renewables Obligation are available in the Consultation section of the DECC website
  2. DECC’s latest renewable energy jobs and investment map, broken down by region is available in the Renewables section of the DECC website 
  3. As part of 17 Global Business Summits which will take place at the British Business Embassy during the Games, an Energy Summit will take place on 6 and 7 August. Speakers include Energy Secretary Edward Davey, Sam Laidlaw, CEO, Centrica, Steve Holliday, CEO, National Grid PLC, Maria McCaffery, CEO, Renewable UK, Samir Brikho, CEO, AMEC plc and Bob Dudley, CEO, BP.
    The series of summits will be the largest set of trade and investment events ever held in this country with over 3,000 business leaders, policy-makers and ministers from around the world attending including half the companies in the FTSE 100. More information can be found on the UKTI website
  4. Bill impacts of current bandings and 2013-17 bandings:
Absolute contribution to average household electricity bills of RO support costs under current bands and the revised bands
£2011 prices 2013/14 2014/15 2015/16 2016/17
Current bands 44 47 49 50
Revised bands 38 42 50 53
Difference between revised and current bands -6 -5 1 3

(Using household electricity demand before the impact of other policies) 

5. Bandings for all technologies:

Table 1 - Bandings under the Renewables Obligation

Renewable electricity technologies Current support (2012-2013) ROCs per MWh[1]
Post-consultation decisions
Level of support (ROCs per MWh)

Comment and other changes

Advanced gasification  2 2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17
 
One ACT band supporting ‘standard’ and ‘advanced’ ACTs at the same ROC level
Advanced pyrolysis 
Anaerobic digestion 2 2 in 2013.14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17 Closure of band to new projects at or below 5 MW from 1 April 2013, subject to consultation
Biomass conversion No current band but 1.5 ROCs under current banding arrangements  1 New band. Unit by unit approach. No energy crops uplift. Change to definition of relevant fossil fuel generating station.
Biomass conversion with CHP No current band but 2 ROCs under current banding arrangements 1.5 in 2013/14 and 2014/15 New band. Unit by unit approach. No energy crops uplift. Change to the definition of relevant fossil fuel generating station. Close band to new accreditations from 1 April 2015.
Co-firing of biomass (standard) 0.5 Solid and gaseous biomass (less than 50% biomass co-fired in a unit): 0.3 (proposed) in 2013/14 and 2014/15; 0.5 from 2015/16. Unit by unit approach. ROC levels in 2013/14 and 2014/15 subject to further consultation.
Bioliquids (less than 100% biomass co-fired in a unit): 0.3 (proposed) in 2013/14 and 2014/15; 0.5 from 2015/16.
Co-firing of biomass (enhanced) No current band but 0.5 ROCs under current banding arrangements Mid-range co-firing (50-less than 85%): 0.6 New band. Unit by unit approach. Excludes bioliquids (other than energy crops). Cost control mechanism to be introduced, subject to consultation
High-range co-firing (85-less than 100%): 0.7 in 2013/14; 0.9 from 2014/15
Co-firing of biomass with CHP (standard) 1 0.5 ROC uplift in addition to prevailing ROC support available to new accredit-ations until 31 March 2015 Unit by unit approach. Close band to new accreditations from 1 April 2015.
Co-firing of biomass with CHP (enhanced) No current band but 1 ROC/MWh under current banding arrangements 0.5 ROC uplift in addition to prevailing ROC support available to new accredit-ations until 31 March 2015 New band. Unit by unit approach. Close band to new accreditations from 1 April 2015.
Co-firing of energy crops (standard) 1 0.5 ROC uplift in addition to prevailing ROC support for co-firing of biomass (standard). No uplift available for mid-range or high-range co-firing. Band to be closed, subject to consult-ation. Unit by unit approach. Changes to definition of energy crops.
Co-firing of energy crops with CHP (standard) 1.5 0.5 ROC uplift in addition to prevailing ROC support for co-firing of energy crops (standard). Band not available for mid-range or high-range co-firing. Band to be closed, subject to consultation
Unit by unit approach.
Changes to the definition of energy crops. Close band to new accreditations from 1 April 2015.
 
Dedicated biomass 1.5 1.5 until 31 March 2016; 1.4 from 1 April 2016 Introduction of a supplier cap, subject to consultation
Dedicated biomass with CHP 2 2 in 2013/14 and 2014/15 Changes proposed to add fossil derived bioliquids, to exclude biomass conversion and to close this band to new accreditations from 1 April 2015
Dedicated energy crops 2 2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17 Changes to the definition of energy crops
Dedicated energy crops with CHP 2 2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17 Changes to the definition of energy crops.
Energy from waste with CHP 1  1 Decision to retain support at current level following consultation
Geothermal 2 2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17  
Geopressure 1  1  
Hydro-electricity  1  0.7 Closure of band to new projects at or below 5 MW, from 1 April 2013, subject to consultation.
Landfill gas   0.25 0 for open landfill sites New bands for closed landfill sites and Waste Heat to Power.
0.2 for closed sites
0.1 for new Waste Heat to Power band at open and closed sites.
Microgeneration 2 2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17  
Offshore wind 2 in 2013/14; 1.5 from 2014/15 onwards 2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17  
 Onshore wind 1 0.9 Closure of band to new projects at or below 5 MW, from 1 April 2013, subject to consultation
Sewage gas 0.5 0.5
Solar photovoltaic  2 Banding proposals subject to re-consultation. Closure of band to new projects at or below 5 MW, from 1 April 2013, subject to consultation.
Tidal impoundment (range) – tidal barrage (<1GW)
2
2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17  
Tidal impoundment (range) – tidal lagoon (<1GW)
Tidal stream 2 5  up to a 30 MW project cap. 2 above the cap.  
Wave
Standard gasification  
2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17
One ACT band supporting ‘standard’ and ‘advanced’ ACTs at the same ROC level 
Standard pyrolysis 

 

 

1.Different levels of support may apply to certain types of generating station accredited before 1 April 2009. The default rate of 1 ROC/MWh applies to eligible generation that does not fall within any other banding provision.

 

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