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DECC fixes renewable energy subsidies

25 July 2012

The Banding Review for the Renewables Obligation – the government’s main mechanism for supporting large-scale renewables – has been decided for the period 2013-17.

Support for onshore wind from 2013-17 will be reduced by 10% to 0.9ROCs, as consulted on in Autumn 2011. This level is guaranteed until at least 2014 but could change after then if there is a significant change in generation costs. A call for evidence on onshore wind industry costs will be launched this Autumn and report in early 2013.

If the findings identify a significant change, the government says it will initiate an immediate review of renewables obligation certificate (ROC) levels with any new support arrangements taking effect from April 2014, but with grandfathering and grace periods for projects already committed. The call for evidence will also consider how local communities can have more of a say over, and receive greater economic benefit from, hosting onshore windfarms.

Rates of support for offshore wind will reduce as the cost of the technology comes down during the decade, and support levels for certain marine energy technologies will more than double from 2ROCs to 5ROCs per MWh, subject to a 30MW limit per generating station.

There will be a new band to support existing coal plant converting to sustainable biomass fuels. This will increase the amount of renewable energy produced at less cost to consumers. Finally, there will be no immediate reduction in support for large-scale solar, but there will be a further consultation this year on reduced support levels given recent dramatic falls in costs.

By 2017, this package could deliver as much as 79TWh of renewable electricity per annum in the UK - nearly three-quarters (74%) of the way towards the 108TWh of electricity needed to meet the UK’s 2020 renewable energy target.

These proposals are expected to bring forward 11TWh more renewable energy in 2016/17 than current bandings, and stimulate between £20bn and £25bn of new investment. The proposals also provide industry with the certainty needed to make near-term investment decisions.

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