A UK SUPPORT MECHANISM
146. We heard repeated praise for the efficacy of
the feed-in tariff from a number of organisations including the
BWEA and UKERC.[156]
When we asked BERR whether they would consider introducing a feed-in
tariff as successor to the RO we received mixed messages. Sarah
Rhodes, BERR, assured us that feed-in tariffs "are not off
the agenda, they are firmly on the agenda"[157],
whereas Malcolm Wicks was more guarded:
[
] we will look again at microgeneration
and on the table will be one or two different mechanisms including
feed-in tariffs, but that is not about large scale deployment
or turning our back on the RO, which we think is the appropriate
mechanism, and one does not want to keep chopping and changing
because of investor confidence.[158]
147. Electricity generators such as RWE npower and
EDF Energy also underlined the importance of long-term consistency
of policy in maintaining regulatory and investor certainty.[159]
We agree that maintaining investor confidence is key to the health
of the renewable electricity industry. However, it should not
be the only factor used to decide on the optimal mechanism for
supporting the deployment of renewable technologies in the UK.
148. We believe that, in consulting on policies
to support the deployment of renewable technologies after the
end of the Renewables Obligation in 2027, detailed consideration
should be given to the full range of potential support mechanisms,
including the introduction of a feed-in tariff.
149. Several of the submissions we received expressed
concern that the case for a feed-in tariff in the UK has not received
appropriate consideration to date. Professor Keith Barnham, Imperial
College London, told us that "the second [Energy White Paper]
in May 2007 briefly mentions that other European countries have
such schemes but dismisses them in a few lines".[160]
We note that the merits of the feed-in tariff were debated in
April 2008, in the context of the Energy Bill. A motion to commit
the Government to developing a framework for the introduction
of a feed-in tariff for renewable electricity generators was voted
down.[161]
150. Irrespective of the policy mechanism, or
mechanisms, selected to support the deployment of renewable electricity
technologies post-2027, we recommend that the Government provide
a full and transparent account of its decision process and the
reason for rejecting or adopting possible options.
Microgeneration and the Renewables
Obligation
151. Specific arrangements exist under the RO for
microgenerators (installations of 50kW or less) to be issued with
ROCs. To be eligible, the installation must be accredited by Ofgem
and the output meter, which records the electricity generated,
needs to be on the Ofgem list of approved meters. Just like any
large-scale electricity generator, one ROC is awarded for every
MWh of electricity produced. Once issued with a ROC, the microgenerator
can either sell it direct to an electricity supply company or
to an agent. The threshold for claiming 1 ROC is the generation
of 0.5MWh over a year.
152. Speaking to the Committee in March 2008, Dave
Sowden, Micropower Council, stated that:
The process which a customer needs to go through
in order to register as eligible for ROCs and subsequently to
claim them is quite a torturous process [
] in their current
form ROCs do not work for microgeneration customers.[162]
153. The Government has recognised that current arrangements
under the RO are insufficient to support microgeneration and,
in Budget 2008, committed to consulting on an appropriate form
of support.[163] This
commitment was reaffirmed by the Minister:
[
] we need to revisit whether we are providing
enough incentives for microgeneration - something I am very interested
in and the Government is very interested in [
] There are
some incentives for householders in terms of micro but are there
enough? Maybe not, and I have said that as part of our renewable
energy strategy review we will look again at microgeneration and
on the table will be one or two different mechanisms including
feed-in tariffs.[164]
The Government will consider future support mechanisms
for microgenerators as part of consultations on the new microgeneration
strategy, to be conducted in Autumn 2008.
154. We welcome the Government's forthcoming consultation
on mechanisms to incentivise the deployment of microgeneration
technologies, and recommend that a feed-in tariff for microgenerators
be introduced urgently.
139 DTI, Reform of the Renewables Obligation and Statutory
Consultation on the Renewables Obligation Order 2007, October
2006; DTI, Renewable Energy: Reform of the Renewables Obligation,
May 2007 Back
140
HM Treasury, Meeting the Energy Challenge, Cm 7124, May
2007, p 155 Back
141
http://www.timesonline.co.uk/tol/news/environment/article3257728.ece,
The Sunday Times, 27 January 2008 Back
142
DTI, Reform of the Renewables Obligation and Statutory Consultation
on the Renewables Obligation Order 2007, October 2006, p11 Back
143
Q 375 Back
144
Ev 259 Back
145
Q 73 Back
146
Reform of the Renewables Obligation: What is the likely impact
of changes? Report by Oxera for DTI, May 2007. URN 07/949 Back
147
Q 74 Back
148
Q 403 Back
149
Note that several European countries, such as Germany, the Netherlands
and Spain currently operate feed-in tariffs. Back
150
Federal Ministry for the Environment, Nature Conservation and
Nuclear Safety, Development of renewable energies in 2006 in Germany,
February 2007 Back
151
BERR, Digest of UK energy statistics 2007 (DUKES), 2007 Back
152
http://www.erneuerbare-energien.de/files/pdfs/allgemein/application/pdf/eeg_brochure_engl.pdf Back
153
Qq 8, 25 Back
154
UKERC, Investment in electricity generation: the role of costs,
incentives and risks (London 2007) Back
155
UKERC, Investment in electricity generation: the role of costs,
incentives and risks (London 2007) Back
156
Ev 186, 297, 321; Qq 8, 25 Back
157
Q 86 Back
158
Q 404 Back
159
Ev 108, 131 Back
160
Ev 298 Back
161
HC Deb, 30 Apr 2008, col 394 [Westminster Hall] Back
162
Q 267 Back
163
HM Treasury, Budget 2008, HC 388, March 2008 Back
164
Q 484 Back