20 Dec 2012, 11:47 AM
The government has announced that it will support biomass generation more and reduce subsidies for large solar installations by less than it originally planned, hoping that its new package will unlock a wave of investment in these technologies.
In its long-awaited response to a consultation published earlier this year on the level of Renewable Obligation support for solar installations with over 5MW of capacity, the Department of Energy and Climate Change (DECC) confirmed that from next April ground-mounted systems will receive 1.6 Renewable Obligation Certificates (ROCs) per MWh, while a new band will mean building-mounted systems will received 1.7 ROCs/MWh.
The new support levels are higher than the 1.5 ROCs/MWh originally proposed by DECC, but they also fall short of the 1.8 ROCs/MWh the solar industry had argued was necessary for new projects to be deemed financially viable.
Climate Change Minister Greg Barker said detailed and independent modelling had suggested projects will be able to proceed at the new support levels.
"We listened very hard to industry and this decision marks the new partnership between the coalition and the solar industry," he said. "Confirming the level of RO support is the last piece of the jigsaw that will allow the solar industry to move into 2013 very much on the front foot."
He added that DECC appreciated the cut from the current 2 ROC/MWh level of support would be "challenging" for some projects, but argued the new level of subsidy struck the right balance between helping the industry on its journey towards delivering solar power at "grid parity" and minimising costs to the consumer.
Renewable Energy Association, REA, Head of On-site Renewables Mike Landy said:
“Government has heard the evidence provided by industry and has increased the support for large-scale solar PV compared with its consultation proposals, albeit only slightly. We welcome the decision to provide higher support for roof-mounted PV (compared with ground-mounted) and to recognise the very much larger deployment potential for ground-mounted PV than originally foreseen.
“However we do not understand the rationale for limiting large-scale PV to “slow but steady deployment” when much more could be achieved at a cost below that of the Government’s ‘marginal’ renewable technology, offshore wind. Nevertheless large-scale solar PV has now joined the UK’s Premier League of renewables and is poised to make a major contribution to our electricity supplies in the coming years. Solar PV has truly come of age.”
Under the the new plans, the level of support for both ground and building mounted solar installations will fall by 0.1 ROC/MWh for each year until 2017 when ROCs are set to be replaced by the contracts for difference scheme outlined in the Energy Bill.
Barker said he was particularly excited at the boost to large building mounted systems offered by the new RO support band.
"The new band for building mounted systems will deliver a step change for the industry, enabling installations on supermarkets, warehouses, large office buildings, and car parks," he said. "We want to see onsite generation become the norm, not the exception."
Barker also confirmed solar energy would be "embedded" in the government's imminent Renewable Energy Roadmap, which he confirmed was due for publication before the end of the year.
Alongside the new solar RO rates, the government today also published details on support for biomass, which DECC predicts could unlock investment decisions worth £600m and create around 1,000 new construction jobs.
In future, dedicated biomass installations will receive 1.5 ROCs/MWh, but only up to the point where 400MW of capacity is installed. Once the cap is reached, government will consider issuing a consultation paper on proposals to restrict further biomass deployment through the removal of grandfathering rights from any additional dedicated biomass power plants.
Support for standard co-firing of biomass and co-firing of regular bioliquids will be reduced to 0.3 ROCs/MWh in 2013/14 and 2014/15. Meanwhile, support for standard co-firing with CHP and co-firing of regular bioliquids with CHP will be reduced to 0.8 ROCs/MWh in 2013/14 and 2014/15.
Ed Davey, Energy and Climate Change Secretary, said: "Biomass will make a significant contribution as we seek to increase the amount of cost-effective, low carbon renewable power in our energy mix. The support we are setting out today will bring new investment into the economy and create new jobs."
The REA congratulated itself on its successful lobbying on the biomass issue, and also welcomed the decision that combined heat and power (CHP) projects will be permanently excluded from this monitoring process from the point of certification under the Combined Heat and Power Quality Assurance (CHPQA) programme.
REA Chief Executive Gaynor Hartnell commented: “REA has been listened to on the proposed cap on new biomass projects. Instead of implementing legislation that would have stopped investment in its tracks, DECC is taking more of a ‘wait and see’ approach, with the option of consulting if deployment exceeds 400MW. Today’s decision recognises the substantial contribution that these projects can make to delivering cost effective carbon savings and steady baseload output.”