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Tories Want Reform to Renewable Energy Incentives

Tories Want Reform to Renewable Energy Incentives

The Conservative Party has responded to rumours that it is preparing a major overhaul of the UK's renewable energy policy by confirming that if elected it plans to effectively phase out the government's Renewable Obligation scheme.

The news was met with considerable disquiet from across the renewable energy industry, with insiders warning that any disruption to the current Renewable Obligation scheme could lead to delays for major renewable energy projects such as new wind farms.

Writing in response to inquiries from BusinessGreen.com about the finer detail of the Conservative's renewable energy policy, a spokeswoman confirmed the party would like to see the Renewable Obligation and system of Renewable Obligation Certificates (ROCs) replaced with an extended feed-in tariff scheme.

"It is important that we support the development of renewable energy, but the Renewables Obligation, in comparison to the feed-in tariff system used in other countries, is expensive, bureaucratic and produces an unpredictable revenue stream," she said. "We will reduce costs to consumers and risks to investors by allowing feed-in tariffs to be used for future investments such as round three of the offshore wind development programme and wherever this would offer better value for money to the public and reduce the cost of capital for investors."

The proposals raise the prospect of considerable investment uncertainty for wind farms and other large-scale renewable energy projects, which are currently being planned based on the returns they could realise through the ROC system.

The Conservatives said they would ensure a smooth transition between the two support systems, promising to "approach in a fair way the continuing use of ROCs by existing developments, taking into account investors' expectations and based on a grandfathering approach".

However, a spokesman for trade association RenewableUK, which has previously lobbied for the feed-in tariff scheme to be limited to small-scale renewable energy installations, questioned the wisdom of changing the current policy regime.

"The Renewable Obligation (RO) continues to be extremely successful in attracting investment to the whole of the renewable electricity sector, but particularly for wind developments," he said. "The RO has brought nearly 20,000MW of onshore wind projects into the planning system and made the UK the world's leading market for offshore wind development. This success should not be endangered through over-hasty policy making, nor should decisions on this vital topic be undertaken without fully understanding the needs of the industry."

One wind industry insider went further still, warning that the creation of a twin track approach where projects can choose between selling ROCs or generating income through guaranteed feed-in tariffs would inevitably lead to delays in renewable energy projects. "Imagine a situation where you are currently trying to get a project off the ground and raise financing," he said. "You can't work out what your income is going to be with this kind of policy uncertainty, which makes it harder to attract financing. We've heard rumours about these plans for a long time, but this is the first time they have been confirmed."


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