Renewable Energy in the UK * an overview

Report
Renewable Energy in the UK –
an overview
Gaynor Hartnell
Chief 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 Directive
2009/28/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
50%
National targets under the EU's Renewable Energy Directive
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
2020
2005
United
Kingdom
Renewables directive: UK interim and 2020 deployment targets
16%
15.0%
14%
12%
10.2%
10%
8%
Latest DUKES data:
2007: 1.8%
2008: 2.4%
2009: 3.0%
2010: 3.2%
2011: 3.8%
6%
4%
7.5%
5.4%
4.0%
2%
1.3%
0%
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
DECC’s indicative 2020 mix,
published 2009
UK renewable electricity production and NREAP indicative 'targets'
120
Electricity production (TWh)
100
80
30%
UK NREAP indicative targets
Hydropower
Tidal and Wave
Solar PV
Landfill Gas
Electricity from waste
Biomass electricity
Offshore Wind
Onshore wind
60
40
8.7%
Main contributors:Onshore and offshore wind
Biomass, (conversion and co-firing)
Solar
20
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
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)
How CfDs should work
Strike price
Income
…And this much from the CfD
The Government’s objective is
that the generator earns this
much for their power sales….
Time
Reference
price
In total both income
streams should
equal the strike
price, and give the
generator a stable,
bankable income
stream
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
UK renewable heat production and indicative 'targets' from
the UK National Renewable Energy Action Plan
80.0
UK NREAP indicative targets
12%
Heat Pumps
70.0
Geothermal aquifers
Municipal solid waste
Plant Biomass
60.0
Heat production (TWh)
Anaerobic Digestion
Animal Biomass
50.0
Wood combustion - industrial
Wood combustion - domestic
Sewage sludge digestion
40.0
Landfill gas
Active solar heating
30.0
20.0
2.2%
10.0
0.0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
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
UK transport biofuels and indicative 'targets' from the UK
National Renewable Energy Action Plan
60,000
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)
Biofuels used as transport fuels (GWh)
50,000
40,000
10%
NREAP biofuels
Biodiesel
Bioethanol/ bio-ETBE
30,000
20,000
2.9%
10,000
0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
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 decision
fallen from 15.5m
to 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 microrenewables equipment
• Your support for our ILUC recommendations
THANK YOU!
[email protected]

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