Regulatory and policy options to encourage development of ...

MODULE 9: RENEWABLE ENERGY: REGULATORY AND POLICY OPTIONSpage 9.133Table 2.A comparison of RO compliance figures over the 1st and 2ndobligation periods2002/2003 2003/2004Total obligation (TWh) 8,393,972 12,387,720ROCs and SROCs produced (£ mlln) 4,973,091 6,914,524Buy-out paid (£ mlln) 78,853,260 157,960,978Buy-out not paid (£ mlln) 23,773,170 9,026,231Percentage obligation met by ROCs or SROCs 59 56Buy-out distributed and late payment fund (£ mlln) 79,251,930 158,466,502Buy-out paid per ROC or SROC produced (£) 15.94 22.92What a ROC or SROC was “worth” to a supplier (£) 45.94 53.43Source: Ofgem, 2nd annual report on the renewables obligation.6. OTHER SUPPORT FOR RENEWABLESThe fact that the RO does not pay different prices for different technologies meansthat suppliers tend to favour the least costly forms of renewables (currently landfillgas and onshore wind) which can be viewed as an advantage on costeffectivenessgrounds. However, this does mean that it may not promote as muchdiversity as schemes that pay higher prices for less mature technologies. The UKGovernment is tackling this issue via a range of other schemes of funding forrenewables—typically capital grants to offset the extra costs of technologies suchas offshore wind, biomass, wave and tidal power, and photo-voltaic. Theseinclude grants for large and medium-scale schemes and some grants for smalland micro-scale technologies.Examples include: Bioenergy has received £55 million in capital grants to support 22 projects,although not all of these are proceeding due to various difficulties in makingthem commercially viable. The offshore wind scheme has allocated capital grants of £117 million to12 projects, two of which are now fully operational. The remaining projects areexpected to come on stream in the next three years, providing total capacityof over 1,000 megawatts, enough to supply more than 600,000 households.