UK Government builds on renewable energy incentives

By Neil Budd, solicitor at Watson, Farley & Williams LLP.

This summer has seen a three-pronged strategy by the UK government to increase support for renewable energy firms developing their technologies and setting up projects in the UK.

Complementary measures include a more efficient planning procedure and greater incentives for generating energy from emerging renewable technologies, including energy from waste.

The changes were set out in an Energy White Paper, a Planning White Paper and a new Waste Strategy.

Building on current scheme of ROCs

The UK Government has set a target for 20 per cent of the UK’s electricity to be generated from renewable sources by 2020.

To help meet this target it has implemented Renewables Obligation Certificates (ROCs).

Firms generating renewable energy receive ROCs for the electricity they produce from renewable sources, which can they be sold on to electricity suppliers to help meet their renewable energy obligation.

Under the current regime, one ROC is provided for each MWh of electricity produced from renewable sources, regardless of the type of renewable energy used.

The main proposal to come out of the Energy White Paper is for Renewable Energy Certificates (ROCs) to be banded depending on the source of energy.

Boost for less developed technologies

Established technologies such as landfill gas will have their ROC entitlement reduced to one ROC for every four MWh generated.

Other technologies, such as onshore wind, will continue to receive one ROC per MWh.

In a sign of support for less developed technologies such as offshore wind, the ROC entitlement will increase to one-and-a-half ROCs per MWh.

For emerging technologies, such as solar power and certain waste-to-energy technologies, the entitlement will be even greater, increasing to two ROCs per MWh.

Primary legislation will be required to implement the new ROC regime and it is likely that it will start after April 2009.

Speeding up planning applications

In an acknowledgement that renewable energy projects are often dependent on effective planning procedures, the Government is streamlining the planning process.

The UK’s recent Planning White Paper proposes changes that will reduce the overall application time for a major project, from time of application to decision, to one year.

A single consent process for all of the development authorisations needed for a renewable energy project will also be introduced.

And to provide guidance on making applications for major projects a new infrastructure planning commission is being created.

Capital allowances for waste investment

One of the main elements of the new Waste Strategy launched this year is to promote recovery of energy from waste as one of the ways to reduce landfill.

The Government proposes to increase landfill tax and introduce enhanced capital allowances for investment involving the use of secondary recovered fuel (SRF) for combined heat and power facilities.

These proposals, which should encourage investment in waste-to-energy plants, complement the new banding proposal for ROCs under the Energy White Paper.

Advanced conversion technologies for energy from waste such as anaerobic digestion, gasification and pyrolysis will be eligible for two ROCs per MWh of electricity generated.