22 October 2008

UK Renewable Energy Strategy

ESA has responded to two Government consultations on the UK’s Renewable Energy Strategy and the Renewables Obligation (RO).

On the former, ESA called on the Government to focus on providing a stable and transparent investment framework for renewable energy projects and said that lessons should be learned from the experience of the RO and applied to the introduction of new policy instruments, such as for those proposed for renewable heat.

ESA noted that waste has the potential to provide a more reliable electricity base load than other more intermittent renewable generation technologies, which is clearly signalled by the fact that the waste sector remains the largest generator of renewable electricity in the UK.

ESA also recognised that the full exploitation of energy recovery opportunities from the waste stream would also enable the Government to exploit the potential synergies between energy and waste policies.

The introduction of an appropriate incentive structure for the development of energy from waste infrastructure could help the Government to meet both its renewable energy and landfill diversion targets.

ESA said it would support the introduction of an incentive for heat similar in concept to a feed in tariff for electricity as this would help to provide greater price certainty to investors and that this would be preferable to trying to incentivise heat generation through the RO.

Responding to the consultation on the Renewables Obligation, ESA stated that the RO should provide a stable and transparent investment framework for renewable electricity projects. ESA recognised that the grandfathering proposals now put forward by the Government sought to protect existing investments.

This was crucial for the ongoing viability of the RO and explicit recognition of the grandfathering principle, coupled with the introduction of practical transitional arrangements, was a positive move.

ESA also welcomed the recognition that an overall efficiency criterion of 70% was not practically achievable for renewable projects but was concerned about the ongoing use of the GQCHP index for establishing the ROC eligibility for waste-fired CHP projects.

ESA argued again that a new overall 35% efficiency criterion should be adopted as an alternative rather than complementary criterion to the GQCHP index for establishing ROC eligibility and that it would welcome the Government’s efforts to introduce a scheme that would directly incentivise heat production.