Climate Change Act
The Act makes it the duty of the Secretary of State to ensure that the net UK carbon account for all targeted greenhouse gases for the year 2050 is at least 80% lower than the 1990 baseline. Meeting this target requires decarbonisation of the electricity generation, heating and transport sectors. Three key technologies used to approach this target are nuclear, renewable and carbon capture and storage (CCS). To ensure regular progress, the act established a system of legally binding five-yearly carbon budgets.
For more information visit: http://www.legislation.gov.uk/ukpga/2008/27/introduction
EU Renewable Energy Directive 2009/28/EC
A European Union (EU) directive that sets targets for all EU countries with the overall aim of making renewable energy sources account for 20% of EU energy and 10% of energy specifically in the transport sector by 2020. The directive sets a target for the UK to achieve 15% of its energy consumption from renewable sources by 2020. This compares to only 1.5% in 2005.
For more information visit: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32009L0028
Feed in Tariffs (Fit) scheme
The Feed-in Tariffs (FIT) scheme is a government programme designed to promote the uptake of small-scale renewable and low-carbon electricity generation technologies. The FIT scheme is available for anyone who has installed, or is looking to install, one of the following technology types up to a capacity of 5MW, or 2kW for micro-CHP: Solar photovoltaic (PV), Wind, Micro combined heat and power (CHP), Hydro and Anaerobic digestion (AD).
For more information visit: https://www.ofgem.gov.uk/environmental-programmes/fit/about-fit-scheme
United Kingdom National Renewable Energy Action Plan (NREAP)
The EU Renewable Energy Directive 2009/28/EC required Member States of the EU to notify the European Commission with a national action plan for 2020. The UK NREAP report describes how the United Kingdom planned to achieve its legally binding target of a 15% share of energy from renewable sources in gross final consumption of energy by 2020. It indicated that delivering 15% renewable energy by 2020 is feasible through domestic action and could be achieved with the following proportion of energy consumption in each sector coming from renewables (purely illustrative figures):
- Around 30% of electricity demand, including 2% from small-scale sources;
- 12% of heat demand;
- 10% of transport demand.
- The plan provided an overview of all policies and measures to promote use of renewable resources such as Renewables Obligation (RO), Feed in Tariffs (FITs), Renewable Heat Incentive (RHI - non domestic), Renewable Transport Fuel Obligation (RTFO), Zero Carbon Homes and Green Investment Bank.
For more information visit: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/47871/25-nat-ren-energy-action-plan.pdf
UK Renewables Energy Roadmap
The UK's first renewable energy (RE) roadmap published in July 2011 provided evidence highlighting significant upside potential as well as downside risk to deployment of RE sources. It illustrated all the actions underway for UK to achieve 15% of its energy consumption from renewable sources by 2020 introduced in the 2009 EU Renewable Energy Directive. It identified 8 technologies that are capable of delivering more than 90% of the renewable energy for 2020. The document has published updates in 27 Dec 2012 and 5 Nov 2013.
For more information visit: https://www.gov.uk/government/publications/renewable-energy-roadmap#history
Electricity Market Reform (EMR) white paper
The Government’s Electricity Market Reform programme (EMR) is designed to attract the £110 billion investment needed to replace the UK’s ageing energy infrastructure with a more diverse and low-carbon energy mix. EMR is the biggest change to the electricity market since privatisation. It presents the measures government is introducing to attract investment, keep energy bills as low as possible in the long run and secure a mix of low-carbon electricity sources that includes renewables, new nuclear, Carbon Capture and Storage (CCS) and gas. EMR will facilitate vital investment through the introduction of two new schemes: the “Contract for Difference” (or “CFD”); and the “Capacity Market”. EMR is designed to:
- Decarbonise electricity generation (investment in a range of low-carbon technologies and new coal-fired power station to be equipped with CCS);
- Keep the lights on (CFDs will diversify the UK’s domestic energy supply. It will ensure consumers can keep the lights on and are protected against global spikes in fossil fuel prices);
- Minimise the cost of electricity to consumers (EMR will reduce household electricity bills by £41 or 6 per cent per year on average over the period 2014-2030)
The EMR proposed to establish a system where low-carbon technologies can compete against each other on a level playing field in the long run.
For more information visit: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/48129/2176-emr-white-paper.pdf
Green Deal Energy Efficiency Scheme
The Green Deal was a UK government policy officially launched in January 2013. It was designed to help consumers to benefit from energy efficient improvements to their home.The deal was changed from loans to grants in 2014.
For more information visit: https://www.gov.uk/green-deal-energy-saving-measures/overview
Offshore Wind Industry Council
The Offshore Wind Industry Council (OWIC) is a senior Government and industry forum established in May 2013 to drive the development of the world-leading offshore wind sector in the UK. The OWIC is responsible for overseeing implementation of the Offshore Wind Industrial Strategy, and is the sponsoring body of the Offshore Wind Programme Board established following the recommendations in the Offshore Wind Cost Reduction Task Force report (June 2012) - a joint government / industry body responsible for driving cost reduction in offshore wind.
