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Renewables Obligation Banding Review

Volume 533: debated on Thursday 20 October 2011

I am today announcing the publication of the renewables obligation banding review. This consultation looks at the levels of support renewable technologies will receive under the renewables obligation from 2013 to 2017 (from 2014 for offshore wind).

We need a surge of investment in low-carbon energy sources to help get us off the fossil fuel price hook, keep the lights on, and keep bills down. The package proposed in the banding review will bring forward investment, securing the UK’s position as a global leader in the renewable energy sector, and supporting the transition to a green economy.

The UK has some of the renewable resources in the world, and the proposals in the consultation aim to make the most of those resources. The package of measures we propose will ensure we keep on track to meet our 2020 renewable energy target, in line with our vision for renewables published in July’s UK renewable energy road map.

At the same time, we are paying attention to consumer bills. It is vital that our support for renewable electricity both encourages investment and represents value for money for consumers. So the banding levels we are proposing will cost less than if we remained with the current levels of support, while delivering more renewable energy.

To do this, our proposals encourage the most efficient use of UK renewable resources. We are proposing to remove excess support from technologies that would be overcompensated by the current levels, and maximise deployment of the cheapest renewable technologies, such as energy from waste and co-firing.

For offshore wind, where the UK is the international market leader, we are working closely with the supply chain, developers and finance community to drive down costs by around 40% by 2020. As part of that trajectory, we are reducing support in this banding review by 5% in 2015, and another 5% in 2016, ensuring that consumers benefit from these cost reductions, and ensuring that we are able to maximise deployment of this key technology—providing the potential for a 18GW market by 2020.

We should not be supporting inefficient generation, and our proposed support for onshore wind will target only the most cost-effective onshore wind farm deployment, encouraging developers to build in places where the wind is strongest.

We support predictable and flexible biomass electricity generation. Our support focuses on cheaper and transitional biomass technologies by introducing new bands for biomass conversion and enhanced co-firing—making the most of our existing generation assets, and therefore reducing the cost to consumers. We are also maintaining current levels of support for dedicated new build biomass until 2016 in order to encourage shovel-ready projects to begin construction, securing significant investment and green jobs.

This consultation also reiterates the coalition’s agreement to promote marine technologies, recognising that marine energy has the potential to meet a large proportion of our electricity demand by 2050. Our proposals provide a clear signal that we want to see large-scale, commercial deployment of wave and tidal technologies in UK waters, cementing the UK’s position as the global leader in this technology.