Wednesday, 20 March 2013
Write to your MP to demand a decent deal for community renewables!
Readers of this blog are urged to write to your MP urging that the Government ensures, as part of the Energy Bill, that community and independent renewable energy generators are given equivalent income streams for renewable energy projects as will be available to the major electricity companies. A letter, signed by over 30 academics and NGO leaders, appears today in the Guardian with this objective in mind. See:
The solution backed by this letter is a scheme that can ensure that independent renewable generators should get the same level of incentives as will be available to the Big Six electricity companies under 'contracts for differences' (CfD) arrangements. In effect, only very large companies will be able to access CfDs. There's no good logic for this - it is just the way our cock-eyed electricity system is regulated. Of course, even more cock-eyed is the spectacle that EDF is demanding, and will get at least up to a point, much better terms and levels of subsidies for nuclear power than will be given to community renewables schemes.
Although the Government slipped in a clause to their Energy Bill giving the Secrtetary of State power to make the electricity majors issue power purchase agreements (PPAs) to independent companies, unfortunately this on its own is unlikely to lead to good terms being offered to independents. The Big Six will have no incentive to offer good terms to people who they will see as competitors. The 'Big Six' are likely to cite uncertainties about 'balancing costs' as reasons why they offer PPAs worth considerably less than the CfD contracts to which the Big Six will have access (but not independents).
So, the idea behind the 'Green Power Auction Market' (GPAM) notion (originally designed by Nigel Cornwall and put forward by Alan Whitehead MP) is that independent companies could offer their schemes as PPAs (for, say, 15 years or whatever they need) for which there would be an auction and the independent companies would accept the best deal on offer. Experience suggests that this could get them a reasonable deal, within the limits of the economics of the CfD system of course. But I do not want to tire you with the arcane complexity of the whole thing here.
The GPAM scheme is the best option that is both available and currently being discussed. The Government is conducting a review on arrangements for independent generators at the moment, although it failed to accept a proposal for GPAM made by Alan Whitehead MP at the committee stage of the Energy Bill.
Sufficeth it to say that the optimum system, for a variety of reasons, is the 'Fixed Feed-in Tariff' (Fixed FIT) concept. But the Government have firmly rejected this sensible idea. GPAM is not a Fixed FIT. However, the GPAM proposal is a workable alternative in the context of CfDs that will allow independent generators a reasonable deal compared to the Big Six. Hence GPAM is the proposal that needs promoting now.
In fact the independent sector builds a much larger proportion of renewable capacity than is generally realised. There are some community renewables projects, such as promoted by the company Energy4All, but there are also some independent renewable companies like RES and Fred Olsen who develop a lot of schemes. Without them, and without the competition that all of these companies provide to the Big Six, the renewables programme will be cut by as much as a half compared to whatever would otherwise take place. You can see some argumentation in support of GPAM on http://www.businessgreen.com/bg/opinion/2240941/the-green-power-auction-market-a-winwinwin-for-renewables-consumers-and-suppliers
You can see some arguments in favour of a 'Fixed' Feed-in Tariff on the FOE website, http://www.foe.co.uk/blog/energy_bill_will_give_more_38654.html, and a report I wrote for Friends of the Earth on http://www.foe.co.uk/resource/briefings/david_toke_fits.pdf. There are other arguments to suggest that sooner or later we will need a Fixed FIT, and that CfDs need to be replaced. In particular they give perverse incentives to renewable generators to stop producing precisely when we need renewable electricity. See my blog post: http://realfeed-intariffs.blogspot.co.uk/2013/03/how-electricity-balancing-mechanism-is.html