The Renewable Energy Issue
The UK is committed to increasing renewable energy use, as an integral part of a wider strategy to address climate change and to bolster our future energy security. With an inspirational target that would see some 20 per cent of our electricity coming from renewable sources by 2020, the UK played a leading role in making this target ‘binding across Europe’, along with the EU heads of government in 2007 (to include heat, electricity and transport)
In 2005 only an estimated 8.5 per cent of the EU’s energy came from renewable sources and analysts predict that this will only rise to 10 per cent by 2020, thus much work needs to be done if we are to achieve our ambitions. In the UK, the picture was even worse with only 2 per cent of our energy being renewable in 2005, with estimates that it will reach 5 per cent by 2020. (Source BERR 2008) Individual state contributions to the EU renewable target has yet to be decided, though we can be sure that the UK will need to make a significant contribution.
The 2007 Energy White Paper; meeting the energy challenge sets out proposals to expand and accelerate the roll-out of renewable energy, including reforms to the Renewable Obligation (RO). The Renewables Obligation is the Government's main mechanism for supporting the generation of renewable electricity. Since its introduction in 2002, the RO has been successful in driving growth in renewable electricity generation - it has more than doubled since 2002 - and a project pipeline of more than 11GW is in place across the UK. However, with estimates suggesting that we will only reach 50 per cent of our aspirational target, much more effort is needed.
The Renewables Obligation (RO)
The Renewables Obligation requires licensed electricity suppliers to source a specific and annually increasing percentage of the electricity they supply from renewable sources. The current level is 7.9 per cent for 2007/08 rising to 15.4 per cent by 2015/16.
It is expected that the Obligation, together with exemption from the Climate Change Levy for electricity from renewables, will provide support to industry of up to £1 billion per year by 2010.
The Obligation is enforced by an Order (Statutory Instrument) made under the terms of the Utilities Act 2000. The Order was introduced in April 2002.
The Obligation requires suppliers to source an annually increasing percentage of their sales from renewables. For each megawatt hour of renewable energy generated, a tradable certificate called a Renewables Obligation Certificate (ROC) is issued.
Suppliers can meet their obligation by:
- acquiring ROCs;
- paying a buy-out price equivalent to £34.30/megawatt hour in 2007/08 and rising each year
- or a combination of ROCs and paying a buy-out price.
When a supplier chooses to pay the buy-out price, the money they pay is put into the buy-out fund. At the end of the 12-month Obligation period, the buy-out fund is recycled to electricity suppliers presenting ROCS.
A large number of processes and technologies qualify as renewable electricity generators, including landfill gas, sewage gas, some hydro generating stations, on-shore and off-shore wind turbines, geothermal power, biomass, tidal and wave power, photovoltaic’s and energy crops. Qualification with regard to the disposal of waste is a little more complicated. Mass burn incineration of mixed waste does not qualify, though the ‘mass burn’ incineration of waste that is pure biomass does qualify. However, technologies such as pyrolysis, gasification and the anaerobic digestion of waste does qualify, though where the waste is mixed, only the percentage of the waste that can be classed as biomass qualifies. The co- firing of mixed waste is not eligible.
Renewable Heat
Almost half of the final energy consumed in the UK (49 per cent) is in the form of heat, the generation of which accounts for around 47 per cent of UK CO2 emissions. At present the amount of renewable heat in the UK is low at (0.6 per cent) of heat demand.
Several renewable heat technologies already exist and are being deployed at varying rates and scales. Key technologies include:
- Biomass: Used in boilers or stoves or on a larger scale Combined Heat and Power (CHP).
- Heat from waste: Used to generate heat through combustion in boilers / CHP plants or via advanced processes which produce combustible biogas. This biogas can be burnt locally to generate heat or potentially, after processing, injected into the gas grid as bio-methane. The biodegradable part of waste is classed as renewable.
- Microgeneration heat technologies: Solar thermal and air or ground source heat pumps.
In May 2007, the Energy White Paper restated the Government’s commitment to decarbonising heat with an undertaking to conduct further work into the policy options available to reduce the carbon impact of heat and its use in order to determine a strategy for heat. The Government believes that it is essential to consider the heat sector holistically and is examining policy options and support measures that could further reduce the carbon impact of heat. This work focuses on all sectors from domestic to large-scale industrial and considers options to further encourage the uptake of renewable technologies.
The UK Biomass Strategy 2007 was developed jointly by BERR (formerly DTI) and DEFRA with the aim of achieving optimal carbon savings from biomass, while complying with EU policies and the Biomass Action Plan. It is also intended that the strategy should support existing renewable energy and climate change targets, and should facilitate the development of a competitive and sustainable market and supply chain for biomass. The Biomass Strategy was published alongside the Energy White Paper in May 2007.
In response to calls for the establishment of a renewable heat obligation during the passage of the Energy Act, the Government gave a commitment to undertake analysis about the scope and case for promoting heat from renewable sources.
More recently, and building on this report, Ernst & Young were jointly commissioned by BERR (formerly DTI) and DEFRA to produce a report which considered the business case for the development of renewable heat. The terms of reference in producing this report were to assemble, examine and develop the evidence base; consider the market potential/barriers and cost-effectiveness of existing technologies (financial and in terms of carbon abatement potential); to use financial and economic modelling to enable future BERR/DEFRA work on the topic.
The Prime Minister’s speech on climate change on 19 November 2007 announced a Call for Evidence on renewable heat to be issued in January 2008 and followed by further consultation later in the year.
