1273068454 611
The role of the feed-in tariff Stephen de Souza Head of Renewables Financial Incentives DECC Sponsored by
Feed-in Tariff: the bigger picture Stephen de Souza Head Renewables Financial Incentives Office of Renewable Energy Deployment
The challenge for the UK and the rest of the world is to reduce emissions and build a better, lower carbon future
Chapter 1: The Challenge
The Government will drive the transition to a low carbon UK using the world’s first ever legally binding carbon budgets
Carbon budgets are equivalent to a 34% cut in greenhouse gas emissions in 2020. The UK will also cut emissions by 80% by 2050.
Chapter 2: Driving the transition
The plan will ensure that 40% of UK electricity comes from low carbon sources by 2020
Chapter 3: Power
At the heart of the Plan is the EU Emissions Trading System which sets a declining limit or ‘cap’ for emissions from electricity generation and heavy industry.
Further action:
30% of electricity through renewables in 2020
Supporting up to 4 new CCS demonstrations
New nuclear power stations under way by 2018 12 planned by 2025
We will need a bigger, smarter electricity grid – later this year the Government will publish a vision for this.
Maintain secure electricity supplies by creating a supportive climate for timely investment
What are we seeking to achieve? 15% - 7x increase in renewables by 2020
Source: Energy Trends June 2009 and DECC internal analysis
Why are we trying to do it? • Climate change: – Part of long-term low carbon energy mix – Technology support complementary to carbon price and behaviour change • Security of supply: – Diversity of fuel sources and reduction in dependence on fossil fuel imports • Business and employment benefits: – Up to half a million jobs generated in the UK renewables sector and its supply chains, £100bn investment opportunities?
• Legal obligation
How will we do it? Action Plan to: 1. Finance deployment 2. Enable deployment: – Planning ; Supply-chain; Grid; Biomass 3. Innovate 4. Engage Co-ordinated and delivered by: • Office for Renewable Energy Deployment (ORED)
(1): Finance • Electricity – Extend & improve RO (already c£1bn/yr) (Banding & headroom already in place) – Offshore wind 2 ROCs • Small-scale generation – New ‘Feed in Tariffs’ • Heat – New ‘Renewable Heat Incentive’ • Transport – Amend or replace Renewable Transport Fuel Obligation • Credit crunch measures - Up to £4bn European Investment Bank - Grants/investment
Growth in renewable electricity
Renewables Obligation
• Banding should make the RO 30% more efficient in delivering new generation • Extension necessary for RES 2020 targets • Budget announcement on offshore review • Consultation: – Offshore – for 2010 Order – Extension – for 2010 Order – Efficiency – longer term
Feed-in tariffs
• More suitable than RO for “non-expert”: households, communities, non-energy, businesses • Up to 5MW (and microCHP to 50 kW)
(2a) Enabling: Planning for deployment
• Proactive planning: – National Policy Statements & Infrastructure Planning Commission – Regional strategies/ targets – evidence-based – Offshore: 25GW SEA • Improving/ streamlining the planning system: – Performance Planning Agreements, appeals, recovery, Permitted Development Rights, guidance • Reducing impacts that cause objections: – Radar, navigation, environment, air quality – Community support (community benefits and community delivery model) • Office for Renewable Energy Deployment (ORED)
(2b) Enabling: Supplying for deployment • Supply chain development – Creating market: RES policies: vision, finance, enabling – Attracting business: MAS, UKTI, RDAs – Strategic investment – e.g. ports, skills, test centres: £405 million, including £120 million offshore wind – Office for Renewable Energy Deployment (ORED)
(2c) Enabling: Connecting for deployment • Strategic investment in the grid: – Agreed ‘strategic vision’ for 2020 grid – Incentives to build it – Offshore Transmission Regime • Ensuring access to the grid: – Interim ‘connect & manage’ – Earlier connection dates offered to around 1 GW of renewable generation projects – Longer term access reforms (TAR) – consultation on enduring access reform issued 25 August 2009 for implementation from June 2010 • Developing smart grids
(2d) Enabling: Bioenergy • Improved information – Sufficient biomass supplies – Supply data availability through reporting
• Increase UK supply – – – –
More managed forests; Higher level of grants for energy crops More research More exploitation of food and waste wood
• Sustainability – sustainability criteria for biomass: EU process
• Removing barriers – – – –
Fuel quality standards Air quality Infrastructure Biomethane
(3) Innovation and Future Capacity
• Strategic approach – 2050 vision & technology families – Co-ordination of support bodies & unified ‘front-door’ – Action plans for technology areas • Incentives – Grants – ETF, ETI et al – Market pull – RO, RHI, FIT, RTFO – Marine, 2nd gen, offshore wind, smart grids, EVs etc • Severn Tidal Power – Confirm short-list
(4) Engagement
• Aim: – Individuals, businesses, communities, public sector to accept and deliver renewables • Approach: – Public sector leadership: • targets, incentives, support – Community delivery: • Revised RAB toolkit; FITs/RHI – Individuals/business: • Enhanced advice/information • New & improved incentives
Maximise benefits, minimise costs
• 2020 estimated impacts on bills (central fossil fuel prices): electricity 15%; gas 23-30% • No high carbon, low cost future; costs of renewables lower or zero if fossil fuel prices rise • Costs lower than previously estimated • Reducing costs further • Managing the remaining impacts
Maximise benefits, minimise costs Other impacts and benefits • Environment & sustainability
• Climate change & carbon budgets • Security of supply & electricity market • Business & employment benefits
Next Steps
• National Action Plan – spring 2010
• First interim target: 2011/12 • 15% Renewable Energy – 2020 or before
Feed-in Tariff: the bigger picture Stephen de Souza Head Renewables Financial Incentives Office of Renewable Energy Deployment
The challenge for the UK and the rest of the world is to reduce emissions and build a better, lower carbon future
Chapter 1: The Challenge
The Government will drive the transition to a low carbon UK using the world’s first ever legally binding carbon budgets
Carbon budgets are equivalent to a 34% cut in greenhouse gas emissions in 2020. The UK will also cut emissions by 80% by 2050.
