Subsidies for tidal-stream energy technologies are to double as a result of the Renewables Obligation banding review but support for onshore wind-power projects has been cut by 10%. And critics say the subsidies offered to geothermal installations will not be enough to get the industry off the ground.
Under the Renewables Obligation, green certificates are awarded to suppliers of renewable energy. These can be sold to companies that purchase energy, to help them meet government targets for renewable power.
Tidal-stream installations that generate less than 30MW will receive five certificates for every megawatt-hour of energy produced, up from two certificates previously. Tidal impoundment installations will remain at two certificates until 2015 and fall 10% each year after that until 2017.
Subsidies for geothermal installations will remain at two certificates until 2015 and then drop by 0.1 of a certificate each year to 2017. But the Renewable Energy Association (REA) said the level of subsidy left the geothermal industry with little prospect for development.
Dr Ryan Law, chairman of the REA’s deep geothermal group, said that he was “shocked” at the announcement. “We should be at the forefront of this industry, given the strength of British engineering skills. If the UK wants to seize a share of the booming global market for geothermal development we must prove our competence at home. The message the announcement sends to the outside world is that the UK is closed for geothermal business.”
Germany has similar sub-surface temperatures to the UK and is building 150 geothermal heat-and-power plants in an investment of €4 billion that could create 9,000 jobs. Law said: “We are now watching from the sidelines while other countries forge ahead in a global market estimated to be worth $40 billion by 2020.”
Under the new bandings, onshore wind installations will now be entitled to 0.9 of a certificate for each megawatt-hour, down from one certificate previously. This level of support is guaranteed until 2014 but is subject to change after that if the cost of generating alters. Offshore wind will remain at two certificates until 2015, after which it will drop by 0.1 of a certificate each year to 2017. The banding review outlines no immediate cut for large-scale solar power projects, but as a result of “dramatic” falls in costs the level of future subsidies will be subject to further consultation later this year.
The Department of Energy and Climate Change said that the changes would bring forward 11TWh more renewable energy by 2017 than the previous banding system. It added that the new values will stimulate £20 billion to £25 billion of investment.
Roger Salomone, head of business environment at manufacturers’ organisation the EEF, said: “While it is welcome that the government has made a decision on renewables, the wrangling over subsidy levels for different technologies highlights the need for a more sensible approach to energy policy. The government needs to move to a technology-neutral approach as soon as possible to keep costs down and avoid these destabilising debates in the future.”
The energy department recently released updated feed-in tariffs for anaerobic digestion, wind and micro combined-heat-and-power technologies after a six-month consultation. Leonie Greene, head of external affairs at the REA, said: “We are not happy with the ambition levels on anaerobic digestion. The coalition document committed to a massive increase in energy from anaerobic digestion.” Subsidies for anaerobic digestion have remained stable.
The feed-in tariffs (FITs) scheme pays people for the electricity they generate from small-scale renewables installed in homes, schools and businesses. The new tariffs will take effect from December this year.
Subsidies for wind have been cut across all sizes of installation but subsidies for micro combined-heat-and-power plants have increased. Across all sectors, FITs will decrease over time from April 2014 as take-up of the technologies increases and costs fall.
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