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Wind: Cuts and Compromise or Clear Direction?

This morning, the DECC announced the results of the latest alteration to UK renewable energy subsidies. The Government’s Renewable Obligation Certificate (ROC) banding review was due before parliament’s summer break; however a clear divide within the coalition meant that the final announcement was delayed until today.

26th July 2012    |     Tom Warwick: Renewables Engineer, Rolton Group

The ongoing debate within Government has been primarily concerned with the scale of cuts necessary to keep incentives in line with the reduction in technology and installation costs. The green policy rift widened with Lib Dem MPs calling for a reduction consistent with that which was suggested in the August 2011 consultation. Large portions of the Conservative party called for greater reductions in tariff levels, in particular a 25% banding reduction for the onshore wind sector.

From the announcement this morning it seems clear that a compromise has been met, with onshore wind ROC banding being reduced by 10% to 0.9ROC/MWh from 2013 to, in theory, 2017. However, this figure is subject to further reductions from as early as April 2014 if the findings of a new report, starting in August, find further reduction in the sectors costs.

Wind is easily the most contentious form of renewable energy generation, so it is no surprise that the onshore wind debate has caught the attention of the mainstream media over the last week. The wind banding reduction was a relatively small portion of today’s announcement, though, with all areas of renewable energy generation being affected by the important changes laid out in the review.

Not all of these changes were reductions, and the announcement brings with it a huge boost to marine and tidal sectors. Predicted by some within the industry to remain at 2.0ROC/MWh, today’s publication sees an increase to 5.0ROC/MWh. Also, the Energy from Waste (EfW) sector has seen a number of previously proposed reductions cancelled. Reductions in offshore wind are now to be staged down from 2.0 to 1.8ROC/MWh over the next five years, rather than suffering a steep reduction to 1.5ROC/MWh in 2014/15 as was previously proposed.

Today’s announcement has been commended by the majority of sectors within the industry as "a positive economic rationality linked to improvements in technology and cost reduction." The review, announced on the same day as figures which reveal the country has officially entered a double dip recession, is predicted to create between £20-25bn of new investment in the economy by 2017.

Ed Davey, Secretary of State for Energy has commented on today’s announcement, "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... Renewable energy will create a multi-billion pound boom for the British economy, driving growth and supporting jobs across the country."

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