The following is an extract from the Enviros Consulting September 2009 Briefing Note on the UK's Low Carbon Strategy:
The UK government has announced a number of financial drivers and measures to remove barriers to deployment of more renewables, as part of their low carbon strategy.
This rapidly growing industry will bring opportunities for many of our customers. Nonfinancial measures include a new planning PPS, measures to improve grid access and a new Office for Renewable Energy Deployment.
However the main drivers announced are the financial ones outlined below.
The Renewables Heat Incentive
- The Renewables Heat Incentive will deliver a staggering 72TWh/yr of heat by 2020 from biomass, solar, heat pumps and biomethane
- The policy to be in place from April 2011
- It will give guaranteed payments to those generating heat from renewables – domestic through to industrial scales
- We should expect a fixed rate paid on energy yield and cost of plant – not on CO2 emissions saved
UK Government will consult at the end of this year on scheme details and on fundamentals including levels of funding and how the levy to fund it will work
Installations from 15 July 2009 onwards will qualify for payments though there will be environmental standards and a qualification scheme for installers.
Measures to support electricity from renewables
The plans for financial support for renewable electricity has been presented in a separate consultation paper
Renewable Electricity Financial Incentives.
There are some detailed changes to the Renewables Obligation (ROC) regime that will impact larger generators and are designed to bolster confidence in this support mechanism.
However, perhaps the most significant announcement is of a new mechanism known as Feed in Tariffs (FIT).
As presented in the consultation paper FITs:
• Will give significant payments to small scale renewables – up to 5MW but with much higher payments for micro-renewables
• Will come into operation from April 2010 with consultation closing Oct 09 (though schemes built from 15 July 2009 will qualify)
• Will support delivery of up to 2% of our electricity by 2020
• Will pay the tariff for every unit of generation (whether used on site or not) aiming to give investors 5-8% internal rate of return (IRR)
• A FIT contract would be for 20 years, index linked and transferable from person to person
• Fix the price that will be paid for power exported at reasonable level (5p/kWh suggested)
• Will be paid by those supplying the site with electricity to the site of generation.
Payments proposed are much higher than anything seen in the UK so far.
For example a householder installing a retrofit domestic scale solar panel would get 36.5p/kWh for all the generation from the panel, would enjoy free electricity from it while using it and would get a suggested 5p/kWh for electricity exported (income tax free).
Other Opportunities
The Low Carbon Transport Strategy and the Low Carbon Industrial Strategy will give other opportunities to those sectors of the industry.
The transport strategy proposes that the proportion of biofuels being blended with petrol and diesel be increased to 10% by 2020 in line with the EU directive.
This is a huge increase in the amount of liquid biofuels required and could offer opportunities for farmers.
However, it is recognised that there are potentially negative food security and environmental issues associated with this policy and we can expect increasingly stringent controls on sourcing of liquid biofuels.
The transport strategy also outlines measures to reduce transport emissions by:
• Improving the efficiency of new vehicles (cars, vans and buses)
• Electrifying more of the rail network
• Facilitating the use of electric vehicles – including the offer of financial support to purchase them
• Encouraging more walking, cycling and low carbon travel habits • Working on international agreements on shipping and aviation.
The Low Carbon Industrial Strategy recognises the opportunities for UK industry and commerce. To maximise the opportunities, the government intends to remove barriers to making the changes and has announced £405 million of support:
• £120 million will be used to develop offshore wind
• £60 million to develop wave and tidal power
• £6 million to contract “60 or more” low carbon affordable homes
• £10 million increase, from £20 million to £30 million, for electric vehicle charging infrastructure and £25 million Low Carbon Vehicle Demonstrator Programme • £4 million expansion of the Manufacturing Advisory Service
• £12 million for green chemicals/sustainable biotechnology
• £15 million nuclear advanced manufacturing research centre
• £150 million for UK Innovation Investment Fund -> £1billion in 10 years.
How Enviros can help
This is an exciting time for initiatives in the low carbon sector and with these recent papers, the Government’s direction and support is now clear.
With the ‘step change’ represented by these papers some projects that were not previously viable now may well be. Enviros have over 30 years of experience in this field so have the skills, knowledge and expertise needed to be able to support you as you work to make the ‘low carbon transition’ needed or capitalise on the opportunities presented, whether you are working in the public or the private sector.
Get your FREE copy of the full Low Carbon Strategy briefing document here.
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