For more information visit: https://www.thecrownestate.co.uk/energy-minerals-and-infrastructure/offshore-wind-energy/working-with-us/offshore-wind-industry-council/
The Energy Act 2013 is the primary legislation that enables Electricity Market Reform, including the implementation of the Capacity Market. It received Royal Assent on 18 December 2013.
For more information visit: http://www.legislation.gov.uk/ukpga/2013/32/pdfs/ukpga_20130032_en.pdf
Electricity Settlements Company
The Electricity Settlements Company (ESC) is a private limited company, wholly owned by the Secretary of State for Energy and Climate Change. ESC’s role is to oversee the settlement of the Capacity Market to ensure that regular payments are made to capacity providers who have agreed to provide capacity at times of system stress. In addition ESC manages Credit Cover required from potential capacity providers participating in the capacity auctions run by National Grid (as system operator). These capacity arrangements help to keep the lights on across Great Britain. The company plays a key role in delivering the EMR programme and has overall accountability for the managing the Capacity Market settlement process. This includes determining Capacity Market settlement disputes and monitoring and reviewing the regulations relating to the settlement functions of the Capacity Market. The Low Carbon Contracts Company manages the administration and operation process for ESC.
For more information visit: https://www.emrsettlement.co.uk/
Domestic Renewable Heat Incentive (Domestic RHI) scheme
The Renewable Heat Incentive (RHI) scheme was extended to domestic buildings on 9th April 2014. It is a government financial incentive to promote the use of renewable heat.
For more information visit: https://www.ofgem.gov.uk/environmental-programmes/domestic-rhi/about-domestic-rhi
Low Carbon Contracts Company
The Low Carbon Contracts Company (LCCC) is the designated counterparty to Contracts for Difference (CFD). It commenced operations on 1 August 2014, governed by an independent board of directors. Its primary function is to manage the CFDs, which are 15-year private law contracts for the delivery of low carbon electricity generation over 5MW.
For more information visit: https://www.lowcarboncontracts.uk
First CFD auctions
A Contract for Difference (CFD) is a private law contract between a low carbon electricity generator and the Low Carbon Contracts Company (LCCC), a government-owned company. A generator party to a CFD is paid the difference between the ‘strike price’ – a price for electricity reflecting the cost of investing in a particular low carbon technology – and the ‘reference price’– a measure of the average market price for electricity in the GB market. It gives greater certainty and stability of revenues to electricity generators by reducing their exposure to volatile wholesale prices, whilst protecting consumers from paying for higher support costs when electricity prices are high.
For more information visit: https://www.gov.uk/government/collections/electricity-market-reform-contracts-for-difference
First CFD auctions round outcome
27 contracts worth £315million being offered to projects which will deliver over 2GW of renewable energy across England, Scotland and Wales.
For more information visit: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/407059/Contracts_for_Difference_-_Auction_Results_-_Official_Statistics.pdf
RO closure for onshore windfarms
The Government to end new public subsidies for onshore wind farms by legislating to close the Renewables Obligation across Great Britain to new onshore wind generating stations from 1 April 2016. In 2014, over £800m of Government subsidies helped onshore wind to generate 5% of the UK’s total electricity, with the high volume of onshore wind either deployed or in the pipeline can help the UK in meeting its climate change targets.
For more information visit: https://www.gov.uk/government/news/changes-to-onshore-wind-subsidies-protect-investment-and-get-the-best-deal-for-bill-payers
Summer Budget 2015 - RE context
- Climate Change Levy exemption for renewable electricity producers was closed for renewables from 1st August 2015.
- Vehicle Excise Duty reform implying zero-rate tax for zero-emissions cars and a flat rate for all other cars affecting uptake of low-emission vehicles
For more information visit: https://www.gov.uk/government/publications/summer-budget-2015
Zero carbon scheme scrapped
The zero carbon homes policy first announced in 2006 to ensure housebuilders build "zero carbon" homes within 10 years was scrapped on 2015.
For more information visit: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/443897/Productivity_Plan_print.pdf
Green Deal Energy Efficiency Scheme
Green Deal energy efficiency scheme launched in January 2013 was scrapped in July 2015. Funding was not renewed for Green Deal finance company, meaning no new applications were accepted. The action applied to new applicants to energy efficiency scheme.
For more information visit: http://www.telegraph.co.uk/news/earth/energy/11758707/Green-Deal-funding-pulled.html
New direction for energy policy announced
- Plans to phase out all unabated coal-fired power plants by 2025
- Further three auctions of clean energy support contracts announced. Second CfD auctions delayed.
