Memorandum submitted by British Hydropower Association (EN 14)
Energy Bill 2007 - 2008
I am writing on behalf of the British Hydropower Association (BHA) with regard to the Energy Bill and, in particular, the proposals for modifications to the banding of Renewable Obligation Certificates (ROC's) in modification to the Renewables Obligation (RO).
The BHA is the trade association of the UK hydropower industry. With around 100 members, the Association represents a wide range of interests: consulting engineering, design, manufacture, investment and operations, and specialist service providers. The BHA represents generators from small owner-operators to large UK and international companies.
The BHA welcomes the Government's intention to provide double ROC's for microgeneration from all technologies for new and existing schemes. Unfortunately, the widely accepted range of up to 100kW for micro hydropower has not been acknowledged and a cap of 50kW is proposed. Above this limit hydro projects will attract the standard one ROC per kWh.
We are in the strange position of having more than one definition of micro hydro on the statute books. It is already as being 1.25mW, a value with which we are comfortable surely that should stand. Within the hydropower sector there are sound technological reasons for describing micro hydropower as being up to 100kW. There is a definite case to be made for defining "micro" according to technology. For example, a Photovoltaic station of 50kW would be considered a very large station indeed and one beyond the means of most individuals.
Two studies into the potential for new hydropower development in the UK are being carried out this year. For England and Wales there is support from BERR via the BHA. The Scottish Government is supporting a similar survey for Scotland. Once completed, we will have a much better feel for exact generation potential from hydro power from all sizes of plant. In order to show how potentially wasteful a cap set at 50kW for receiving double ROC's would be we give below an analysis for the counties of Dorset and Somerset.
The following is the total power estimate for 102 sites (usually old watermills) which have been identified in the two counties:
More than50kW 50 kW or less Total
Annual output (kWh) 3,682,529 3,843,240 7,525,769
Number of mills 12 90 102
Percent of total output 45% 55% 100%
Output per mill (kWh) 306,877 42,703
11 of the sites in the first column would earn more by restricting their output to 50kW under the new proposals. The figures would then be:
More than50kW 50 kW or less Total kWh
Annual output (kWh) 489,334 6,545,700 7,035,034
Number of mills 1 101 102
Percent of total output 7% 93% 100
Output per mill (kWh) 44,485 73,547
From these two tables it can be seen that if the installed capacity were limited to get the double ROC's then total output will fall by 490,735kWh. This equals the output from up to 40 of the sites with less than 50kW. In other words those forty sites have received double ROC's for no overall benefit to the nation's renewable generation targets.
In addition the cost of the ROCs at the present rate (£0.0326) is as follows:
All @ single ROC 12 sites @ single ROC +90 sites @ double ROC's
Difference value of ROCs £ 245,227 £378,549 +£133,322
kWh generated 7,525,769 7,035,034 - 490,735
The existing arrangement is shown in the first column. The second shows the situation when double ROCs are paid for 50kW or less. The latter will cost an extra £133,322 but generate 490,735kWh less.
Extrapolating those figures to the whole country, assuming potential projection of 20,000 micro hydropower sites, indicates that this perverse disincentive will annually cause a loss of 96,200,000 kWh for an additional cost of £26 million.
We therefore urge that double ROC's are awarded for hydropower projects with a capacity of more than 50kW.
There is also a further argument for a banding of, say 1.5 ROC's per kWh for hydro projects up to a capacity of 250kW. The reasons are purely economic since many good technically viable project would be developed with this enhanced tariff. We will be delighted to explain this in due course when we have a better feel for the total potential for the UK on completion of the new studies.
I hope that the case for reviewing this matter is made clear here. We will be pleased to provide any necessary clarification.