Despite fears of sweeping cuts, Rick Eggleston, Managing Director of REpower UK, believes yesterday’s ROC banding announcement by DECC is welcome and will ensure growth remains healthy across the wind sector.
Reductions include a fall of 1 ROC to 0.9 ROC in 2013 for onshore wind, and from 2 ROCs to 1.9 ROCs from April 2015, and to 1.8 ROCs in April 2016 for the offshore wind sector.
“The level of cut in the case of onshore wind is to the lower end of industry expectations, with many of us having predicted something deeper. The reality is that in the case of onshore wind, the industry has achieved significant cost reductions in recent years as the industry matures and becomes more competitive. The cut in ROC level for onshore wind was inevitable, and at 0.9 is at an appropriate level to encourage the industry to drive towards further cost cuts, while reaffirming the UK Government's commitment to renewables,” commented Eggleston. "For us, as a leading turbine manufacturer, this gives us the clear visibility we need over the next 5 years. I also believe DECC’s phased approach to the new levels should result in a degree of stability.”
"In the case of offshore wind, the industry is less mature and cost reductions will take longer to achieve, both in hardware terms, and in installation and operation costs. The delay in reductions to 2015/16 will go some way towards addressing this. The industry is already working with the Government to achieve cost reductions in offshore wind, and this must remain a priority,” he added.
The UK’s largest renewable energy trade association, RenewableUK, also welcomed the new ROC levels for wave and tidal energy projects, but was not so quick to praise the Government's decision to downgrade the ROCs for wind energy.
“Any reduction in financial support will have an impact on the industry, reducing deployment, and potentially jeopardising momentum as we strive to reach our carbon reduction targets. However, we recognise the need to drive down costs across the sector, especially offshore,” said Maria McCaffery, the association’s Chief Executive. “Any changes need to be carefully balanced as the proposed onshore reduction would have a disproportionate impact on small community-based wind energy projects, as they don’t enjoy the economies of scale which larger projects can harness”.
On making the announcement, Chris Huhne, Secretary of State for Energy and Climate Change said: “The renewables industry can bring in billions of pounds of investment into the UK economy. Our ambitions for these technologies reflect our desire for the UK to be the number one place to invest. We have studied how much subsidy different technologies need. Where new technologies desperately need help to reach the market, such as wave and tidal, we’re increasing support. But where market costs have come down or will come down, we’re reducing the subsidy.”
Huhne's department estimate that 70-75 TWh of renewable electricity will being generated in the UK by 2017 thanks to his government’s support, which is 70% of the way towards the 108 TWh of electricity needed to meet the UK’s 2020 renewable energy target.
[Photo: Chris Huhne, State for Energy and Climate Change]
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