Renewables sector is braced for change in 2012

December 2011/January 2012

The EU’s new Renewable Energy Directive legislation comes into effect. The RED sets biofuel inclusion targets and, for the first time, mandatory carbon and sustainability criteria for biofuels.

The UK will be required to source 10% of energy used in transport from renewable sources by 2020 and fuel suppliers are also asked to deliver a 6% reduction in greenhouse gas emissions from their fuels by 2020 under the Fuel Quality Directive. Transport elements of the RED will be implemented in the UK through a new Renewable Transport Fuel Obligation.

UK growers should be able to meet sustainability requirements by complying with the Red Tractor assurance scheme.

12 January

Consultation on the Renewables Obligation banding review closes. This aims to set RO support for larger-scale renewable energy projects for 2013-17, with new rates due to come into effect from 1 April 2013.

But a recent Committee on Climate Change bioenergy review (FW, 9 December) suggested there should be “limited, if any, support for new large-scale dedicated biomass generation” due to concerns about the relatively high cost of supporting such technology.

It proposed that support for new dedicated biomass power plants should be limited to small-scale plants and combined heat and power plants or, at a minimum, a small number of projects.

It will be interesting to see how this affects the outcome of the latest RO banding review.

18 January

Green Deal consultation closes. The Green Deal is a scheme that will allow individuals and businesses to make energy efficiency improvements to their buildings at no upfront cost.

A key part of it is a finance mechanism that allow access to the finance needed for the improvements, with repayment in instalments, attached to the electricity bill. It will replace the existing Carbon Emissions Reduction Target and the Community Energy Saving Programme.

February

Possible date for the publication of the FiT review consultation findings – any amended rates will be effective from April 2012.

March/April

Ensus bioethanol plant on Teesside likely to reopen after closing temporarily in May 2011. The original closure was due to be for just four months, but was extended as the company waited for a number of issues to be resolved.

In particular, it blamed slow implementation of the Renewable Energy Directive, delays to the approval of voluntary sustainability schemes and a legislative loophole that had allowed imports of cheaper US ethanol into Europe.

This latter point was addressed by the EU last month and regulatory changes should come in some time in the first quarter of 2012.

Ensus has capacity to take more than 1mt of UK feed wheat, sourced through Glencore.

April

Formal European Union approval of the Red Tractor scheme as an environmental standard for bioliquids is expected.

April/May

Commissioning of the Vivergo bioethanol plant in Hull is likely to begin. The plant has capacity to take 1.1m tonnes of UK feed wheat, sourced through Frontier’s Humber Gold. The opening of this plant and re-opening of Ensus is likely to have a big impact on grain movements around the UK, particularly in north-east England.

1 April

Reduced solar PV Feed-in Tariffs are due to come into effect. Proposed rates were announced in the first phase of a DECC consultation at the beginning of November. The consultation closed today (23 December), but because the proposed cuts came in almost two weeks before the consultation closed, the solar industry won a judicial review of the government plans. That review was earlier this week, although at the time of writing it was too early to tell what the outcome would be.

The lower FiT payments will only apply to installations with an eligibility date of on or after 12 December 2011. Anything installed before then will continue to get the higher payment.

1 April

Solar PV tariffs could be linked to minimum energy efficiency requirements from 1 April 2012 – again, subject to the outcome of the DECC’s consultation. It is proposed new energy generators with an eligibility date between 1 April 2012 and 31 March 2013 will have 12 months from the eligibility date to install the necessary energy efficiency measures.

However, while this may work for domestic properties, it is unclear exactly how this will affect commercial and agricultural installations, such as those mounted on grainstore or dairy roofs.

In a recent letter to DECC as part of its consultation, John Bowler, owner of John Bowler Eggs and Bowler Energy, summarised the concerns about this proposal.

“While I understand the need to improve energy efficiency in domestic dwellings, there has been no consideration as to how or whether this will be applied to agricultural buildings. It is impossible to think that a free-range chicken unit or cattle shed can have an energy efficiency certificate of C or above.

“We have been advised by The Carbon Trust that DECC have omitted and not considered agricultural buildings when proposing this amendment to the FiT guidelines we are not going to be advised of the confirmed amendments until February 2012. This leaves huge gaps in how legislation is going to be applied and leaves our industry scratching its head on how best to advise our customers on a way forward.”

1 April

A proposed “multi-installation” solar PV tariff could be introduced. This applies to any solar PV installation where the FiT generator, or nominated recipient, already owns or receives FiT payments from one or more other PV installations, located on different sites. In such cases, the claimant is only likely to receive 80% of the proposed standard tariffs for individual installations – again, subject to the DECC consultation.

1 April

A redesigned Energy Performance Certificate is being introduced.

April

Final National Planning Policy framework due to be published. This could ease the planning process for those looking to invest in low-carbon energy generation as it includes a “presumption in favour of sustainable development”.

Sometime in the first half of 2012

Changes resulting from a further (so-called “phase two”) DECC consultation on the comprehensive review of Feed-in Tariffs will be implemented in the first half of next year. This consultation was due to be published around the end of 2011, but could be delayed. Phase two is looking at tariffs for other non-PV technologies (wind, AD, etc) and administrative aspects of the FiTs scheme.

April to December

Some financial support from the Carbon Emissions Reduction Target scheme may be available to cover a proportion of the installation cost for the more basic energy efficiency measures needed for domestic houses to reach the minimum “Level C”, with the householder paying the rest upfront.

Autumn

Government’s Green Deal initiative due to come into effect.

The launch of Feed-in Tariffs in April 2010 kick-started a surge of investment in renewable energy generation. The table below shows the total number of installations and capacity installed under the Feed-in Tariff scheme and registered with Ofgem since the launch of FiTs on 1 April 2010, up until 16 December 2011.