Chapter 2: Driving the transition
The plan will ensure that 40% of UK electricity comes from low carbon sources by 2020
Chapter 3: Power
At the heart of the Plan is the EU Emissions Trading System which sets a declining limit or ‘cap’ for emissions from electricity generation and heavy industry.
Further action:
30% of electricity through renewables in 2020
Supporting up to 4 new CCS demonstrations
New nuclear power stations under way by 2018 12 planned by 2025
We will need a bigger, smarter electricity grid – later this year the Government will publish a vision for this.
Maintain secure electricity supplies by creating a supportive climate for timely investment
What are we seeking to achieve? 15% - 7x increase in renewables by 2020
Source: Energy Trends June 2009 and DECC internal analysis
Why are we trying to do it? • Climate change: – Part of long-term low carbon energy mix – Technology support complementary to carbon price and behaviour change • Security of supply: – Diversity of fuel sources and reduction in dependence on fossil fuel imports • Business and employment benefits: – Up to half a million jobs generated in the UK renewables sector and its supply chains, £100bn investment opportunities?
• Legal obligation
How will we do it? Action Plan to: 1. Finance deployment 2. Enable deployment: – Planning ; Supply-chain; Grid; Biomass 3. Innovate 4. Engage Co-ordinated and delivered by: • Office for Renewable Energy Deployment (ORED)
(1): Finance • Electricity – Extend & improve RO (already c£1bn/yr) (Banding & headroom already in place) – Offshore wind 2 ROCs • Small-scale generation – New ‘Feed in Tariffs’ • Heat – New ‘Renewable Heat Incentive’ • Transport – Amend or replace Renewable Transport Fuel Obligation • Credit crunch measures - Up to £4bn European Investment Bank - Grants/investment
Growth in renewable electricity
Renewables Obligation
• Banding should make the RO 30% more efficient in delivering new generation • Extension necessary for RES 2020 targets • Budget announcement on offshore review • Consultation: – Offshore – for 2010 Order – Extension – for 2010 Order – Efficiency – longer term
Feed-in tariffs
• More suitable than RO for “non-expert”: households, communities, non-energy, businesses • Up to 5MW (and microCHP to 50 kW)
(2a) Enabling: Planning for deployment
• Proactive planning: – National Policy Statements & Infrastructure Planning Commission – Regional strategies/ targets – evidence-based – Offshore: 25GW SEA • Improving/ streamlining the planning system: – Performance Planning Agreements, appeals, recovery, Permitted Development Rights, guidance • Reducing impacts that cause objections: – Radar, navigation, environment, air quality – Community support (community benefits and community delivery model) • Office for Renewable Energy Deployment (ORED)
(2b) Enabling: Supplying for deployment • Supply chain development – Creating market: RES policies: vision, finance, enabling – Attracting business: MAS, UKTI, RDAs – Strategic investment – e.g. ports, skills, test centres: £405 million, including £120 million offshore wind – Office for Renewable Energy Deployment (ORED)
(2c) Enabling: Connecting for deployment • Strategic investment in the grid: – Agreed ‘strategic vision’ for 2020 grid – Incentives to build it – Offshore Transmission Regime • Ensuring access to the grid: – Interim ‘connect & manage’ – Earlier connection dates offered to around 1 GW of renewable generation projects – Longer term access reforms (TAR) – consultation on enduring access reform issued 25 August 2009 for implementation from June 2010 • Developing smart grids
(2d) Enabling: Bioenergy • Improved information – Sufficient biomass supplies – Supply data availability through reporting
• Increase UK supply – – – –
More managed forests; Higher level of grants for energy crops More research More exploitation of food and waste wood
• Sustainability – sustainability criteria for biomass: EU process
• Removing barriers – – – –
Fuel quality standards Air quality Infrastructure Biomethane
(3) Innovation and Future Capacity
• Strategic approach – 2050 vision & technology families – Co-ordination of support bodies & unified ‘front-door’ – Action plans for technology areas • Incentives – Grants – ETF, ETI et al – Market pull – RO, RHI, FIT, RTFO – Marine, 2nd gen, offshore wind, smart grids, EVs etc • Severn Tidal Power – Confirm short-list
(4) Engagement
• Aim: – Individuals, businesses, communities, public sector to accept and deliver renewables • Approach: – Public sector leadership: • targets, incentives, support – Community delivery: • Revised RAB toolkit; FITs/RHI – Individuals/business: • Enhanced advice/information • New & improved incentives
Maximise benefits, minimise costs
• 2020 estimated impacts on bills (central fossil fuel prices): electricity 15%; gas 23-30% • No high carbon, low cost future; costs of renewables lower or zero if fossil fuel prices rise • Costs lower than previously estimated • Reducing costs further • Managing the remaining impacts
Maximise benefits, minimise costs Other impacts and benefits • Environment & sustainability
• Climate change & carbon budgets • Security of supply & electricity market • Business & employment benefits
Next Steps
• National Action Plan – spring 2010
• First interim target: 2011/12 • 15% Renewable Energy – 2020 or before
