The Renewables Obligation: support for large scale renewable electricity

The Renewables Obligation (RO) provides Certificates (ROCs) to qualifying renewable generators. These are saleable on the open market. Electricity suppliers are required by statute to deliver the required number of certificates to meet their obligation – a rising percentage of the amount of electricity they sell. They purchase ROCs in the market to meet this demand, but if they do not remit sufficient certificates they must pay a fine, the total of which is then returned to those who have met their targets.

Originally the RO was designed as a one size fits all policy. This favoured only onshore wind, as the cheapest technology. CLA argued that the system needed changing to make sure the countryside had a choice of technologies to meet the need for renewables. Our successful lobby efforts are described below.

The RO is now not only “banded” – offering a different rate of support to different technologies – but “grandfathered” – guaranteed not to change for any one installation after it has been registered (the rate for each new installation is set at the time and grandfathered) .

CLA has responded to the recent DECC consultation on the review of the RO and our response is available here.

Electricity Framework Reform

The Government launched a consultation on the reform of the electricity framework which was considered by the CLA’s Business and Rural Economy Committee on 19 January 2012.

At a meeting with DECC on 3 March (Richard Sargeant, Deputy Director Energy Futures), it was confirmed that Energy Market Reform will not be applied to smaller scale renewables (under  five MW) supported under the Feed-in Tariff. This is welcome news.

Members set out guiding principles to inform the CLA response. Firstly, any changes to the supporting framework should protect existing investors in renewable energy and secondly, it should be user-friendly for smaller-scale energy businesses.

The DECC consultation on Electricity Market Reform ends in March. This has major implications for the renewable power sector, and for the prospects of decentralised generation and energy efficiency. It is essential that the proposals work to maximise investment in renewable power to ensure CLA members can benefit and help the UK meet the 30 percent renewable electricity target.

The CLA will again be working with a wide coalition of like-minded organisations with the aim to secure the above objectives.

Banding the Renewables Obligation
The Energy Act 2008 bands the Renewables Obligation. This follows more than five years of consistent and strong CLA lobbying for banding.

What is banding
Banding applies different levels of support and incentives to different technologies.
Put simply, the CLA’s recommendation – accepted by the Government – is that newer, higher-cost technologies such as biogas generation, should attract more support than lower-cost, established technologies like wind power.
Banding boosts emerging technologies, enabling them to compete on an equal footing in the long-term.

How will livestock farmers profit
Livestock farmers, faced with investment challenges in the Nitrates Vulnerable Zone review, may be able to use the reformed Renewables Obligation to develop a profitable enterprise by boosting storage capacity, making money from renewable electricity sales and meeting their heat needs for dairy washings.
At the same time they can save on fertiliser bills and help improve water and air quality.

How did the CLA lobby succeed

• Responding robustly to each of the three energy reviews and to every consultation on the drafting of the Renewable Obligation,
• Making a strong response to the energy review, backed up with meetings with DTI officials,
• Carefully scrutinising the Utilities Bill and proposing specific recommendations,
• Lobbying members of Parliament across all parties, and senior civil servants,
• Convincing strong allies, such as The Royal Commission on Environmental Pollution, of our case, and providing evidence of the facts on the ground, drawing on wider European experience and,
• Setting out our reasoned analysis and recommendations for energy policy in a major report "Renewable Energy – more than wind."

The lobby timeline
2008 The Energy Act is passed, introducing banding from April 2009.
2007 The Government’s Energy White Paper is published in May 2007 confirming the Government proposal to Band the Obligation in 2010.
- It accepts the CLA’s argument for banding the Renewables Obligation stating: “banding would best deliver the Government’s aims of bringing forward emerging renewable technologies; improving the overall cost-effectiveness of the RO, and preserving investor confidence by applying changes only to new projects.”
2006 The CLA continues to campaign robustly through press and parliamentary lobbying.
2005 The CLA publishes a major report with analysis and recommendations for energy policy, including banding. Copies of "Renewable Energy – more than wind" are widely distributed in an opportunity to influence Government policy.
- A section on the CLA website is devoted to the CLA’s original policy ideas on renewable energy.
- The CLA takes its campaign for banding to major events throughout the year and responds to both the Environmental Audit Committee Inquiry and the DTI Energy Review.
2004 The CLA responds to the DTI consultation on Terms of Reference for the 2005-6 Review of the Renewables Obligation.
2003 The CLA responds to the DTI consultation on the Renewables Obligation (amendment) Order 2003, warning that without banding the Government will not achieve its 2010 target for either renewable electricity production or Greenhouse Gas (GHG) reduction.
2002 The CLA continues to call for banding through its press and parliamentary work – briefing all members of both Houses on the Renewable Obligation Order and responding to consultations from both the DTI and the Cabinet Office.
2001 The Government introduces the Renewable Obligation Order. The CLA President warns both the then Secretary of State for Agriculture, and the Environment Minister, that the Renewable Obligation will not promote biomass power.
2000 The CLA briefs the House of Lords throughout the passage of the Utilities Bill, consistently calling for banding and proposing specific amendments with the support of Lord Jenkin of Roding.
- CLA evidence persuades the Royal Commission on Environmental Pollution to publish calls for banding in its Biomass report and to make this submission to the DTI Renewables Obligation Preliminary Consultation.
1999 The CLA calls for a scheme supporting the emerging technologies of biomass energy in response to DTI consultation on new and renewable energy.