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UK Govt To Increase Support For Offshore Wind from April 1

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Offshore wind, marine energy and biomass developers to receive financial boost this April Fool’s day

The long-awaited increase in financial support for offshore wind and marine energy kicks in this week, in a move that will lead to improved financial returns for many renewable energy projects.

From 1 April, the Renewables Obligation (RO) financial support mechanism will be reformed to introduce “banding” that ensures more costly offshore wind, wave and tidal projects, as well as advanced biomass technologies, receive more generous incentives.

Currently, all renewable energy projects are entitled to sell a Renewable Obligation Certificate (ROC) alongside every Megawatt hour (Mwh) of energy they produce. However, under the new banding regime, offshore wind farms and dedicated biomass plants will be able to sell 1.5 ROCs per Mwh, while technologies at even earlier stages of development such as wave and tidal energy generators will be able to issue two ROCs per Mwh.

Onshore wind farms will be able to continue to sell one ROC per Mwh, and technologies which are increasingly economically viable without subsidies such as landfill gas capture and co-firing of biomass and coal will only be able to issue 0.5 ROCs per Mwh.

Speaking at an event later today to promote co-operation between the offshore energy sector and the ports industry, energy and climate change minister Mike O’Brien will argue that the new banding regime underlines the government’s commitment to meet its renewable energy targets.

“This week’s ramping up of financial backing in favour of technologies such as offshore wind is evidence of our determination to create the right investment environment for renewables,” he said.

O’Brien will also announce that an additional £10m in funding is to be made available through the government’s Environmental Transformation Fund to help accelerate the development of giant multi-megawatt offshore wind turbines.

The announcements follow a week in which the government was heavily criticised by the renewable energy industry for leaving a funding gap for onsite micro-renewable technologies while it prepares to launch a new feed-in tariff next year.

Industry insiders said that the failure to offer any form of incentive for homes and businesses interested in installing onsite renewables between the current phasing out of the Low Carbon Building Programme grant scheme and the new feed-in tariff next year will force many small renewables firms to the wall.

Andrew Lee at Sharp Energy Solutions Europe said there was a very real chance that some renewable technology installation firms could go out of businesses before the feed-in tariff is introduced.

“We worry that this funding gap will have a detrimental effect on the uptake of renewables, such as photovoltaic solar, by homes and businesses,” he said. It could even mean that installers go out of business over the next year instead of our hope that we would see thousands of jobs created to support the increased uptake and enthusiasm for renewable energy.”

However, O’Brien will today again insist that the government is “actively examining” how to ensure there is sufficient support for viable projects, adding that this move coupled with the new ROCs banding “should leave investors in no doubt of the UK’s commitment to renewable energy”.

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