Harmonising renewable support mechanisms
Dr David Toke: Senior Lecturer in Environmental Policy, University of
Birmingham and also Energy Expert, World Future Council
What is a REFIT?
• Guaranteed minimum price for renewable electricity production
• Long term contract for power purchase (15-20 years)
• Different to NFFO and RO
What is a RPS? (green electricity certificate scheme)
• Electricity suppliers given renewable obligation
• RE projects sell certificates (and energy)
• Electricity suppliers buy certificates or pay penalty
Why a REFIT?
Less income uncertainty, higher project IRR for a given income level
Costs (£/MWh) of offshore and onshore windfarms at
different internal rates of return (IRR)
02040
6080
5% IRR 11%IRR
£/MWh offshore
onshore
Country Tariff in p/KWh 2004
Average capacity factor (%)
Annual Return per installed MW (£) 2004
Germany 5.5 18 87,000
United Kingdom
5.2 28 128,000
Spain 4.5 28 110,000
2005-2006
Country Tariff
in p/KWh
Average
capacity
factor (%)
Annual Return per
installed MW (£)
Germany 5.6
(declining)
18 88,000
United Kingdom 7.3 28 179,000
Spain 5.9 28 145,000
UK RO confusion?
REFIT = transparency for local and small investors
Advantages of harmonisation
Theoretical advantages of harmonisation
• Investment would flow to where it is most efficient
• All countries would be forced to participate
Harmonised EU-wide RPS?
• Great uncertainty over certificate value• Lack of competition in several countries (eg
France, Germany)• Bottlenecks in some countries (eg UK)• Loss of local investment• Some countries would refuse to participate
A single REFIT?
• Local conditions (esp wind speeds) differ
• Some countries would object
Harmonised transferability
• UK, Italian, Belgium obligations de-stabilised
• Germans would pay for Danish etc renewables
Contacts
• ‘Making Renewables FITTER’ report available at http://www.worldfuturecouncil.org/
• Dr David Toke: [email protected]
• Miguel Mendonca (WFC): [email protected]
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