Memorandum by the Renewable Energy Association
GENERAL QUESTIONS
(i) How achievable are both the EU's
general 20% and the UK's national 15% renewable energies target?
The REA is not qualified to comment on the 20%
overall EU target, but we do observe that the Parliament had previously
sought a 30% target.
There is no doubt the target is very demanding,
however, and will require several bold measures, including:
— An effective measure to boost on-site
renewables, eg a feed in tariff, and non-discriminatory treatment
under the Carbon Reduction Commitment.
— Reform of Business Rating for on-site
renewables. At present the arrangements discourage their uptake—as
described in the paper on this subject on the REA website.
— A reward-based tariff for renewable
heat. This was the REA's key message in its response to BERR's
recent Call for Evidence on Heat consultation (REA Response to
the Heat call for evidence).
— A very large programme to retrofit
zero carbon technologies to existing buildings.
— An increase in the Renewable Transport
Fuel Obligation.
The UK's target is perfectly achievable, given
the right political will. One means of achieving it is described
in a paper by P Wolfe. The REA is also participating in the development
of a national sustainable energy action plan along with a number
of other organisations. This work is being co-ordinated by the
Royal Society of the Arts. The organisations involved felt that
the proposed timetable of a consultation this summer, culminating
in a Renewable Energy Strategy in 2009 would be too slow, given
the scale of acceleration needed and that collaborative action
on an action plan might prompt more rapid progress.
(ii) How coherent are these proposals
in the context of the EU's energy policies in general and the
Third Energy Package in particular?
We feel the Directive's proposals are highly coherent.
We welcome the target being in terms of total energy, and not
broken down into electricity, heating/cooling and transport fuels.
Whilst there is a minimum target for the latter, this is logical
as beyond energy conservation (travelling less) and energy efficiency
(more efficient vehicles) fuel substitution is the only option.
(iii) To what extent are these targets
capable of improving the EU's security of energy supplies?
Almost all renewable energy technologies increase
energy security, by directly replacing imported energy sources
such as gas, uranium or imported coal. The exception is imported
biomass. Even so, imported biomass still contributes to improved
energy security through widening the range of countries and diversifying
types of trading partners. Much of this trading will be with countries
with less geopolitical tensions than those we currently import
energy from.
GRID ACCESS
(iv) How effective has the existing
legislation (2001/77/EC) been in encouraging grid access for renewable
energy generators?
The existing legislation has not assisted progress
in the UK. Whilst it enables the UK to give priority access for
renewables we have not chosen not to go down this route. The UK
may eventually be forced to implement priority access however,
as the new draft renewable energy directive says that member states
"shall" give priority access, rather than saying they
"may".
"They shall also provide for priority access
to the grid system of electricity produced from renewable energy
sources." Extract from Article 14 para 26.
BERR has commissioned a report on this very
subject which, although completed in August last year, has not
yet been published.
The problems with the current UK situation are
well documented but progress towards overcoming them, has been
very slow.
At present the default situation in the UK is
that existing generators have priority over new projects which
wish to connect. This is because only when new infrastructure
has been built, and the system has sufficient capacity to accommodate
the full output of the existing incumbent generation plus the
proposed new generation, is the new generator allowed onto the
system.
This is despite the fact that the amount of
generation requiring transmission is determined by the volume
of demand. If the current rules are not changed, the end result
would be far too much transmission capacity being built. The rules
governing the design of the network (Security and Quality of Supply
Standard) are being reviewed, however, and a Transmission Access
Review is underway to address the problem.
At an informal meeting BERR stated that its
intended outcome from the review is that projects can be connected
within a reasonable timeframe, of say 3—5 years from applying
to connect. If and only if this aspiration is translated into
an access methodology that achieves that objective, will the issue
of priority access for renewables (over existing non-renewable
plant) become less important. Until a system is achieved that
allows all new plant to connect within this time period following
a request to connect, government should continue to be pressed
to implement priority access for renewable generation, as it is
currently clearly allowed to do and may in the future be compelled
to do by the new Directive. We would emphasise that priority access
means priority to connect without regard for the effect of that
in reducing the output of existing non renewable plant. After
all, the purpose of renewable generation is precisely in order
to reduce generation from fossil fuelled generators. If a maximum
connection time scale of 3-5 years is achieved for all new generation
then priority access for renewable generation would be less important.
