The World's #1 Renewable Energy Network for News, Information, and Companies.
Untitled Document

UK Reveals Renewable Energy Strike Prices

The UK government today revealed the strike prices for renewable energy that it proposes to pay under its contracts for difference scheme.

Contracts for difference form a key part of the government’s Electricity Market Reform. Varying in amount for each form of power generation, they guarantee to pay generators a fixed sum — or strike price — for the electricity they generate.

Today’s figures cover each year from 2014 to 2019 and reveal that some forms of renewables will get the same strike price for that period while others will see the price fall.

For projects with a potential deployment capacity of more than 1 GW, the government plans to pay £155/MWh for offshore wind in 2014, falling to £135/MWh in 2019; Onshore wind will get £100 from 2014, dropping to £95 in 2019, while large solar PV will receive £125 in 2014 and get £110 in 2019.

Hydro and biomass conversion will get the same amount for the 2014-2019 period: £95 and £105 respectively.

The government also today revealed details of its proposed capacity mechanism, another pillar of its Electricity Market Reform package.

The government confirmed that — subject to EU state aid approval — the capacity market will be launched next year, with participants such as existing generators and investors in new plant bidding in auctions to provide the total amount of electricity that the UK is predicted to need from 2018-2019.

Successful bidders will receive a steady payment in the year they agree to make capacity available. In exchange, they will be obliged to deliver electricity in periods of system stress or face financial penalties.

Energy Secretary Ed Davey said that “developers and investors have been crying out for more details [on EMR], sooner, and that is what we are giving them today.”

He said the renewable strike prices were intended “to make the UK market one of the most attractive for developers of wind, wave, tidal, solar and other renewables technologies.”

“This will help boost home-grown sources of clean secure energy and enable us to decarbonise the power sector, with renewables contributing more than 30 percent to our mix by the end of this decade.”

The government’s announcements today coincide with the publication of a report by energy regulator Ofgem, which warned that “without action, risks to electricity supply could increase during the middle of this decade faster than expected.”

Ofgem predicted that electricity margins could tighten in 2015-2016 to between around 2 and 5 percent depending on demand.

Ofgem chief executive Andrew Wright said the report “highlights the need for reform to encourage investment in generation.”

Gaynor Hartnell, chief executive of the UK’s Renewable Energy Association, said the draft strike price list fell short of expectations in its scope.

“What is striking is what is omitted,” she said. “Notable omissions are dedicated biomass and the waste to energy technologies. We will be pushing for clarification of these as soon as possible.”

She said there are “hundreds of megawatts of biomass projects looking to commission under the new support regime and their contribution of clean, baseload electricity will help keep the lights on when the capacity crunch comes.”

“This is a technology with a long-term role to play,” she stressed. “In the long term, when coupled with carbon capture and storage, this technology could actually be carbon negative.”

Maria McCaffery, chief executive of trade group RenewableUK, was more upbeat.

“The confirmation of levels of the draft strike prices is a welcome step forward in setting out how the long term market is going to work. The levels of the strike prices are challenging but possible considering the reduced time periods that renewables will be supported for under the contract for difference system compared to the Renewable Obligation.”

However, she added that “more details do need to be set out. The most important ingredient remains investor confidence and that will take time to land. The secret is consistent long term support and investors seeing that government is behind renewables and low carbon generation for the long term.”

Paul Massara, UK chief executive of RWE — one of Britain’s so-called ‘Big Six’ power utilities — welcomed today’s announcements but said “a significant level of detail is not yet finalised.” 

“This, along with the overall complexity of the proposals and the need to gain EU state aid approval, means significant uncertainty remains.

“Only once the final detail on contract terms and conditions is clear will a full understanding of the impact these proposals will have on potential investment into the UK and on Britain’s energy consumers be possible.”

Katja Hall, chief policy director at the Confederation of British Industry, said the renewables strike price and capacity mechanism “will enable investors to take their plans off the drawing board and on to building sites.”

She added: “The Energy Bill’s passage has dragged on long enough — the big task now is to get it on the statute book as soon as possible.”

Lead image: UK flag via Shutterstock

Untitled Document

RELATED ARTICLES

Welspun Commissions 52-MW Solar Power Plant in India

Vince Font Leading Indian solar developer Welspun Renewables has commissioned the construction of a massive solar plant in the state of Maharashtra. The planned 52-megawatt (MW) solar plant will be located in the city of Baramati. The...

Regional News from the July/August 2015 Digital Edition of Renewable Energy World

Renewable Energy World Editors EcoFasten Solar announced that it launched a new mounting "Rock-It System" that it would be displaying during Intersolar. Product compliance was determined through testing per UL Subject 2703, which reviews integr...

SkyPower Inks $2.2 Billion Deal for Massive Solar Power Plant in Kenya

Eric Ombok, Bloomberg Kenya’s Energy Ministry and SkyPower Global Ltd. will sign a $2.2 billion agreement on Sunday that paves the way for the Canadian company to develop a 1-gigawatt solar project in East Africa’s biggest economy. The solar pro...

Making a Match: How Solar Companies and Banks Hook Up

Jennifer Runyon The announcements are fairly frequent: SunPower Partners with Admirals Bank for $200 Million Solar Loan Program, Deutsche Bank to Lend $1 Billion for Japanese Solar Projects, Financing Partnerships Drive North Carolina's So...
Kelvin Ross is Deputy Editor of Power Engineering International magazine and its associated publications – Middle East Energy and the Global Power Review. Previously, Kelvin was News Editor at UK online news site Energy Live News, Production Edito...

CURRENT MAGAZINE ISSUE

Volume 18, Issue 4
1507REW_C11

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

Doing Business in South Africa – in partnership with GWEC, the Glob...

Wind Energy in South Africa has been expanding dramatically, growing fro...

Presenting at Infocast's Utility Scale Solar Summit 2015

Oct. 21, 2015 4:30-5:15pm Albie Fong, National Director, Solar Frontier ...

5th Annual Hydro Plant Maintenance

Join maintenance professionals to discuss the challenges in maintenance ...

COMPANY BLOGS

Behind Every Good Decision

When something about your business isn’t working, you set out to c...

Clean Energy Patents Maintain High Levels in First Quarter, Solar L...

U.S. patents for Clean Energy technologies from the first quarter of 201...

An Overwhelming Paradox

I’m sure we’re all very familiar with the feeling of being o...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS