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The UK's post-ROC regime for renewables emerges
01 December 2011
The UK government’s energy market reform white paper and ROC re-banding proposals have provided some clarity on its renewables regime. The moves come as the biomass, onshore and offshore wind deal pipelines firm up. By Robin Sayles.
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The UK government’s energy market reform white paper, published in July, set out changes to the electricity market that are likely to favour renewable power, and was followed with new renewable obligation certificate banding proposals in October. The main features of the white paper are new feed in tariffs with contracts for differences (FiT CfD), an emissions performance standard for coal-fired power plants and a capacity mechanism for standby power. The reforms would accompany a new carbon price floor mechanism.
The FiT CfD will replace renewables obligation certificates (ROCs) from 2014 and is crucial for sponsors’ and lenders’ revenue expectations on future deals. The principle behind the new incentive is that a low carbon generator would be set a strike price and if the market price falls below this level, the generator would be reimbursed, while a higher reference price would have to partially paid back by the producer. After the...
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