No extension to Roc banding period – UK’s Decc

Some developers are concerned that the delay in announcing the final subsidy levels, which will apply from 1 April 2013-31 March 2017, will not allow enough time to fully finance and construct some biomass plants.

This could mean a period of even greater uncertainty as these countries wait for the government's electricity market reform (EMR) bill to come into force in 2017, which will include subsidies in the form of Contracts for Difference (CfDs).

“We cannot see the case for extending the Roc banding period,” energy and climate change minister Ed Davey said. “The CfDs under the EMR will be better for developers and better for consumers.”

But developers should be reassured by the fact that there will be an overlap period in which UK developers can choose whether to accept subsidy under the Roc scheme or the CfD scheme, according to Decc.

“One of the reasons there will be an overlap period is to give investors choice and certainty about which subsidy route they should take,” Decc Energy Markets and Infrastructure Group director-general Simon Virley said. “We will have a call for evidence later this year for CfDs, so if developers want certainty on how much they should receive after the Roc banding period ends, they need to participate then,” Virley said.

The UK government expects to announce a draft strike price for a CfD mechanism to support renewable power generation in mid-2013, Decc said. It intends for CfDs to be available to nuclear and renewable generators from 2014 as part of the EMR.

There is nothing written into the current EMR draft bill about electricity demand reduction, nor energy efficiency, according to Davey.

“But I am passionate about driving [energy efficiency and energy demand reduction], so this is something we are discussing with the select committee and it is just a question of whether it will be included within this bill or as a separate bill,” Davey said.

CfDs stabilise returns for generators at a fixed level known as the strike price, according to draft legislation. When the electricity market price is below the strike price, suppliers will pay generators a top-up, and conversely, generators must pay back the difference to suppliers if the market price is above the strike price.

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