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Changes to UK wind: Between ROCs and a bad place

15 March 2011

The period for industry submissions on the Consultation on Electricity Market Reform closed on 10 March. The consultation, run by the UK’s Department of Energy and Climate Change (DECC) is a primer to legislation that will be brought in late 2011 to retire the Renewable Obligation Certificates (ROCs) incentive regime.

The consultation seems a done deal: a feed-in tariff, most likely a contracts for difference model, will almost certainly be brought in. On the face of it, a feed-in tariff should be a good thing. The volatility in the price of ROCs increases the weighted average cost of capital because leverage is limited, especially without a long term offtake. However, the near to medium term impact of the uncertainty is a delay to the financing of offshore wind projects. Indications are the new regime could harm future wind development and there is speculation that the change could also trigger...

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