Post on 30-Mar-2015
Renewable Energy in the UK – an overview
Gaynor HartnellChief Executive
Renewable Energy Association
The sole responsibility for the content of this presentation lies with the authors. It does not necessarily reflect the opinion of the European Union. Neither the EACI nor the European Commission are responsible for any use that may be made of the information contained therein.
Overview of talk• Housekeeping arrangements
– Lunch– Briefing materials– Attendance sheet – please sign
• A word about the REA• Progress in UK, in context of EU27• Overview of key electricity and heat financial
instruments• Overview of Electricity Market Reform• The European Commission Proposals on Indirect Land
Use Change – Clare Wenner
What is the REA?• UK trade association for all renewables
We are unique, in that:• Over 1100 members and rising• Members of all sizes – sole traders to multinationals, with
one member one vote• Cover heat, power, transport and biomethane to grid• Members active across all renewables technologies• Activities include lobbying and policy development,
information dissemination to stakeholders and the wider community
Renewable Energy Directive2009/28/EC
• Sets the EU a target of 20% contribution from renewables to energy consumption by 2020
• UK’s target is 15% from a starting point of 1.3% in 2005
• Every country has a 10% target for renewable contribution to transport fuels
Mal
ta
Luxem
bourg
Belgiu
m
The Cze
ch R
epublic
Cypru
s
Hungary
The Net
herla
nds
The Slo
vak
Republic
Poland
United K
ingdom
Bulgar
ia
Irela
ndIta
ly
Germ
any
Greec
e
Spain
France
Lithuan
ia
Roman
ia
Estonia
Slove
nia
Denm
ark
Portugal
Austria
Finla
nd
Latvi
a
Sweden
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2020
2005 United Kingdom
National targets under the EU's Renewable Energy Directive
2004 2006 2008 2010 2012 2014 2016 2018 2020 20220%
2%
4%
6%
8%
10%
12%
14%
16%
1.3%
4.0%
5.4%
7.5%
10.2%
15.0%
Renewables directive: UK interim and 2020 deployment targets
Latest DUKES data: 2007: 1.8%2008: 2.4%2009: 3.0%2010: 3.2%2011: 3.8%
DECC’s indicative 2020 mix, published 2009
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200
20
40
60
80
100
120
UK renewable electricity production and NREAP indicative 'targets'
UK NREAP indicative targetsHydropowerTidal and WaveSolar PVLandfill GasElectricity from wasteBiomass electricityOffshore WindOnshore wind
Ele
ctr
icit
y p
rod
uc
tio
n (
TW
h)
8.7%
30%
Main contributors:-Onshore and offshore windBiomass, (conversion and co-fir-ing)Solar
Renewables Obligation (RO) • Began in 2002, will close to new entrants in 2017• The main driver for renewable power deployment• A cross between a quota system and a premium FIT –
consequently very complex• Suppliers have an obligation to source a certain amount of
Renewable Obligation Certificates (ROCs)• Different technologies earn different number ROCs/MWh• Provides an incentive for suppliers to enter into Power
Purchase Agreements• The impending loss of this incentive is a worry…. (and there
is no priority access in the UK)
EMR – a few buzzwords
• EMR = electricity “market reform”• CfDs = Feed-in tariffs with contracts for
difference• Capacity Mechanism• Carbon Floor Price • LCF = the Levy Control Framework• Delivery plan• Allocation process• Auctions
EMR – what it means for RE• CfDs will replace the RO• CfDs available from 2014 onwards• Initially CfD “strike” prices will be administered• Intention is to move to technology specific auctions, then
have all low carbon technologies competing together• £7.6bn spend allowed under Levy Control Framework in
2020 (covers FITs, CfDs for nuclear, CCS and renewables, and demand reduction measure TBD)
• Intention is that this spend is sufficient to achieve 30% renewables
• The small-scale FIT will continue (and maximum size threshold may be raised under the Energy Bill)
Strike price
Reference price
Time
Inco
me
The Government’s objective is that the generator earns this much for their power sales….
…And this much from the CfD
In total both income streams should equal the strike price, and give the generator a stable, bankable income stream
How CfDs should work
Small-Scale Feed-In Tariffs (FIT)• Introduced in 2010• For wind, AD, PV and hydro projects up to 5MW• Roller coaster, with rapid uptake in PV, where tariffs
were too high• The budget was exceeded, tariffs were reduced
rapidly and there were legal challenges• Tariffs are now subject to capacity-triggered
degression• Minimum energy efficiency requirement introduced• Deployment slowed although returns still attractive
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
UK renewable heat production and indicative 'targets' from the UK National Renewable Energy Action Plan
UK NREAP indicative targets
Heat Pumps
Geothermal aquifers
Municipal solid waste
Plant Biomass
Anaerobic Digestion
Animal Biomass
Wood combustion - industrial
Wood combustion - domestic
Sewage sludge digestion
Landfill gas
Active solar heating
He
at
pro
du
cti
on
(T
Wh
)
12%
2.2%
The Renewable Heat Incentive• Unique in Europe• Effectively a “Feed In Tariff” for heat• Phased introduction
– Nov. 2011 first batch technologies, non domestic– Summer 2013, second batch of technologies, and
householders
• So far uptake slow (many of the first were legacy projects)
• Tariff degression mechanism to be introduced• Teething issues on metering, accreditation –to be
expected
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200
10,000
20,000
30,000
40,000
50,000
60,000
UK transport biofuels and indicative 'targets' from the UK National Renewable Energy Action Plan
NREAP biofuels
Biodiesel
Bioethanol/ bio-ETBE
Bio
fue
ls u
se
d a
s t
ran
sp
ort
fu
els
(G
Wh
)
Road Transport Fuels Obligation targets:2008/09: 2.5% by volume (2.18% by energy)2009/10: 3.25% (2.8% by energy)2010/11: 3.5% (achieved 3.11%)2011/12: 4.0% (3.31% by energy)2012/13: 4.5% (3.72% by energy)2013/14: 5.0% (4.14% by energy)
2.9%
10%
Barriers - Uncertainty • Overall lack of clarity on policy direction,
particularly over renewable transport and EMR
• Uncertainty over RO support levels• Departmental tensions evident• Post 2020 no
special treatment• Evidenced by
investment slow down
Barriers - Planning• From cascading down of regional targets to
Localism• Refusal appeal win = resentment• Targets not imposed, up to local communities,
within context of NPPF, i.e. a “bottom up” approach
• A focus on incentives = contentment• Retention of business rates• More emphasis on community involvement
Barriers - Planning• UK average wind consent rates under 50MW projects are around
65% (by scheme) 62% (by MW) • Average time
for decisionfallen from 15.5mto 14m.
• Localism Act, 2011• New NPPF, 2012• New Minister, 2012• This suggests that the above has not had detrimental impact that it
could have had, although the unpredictability and costs of planning are still unwelcome, from the project developers’ perspective
Where you can help – Targets post 2020
– a decarbonisation without renewable energy targets option, relying on the carbon market and a revised ETS
– continuation of the current regime, with binding renewable energy, emissions reductions and energy efficiency targets, or
– an enhanced, more harmonised management of our whole energy sector with an EU renewable energy target
Where you can help continued...
• Support UK approach to how to define End of Waste, as this will not undermine UK’s Biofertiliser Certification Scheme
• Support UK stance on maintaining lower VAT rate on energy efficiency and micro-renewables equipment
• Your support for our ILUC recommendations
THANK YOU!ghartnell@r-e-a.net