Renewable energy bodies have criticised the government’s plans to introduce a new auction system for supporting large green energy projects.
The draft budget for the new Contracts for Difference (CfD) scheme published yesterday (24 July) disadvantages cheaper, more established technologies such as solar power, onshore wind and conventional waste-to-energy technologies, said the Renewable Energy Association (REA).
This was because it allocated three times as much support (£155m/year) to less-established technologies such as geothermal, wave, tidal and advanced waste conversion such as gasification and pyrolysis.
If the government’s plans succeed, and it is widely expected they will, solar installations larger than 5MW face having to bid for support under the new CfD system from April 2015, while other technologies will continue to receive Renewables Obligation (RO) support until April 2017.
In addition, the budgets for CfD support offered no extra funding for biomass conversions which, along with technologies such as solar and onshore wind, could immediately plug the looming capacity crunch with low carbon generation while ensuring value for money for the consumer, said the REA.
“The limited funding for several key technologies will send shockwaves through the industry,” said chief executive Nina Skorupska.
“With many people struggling with their energy bills, cost-effectiveness is every bit as important, and the DECC cannot say this planned budget delivers value for money for the consumer.”
The Solar Trade Association said the government was stacking the deck against solar and labelled the plan an absurd decision that would ultimately hit energy bill payers across Britain.
“The solar industry was on an impressive track to zero subsidy, but the government needs to provide a level playing field and stable policy if this is to be achieved,” said the association’s head of external affairs, Leonie Green.
The REA also called for:
• Minimum deployment guarantees for each technology in the CfD scheme, which currently includes this only for wave and tidal stream technologies
• Quarterly rather than annual allocation rounds
• Earlier access to a scheme known as the Offtaker of Last Resort (OLR). This finds a backstop buyer for power output from independent renewable generators that struggle to find a buyer because of the illiquidity in the power purchase agreements market. REA wants this to be available from spring 2015 instead of 2016, as currently proposed.
Fast-deploying technologies such as solar power would need OLR support as soon as the CfD scheme launched if the government went ahead with its plans to exclude large-scale solar power from the existing RO in April 2015, said the REA.
The industry is also unclear about how CfDs will work, despite the first round of auctions being planned for October this year – the government aims to have all the legislation in place by the end of this month.
The latest announcement meant that from the farmer and landowner perspective there was a bit less clarity about solar developments, said Ben Harrison of Carter Jonas’ energy team. It would be important to get advice on the suitability of sites for different developers, because the change in support mechanism meant some developers may concentrate on smaller projects while others continued to develop 5MW-plus sites.