RO consultation delay adds to uncertainty
DECC's delay in launching a consultation into subsidies for renewable energy is adding to concerns in the sector about its ability to attract investment.
In December 2010, energy minister Charles Hendry announced that DECC would fast-track its review of the certificate bandings applicable under the Renewables Obligation (RO) from April 2013.
DECC confirmed the consultation would take place this summer, with the bandings to be announced in the autumn, but the consultation is yet to take place.
“The delay to this consultation is very bad timing,” said Leonie Greene from the Renewable Energy Association. “With the general uncertainty caused by the backdrop of the electricity market reform, investors want as low a risk and as much confidence as possible. In comparison with other countries the UK is not looking attractive right now.”
Alan Whitehead MP believes the delay may have been caused by the cap imposed on DECC’s spending on renewables.
“When DECC said it would accelerate the review the landscape was different and they thought they could do it, but since then the Treasury-based cap on imputed tax levy measures has emerged,” he said.
The cap, to which DECC has agreed, limits how much can be spent on funding the feed-in tariff (FIT) scheme, the warm homes discount and the RO until 2015.
“If DECC is trying to put more RO certificates into wind and tide, then that’s going to have a pretty deleterious effect elsewhere across the cap,” warned Whitehead.
DECC’s budgeting calculations are complicated by the fact that the FIT scheme is likely to exceed its budget, despite the controversial tariff changes this year, and the newly announced Energy Companies Obligation will have to be funded from within the same cap.
“DECC has had to go back to the drawing board with several of its calculations,” confirmed Whitehead.
Concerns over the delay to the RO consultation follow accusations that the chancellor, George Osborne, blocked moves to amend the Energy Bill to introduce mandatory display energy certificates for commercial buildings.