Ideally a decision about priority access should
have been made at the outset of the Transmission Access Review,
in order to provide clarity. However the most pressing need is
to implement timely access as rapidly as possible. Provided this
occurs, we suggest by April 2009 then BERR can afford to give
more time to consider the requirements for priority access. It
is worth noting that Ofgem believes that its existing remit enables
the implementation of speedy access, but not priority access.
(v) To what extent does grid access
remain a significant barrier to increased consumption of renewable
energies? Is it consistently a problem across all Member States?
In Germany renewables can connect as soon as
the local connection is built. However, in the UK, grid access
together with the planning system form the two biggest barriers
to increasing renewable electricity generation.
(vi) How does Use of System charging
affect grid access for renewable energy generators? How far can
the different levels of renewable energies take-up in different
Member States be attributed to Use of System charging and cost
sharing rules?
In addition to the transmission access issue
Transmission and Distribution Network Operators are increasingly
imposing technical requirements on renewable generators. Whilst
some of these are necessary others are inappropriate and not required
to ensure system security. This increases the cost of renewable
generation unnecessarily.
Use of system charging has very little impact
on grid access for renewable generators. It is the rules surrounding
the ability to connect that is the problem. How much it costs
to use the grid, may, to some extent, limit the volume which wishes
to connect, but despite this there is over 14GW wishing to connect.
There is also the prospect of totally inappropriate
use of system charges being levied on generation that is connected
to the distribution network. The Transmission Network Operator
would like to charge these embedded generators use of system charges
that would apply had they been connected to the transmission network.
The terminology is that National Grid favours gross charging for
distributed generators, whereas the industry believes that net
charging should apply. We can provide a detailed paper on this
subject.
(vii) What impact do the various systems
of reinforcement planning and work have on encouraging renewable
generation? How important is the issue of constraint in increasing
Member States' renewable generation?
REA is only qualified to comment on the UK reinforcement
planning rules. Our response to the consultation on the Transmission
Security Standards Review for onshore intermittent generation
can be found on the website.
(viii) To what extent is further co-ordination
of National Regulatory Authorities needed?
Priority access to transmission and distribution
grids for electricity from renewable energy sources (as proposed
in the new renewable energy directive) should be interpreted and
implemented along the same principles and criteria in the different
member states, in consultation with the stakeholders, in order
to avoid market distortions. This should be reflected in the relevant
harmonised technical and market codes, to be drafted according
to the proposed regulation in the 3rd liberalisation package.
Therefore national regulatory agencies should coordinate and the
proposed Agency for Coordination of Energy Regulators provides
the proper platform.
(ix) How far do current regulations
inhibit access to the grid?
The current regulations are a major barrier
to renewable electricity uptake, as described in the answer to
question iv, above.
There is around 14GW of projects at varying
degrees of development in a queue waiting for connection, there
are some projects which already have planning permission which
at present stand to wait until 2016 before they are scheduled
to be connected. The situation is completely unacceptable.
SUPPORT SCHEMES
(x) At what level should the EU be
involved in harmonising or regulating support schemes offered
by Member States to encourage renewable energy generation?
It is helpful for the EU to seek to encourage
the widespread adoption of facilitating measures, such as streamlined
consent processes, administrative arrangements, training etc.
Indeed many articles of the new Renewable Energy Directive do
just that.
Whilst guidance and comparisons of the efficacy
of support between member states, such as the 2005 report is very
useful, it would be counterproductive, however, for the Commission
to attempt to enforce harmonisation of support schemes. Each member
state is different, and there are reasons why one approach may
be more appropriate than another. There is also a great deal of
history in many member states, and intervention could be profoundly
destabilising.
The harmonisation of support schemes was higher
on the European Commission's agenda in the mid 1990's than it
is now. At that time there was pressure on member states to move
away from feed in tariffs towards quota-based systems (such as
the RO) or competitive tendering arrangements (such as the NFFO).
However, over time, more and more countries have moved in the
reverse direction. At the moment, in the European Union, 18 EU
Member States have feed in tariffs and 6 EU Member States have
a quota-based/green certificate scheme.
The renewables industries in countries with
feed in tariffs have fiercely defended their governments' policies
and continue to do so.
When the 2001 directive was brought in there
was a requirement to monitor progress, and compare different support
mechanisms across member states. The resulting report clearly
shows countries with feed in tariffs have been more effective
at deploying renewables, very often more cost effectively than
quota- based or green certificate mechanisms. This was confirmed
again very recently in a Commission document released on the 23
January 2008 together with the Renewable Energy Directive: "Well-adapted
feed in tariff regimes are generally the most efficient and effective
support schemes for promoting renewable electricity". Germany
for instance achieved its 2010 target for renewable electricity
in 2007. The drive for harmonisation from the commission has consequently
receded.
Investor confidence is one of the major requirements
of any policy, and consequently there has been very little appetite
for rocking the boat regarding feed in tariffs from the UK renewable
industry. EU Energy Commissioner Piebalgs said it on the 28 February
this year that "the goal of the European Commission is not
to undermine any national support scheme."
A new clause which would introduce tariffs for
small scale renewable power generation and renewable heat and
biogas has been tabled for debate at the report stage of the energy
bill. The REA is supportive of this action, and has drafted a
short briefing note for MPs on the clause.
The REA believes that such tariffs for small
renewables and onsite generation can co-exist with the RO, and
deliver the best of both worlds.
(xi) What impact have the various schemes
in operation across the Member States had on encouraging renewable
energy? How have these schemes affected take-up both by producers
and commercial and domestic consumers?
The report referred to above helps answer this
question, for renewable electricity generation.
The UK RO has been particularly poor at encouraging
the uptake of renewables at the small scale (what we would refer
to as on-site use), but effective at larger scale producers (ie
merchant plant). Feed in tariffs are much more straightforward
to understand, and clearly more effective at the smaller scale,
which is why the REA is encouraging this approach to be pursued
for on-site renewable power generation in parallel with the Renewables
Obligation.
We also feel it would be the most effective
approach to encourage renewable heat and could be applied to renewable
gas.
(xii) Will cross-border renewables
markets be genuinely affected by the existence of a variety of
support schemes? Is necessary investment hampered by lack of market
harmonisation?
There should be no inherent reason why different
support schemes should themselves limit cross border trading—but
one does have to ask what the objective of cross-border trading
is.
There is likely to be cross border trading of
biomass and renewable transport fuels but limited trading of guarantees
of origin for the purposes of meeting member states' targets.
Countries can only trade when they have exceeded their target.
The kind of certificate trading that takes place at present is
merely allocating credit for renewables in a voluntary reporting
sense and there is no clear link between this and encouraging
new deployment. It is likely that this form of trading will tail
off dramatically once the new directive is in place.
(xiii) To what extent would the enhanced
use of Guarantees of Origin certificates require the harmonisation
of support schemes?
Under the current drafting of the directive
in relation to GoOs, which we are comfortable with, the use of
GoOs would not require harmonisation of support schemes. We don't
consider harmonisation of support schemes to be a priority—we
would rather efforts were focused on ensuring member states meet
their targets, however their policies are structured.
It may theoretically be more efficient to have
harmonisation particularly with full tradability where countries
don't have to meet their target to sell renewable energy. However,
this is not practical given the current differences between countries
support mechanisms as described above. The effort required to
achieve this degree of harmonisation would be large, and the benefits
not quantified. One thing is clear, however, and that is that
the process would result in a lengthy hiatus, and large scale
loss of investor confidence, both of which would be unhelpful
with respect to meeting the 2020 target.
21 April 2008
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