The Government’s RO banding consultation launched today setting out a proposed support levels for medium and large-scale renewable electricity until 2017.Gaynor Hartnell responded on behalf of the REA’s ‘Back Biomass Campaign’, saying:

“On first review, we welcome the realistic stance that the Government has taken to support the biomass sector in this country by maintaining the banding for dedicated biomass at least up to April 2016 at 1.5 ROCs/MWh though we would question whether the reduction in ROCs for 2016-2017 will incentivise earlier production or simply insert a extra element of risk for producers.

The Government made clear in its Renewables Roadmap that it sees a leading role for biomass in providing the UK with clean, affordable energy over the next decade. Biomass is a unique low carbon technology: predictable, controllable and able to provide sustainable energy at competitive cost. It is also a proven, practical way of strengthening our energy security and reducing carbon emissions.

In particular we are pleased to see the pragmatic view the Government has taken in recognising the role of co-firing and conversion of existing plants to biomass. Around a quarter of our generating capacity will close over the next decade and there is an urgent need to bridge a gap in the energy mix. We hope that new build and co-firing of biomass, and ultimately full conversion of plants to biomass, will play an important part in achieving this.

In addition, the Government’s extension of the ‘uplift’ for CHP to 2015 is welcome but given the reliance on the RHI thereafter and the levels of uncertainty about the RHI it is important the Government looks carefully at this over the course of the consultation.   Combined Heat and Power (CHP) can make a key contribution to the UK’s renewable energy and heat targets. Integrating the production of usable heat and power (in the form of electricity) into a single, highly efficient process also offers a viable solution to decarbonising some core industrial sectors without jeopardising Britain’s competitiveness.

Throughout the recession, the renewable power sector has bucked the trends, continuing to create jobs and wider economic benefits for the UK at a time of real need.

Today’s consultation announcement is an important step in the right direction for investors looking for signals from Government that the time has come to ramp up operations and deliver the injection of skills, jobs and growth our economy urgently needs.  But it needs to lead to firm, timely conclusions so that developers can feel confident in making final decisions on projects in the very near future. We look forward to continuing to work with the Government to ensure that sustainable biomass power and CHP realises its full potential as a key part of the UK energy mix.”

For enquiries, please contact:
Paul Thompson (REA): ; +44 (0)20 7925 3580; +44 (0)7980 264580
Jessica Lennard (Edelman): ; +44 (0)20 3047 2204; +44(0)778602 5652
Peter Bellini (Edelman): ; +44 (0)20 3047 2159; +44 (0)7980 703 619  


Notes to Editor

Back Biomass Campaign

The REA represents over 900 companies in the UK renewable energy sector. The organisation has recently launched the ‘Back Biomass’ campaign to deliver a clear message to Government on the many benefits of biomass  power and CHP.

Biomass

Biomass is uniquely well placed to help fill the UK’s looming “energy gap” as fossil fuel power plants are gradually phased out over the coming years. As the only renewable, low carbon energy source currently capable of both baseload and peaking generation, it is able to support more low carbon generation coming onto the grid, as well as delivering controllable, predictable low carbon energy.

A balanced energy mix, drawing on all low carbon forms of generation is essential in order to meet the UK’s long term energy needs.  No one technology can provide a ‘silver bullet’ solution on its own. However, the Government’s Electricity Market Reform White Paper and ‘Renewables Roadmap’, as well as reports by the IEA, AEA and IPCC all advocate a significant role for biomass in the UK’s future energy mix.

• Biomass heat and power offers a superb cost and resource efficient solution for energy users. Due to comparatively low capital and operating costs, this flexible, proven, low carbon energy source can help deliver carbon savings cost effectively for the UK taxpayer.

Renewables Obligation for Biomass

Previously the situation for biomass was:

-          Biomass power technologies earned 1.5ROCs/MWh plus a ‘CHP uplift’[1].

 

Renewables Obligation

The RO is a means of incentivising renewable electricity projects in the UK. The RO places an obligation on licensed electricity suppliers in the UK to source an increasing proportion of electricity from renewable sources. Energy providers meet this obligation by presenting Renewables Obligation Certificates (ROCs). Where suppliers do not have sufficient ROCs to cover their obligation, they are required to make a payment into a buy-out fund.

Renewable Obligation Banding

The RO Banding system entitles different renewable technologies to varying levels and values of ROCs. The aim is to send a signal to the market to attract extra investment into emerging technologies (such as biomass) enabling them eventually to scale up and bring down costs long-term.   Banding was introduced in 2009. The current review is the first, and will set levels of support that will apply 2013-17. 

Renewable Energy Roadmap:

The UK Renewable Energy Roadmap, published by DECC alongside the EMR White Paper, outlines a plan of action to accelerate renewable energy deployment  to meet the target of 15% of all energy by 2020 while driving down costs.

 

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[1] CHP uplift: The Renewables Obligation also currently supports the production of renewable heat by some technologies, paying a higher level for electricity generated as part of a sufficiently good quality combined heat and power (CHP) system (the ‘CHP uplift’). The Government has previously proposed to withdraw the CHP uplift from April 2013. The Renewable Heat Incentive (RHI) will be the primary mechanism to incentivise renewable heat from September 2011 onwards. However it is unclear whether this new mechanism will have sufficient funding to give renewable CHP the support it needs to mobilise.