ROC REVIEW: THE NEW PROPOSED BANDINGS
On 20 October 2011, the Department of Energy and Climate Change published its much anticipated proposal of changes to the Renewables Obligation Certificate (ROC) bandings. These proposals, subject to certain exceptions, are also likely to be introduced to Scotland.
ROCs are the key financial mechanism through which the Government encourages the development and generation of renewable energy. They entitle renewable electricity technologies to claim government subsidies; the more ROCs awarded, the higher the subsidy. Government aims to assist those new technologies which need help to reach the market and subsidise less those technologies where market costs have come down.
Under the proposed changes, there are both winners and losers. The biggest winners in Scotland are tidal stream technologies where current subsidies will increase from 3 ROCs per Megawatt hour (MWh), up to 5 with a project cap on instillations generating over 30MW – a welcome boost to projects a long way from commercial development. Wave generating technologies remain at 5 ROCs per MWh.
Looking forward, the new proposals aim to be less costly than the existing bandings and there will be a general reduction in the support available over the coming years. However, in some cases the reduction in funding will tail off at a slower rate than previously anticipated. It is proposed that offshore wind will continue to be funded at 2 ROCs per MWh until 2015 (previously 1.5 ROCs per MWh from 2014), before slowly being reduced to 1.9 then 1.8 in the two following years. Advanced gasification, solar photovoltaic and geothermal technologies are amongst those that will now also see a similar reduction in funding.
Largest losers under the proposal include: onshore wind, which will see a reduction of 10% in funding, and Hydro-electric, which will see a 50% reduction in funding.