- Support for gas-fired and nuclear electricity generation
- Support for offshore wind via contracts for difference (CfD) auctions, provided industry meets the cost-reduction targets. Evaluation of cost-effectiveness is planned in 2019
- Planning decisions for onshore wind to move to local authorities in England and Wales
For more information visit: https://www.gov.uk/government/speeches/amber-rudds-speech-on-a-new-direction-for-uk-energy-policy
Government reneges to support phase two of the CCS pilot project scheme
The UK Carbon Capture and Storage (CCS) Commercialisation competition made available £1 billion capital funding, together with additional operational funding through the UK Electricity Market Reforms, to support the design, construction and operation of the UK’s first commercial-scale CCS projects. In 2015, the government axed a £1bn grant for developing new carbon capture and storage (CCS) technology. The White Rose CCS Project is in Yorkshire, England and Peterhead CCS Project is in Aberdeenshire, Scotland were the bidders in the competition.
For more information visit: http://www.bbc.co.uk/news/uk-scotland-scotland-business-34357804
Autumn Statement and Spending Review
- Department of Energy and Climate Change (DECC) budget cut by 22%
- Department for Environment Food & Rural Affairs (DEFRA) budget cut by 15%
- An additional £1.15bn of funding for the Renewable Heat Incentive (RHI), allowing the scheme to run until 2021. Reforms have been put in place which are expected to generate savings worth £700 million.
- Energy intensive industries (EII) exempted from RO costs
- £250m invested in nuclear energy R&D
- Support for the creation of the shale gas industry, by ensuring that communities benefit from a Shale Wealth Fund (10% of the tax revenues from shale gas spent in local areas)
- Energy Company Obligation (ECO) scheme replaced from April 2017 by cheaper energy effienciency supplier obligation which will run for five years
For more information visit:
2016 - RE context
- Carbon Reduction Commitment (a UK government scheme designed to improve energy efficiency and cut carbon dioxide (CO2) emissions in high energy using private and public sector organisations) abolished from end of 2018-2019
- Revenue lost from CRC replaced by increase in Climate Change Levy from 2019 i.e. tax on energy use paid by businesses. Announcement translates into a rise in the carbon tax for carbon-free renewable energy
- At least £50m for innovation in energy storage, demand side response and other smart technologies over the next five years. Promises to implement the "smart power" recommendations of the National Infrastructure Commission.
- Announcement of auctions of Contracts for Difference of up to £730m, support up to 4GW of offshore wind and other renewables. First auction will allocate £290m. Support for offshore wind will initially be capped at £105 per megawatt hour (MWh), which will fall to £85 per MWh by 2026.
- £30m for a research and development programme to develop nuclear skills capacity
For more information visit: https://www.gov.uk/government/publications/climate-change-levy-main-and-reduced-rates/climate-change-levy-main-and-reduced-rates
COP21 - The Paris Agreement
At the Paris climate conference (COP21) in December 2015, 195 countries adopted the first-ever universal, legally binding global climate deal. The agreement sets out a global action plan to put the world on track to avoid dangerous climate change by limiting global warming to well below 2°C. It was opened for signature on 22 April 2016 (Earth Day) in a ceremony in New York City. On 5 October 2016, the threshold for entry into force of the Paris Agreement was achieved as 103 Parties ratified of 197 Parties to the Convention. The Paris Agreement entered into force on 4 November 2016.
For more information visit: http://unfccc.int/paris_agreement/items/9444.php
EU Referendum Brexit results announced
The United Kingdom European Union membership referendum, also known as the EU referendum and the Brexit referendum, was a referendum that took place on Thursday 23 June 2016 in the United Kingdom and Gibraltar to gauge support for the country's continued membership in the European Union. UK voted to leave the EU by 52% to 48%. Leave won the majority of votes in England and Wales, while every council in Scotland had Remain majorities.
For more information visit: http://www.bbc.co.uk/news/uk-politics-32810887
National Grids future energy scenarios report
Even in the most environmentally minded future scenario, the UK is projected to fail in its target of producing 15% of total energy from renewables. The scenarios meet the target at dates ranging between 2022 in Gone Green and 2029 in No Progression.
For more information visit: http://fes.nationalgrid.com/fes-document/
Energy Entrepreneurs Fund
The Energy Entrepreneurs Fund is a competitive funding scheme to support the development of technologies, products and processes in energy efficiency, power generation and storage.
For more information visit: https://www.gov.uk/government/publications/energy-entrepreneurs-fund-phase-5
Paris Agreement on climate change to ‘enter into force’
The Paris Agreement has formally come into force on 4th November 2016, legally binding countries that have ratified the deal to act on the pledges made at COP21 in December 2015. This includes a commitment by every country to prepare increasingly ambitious pledges to tackle greenhouse gas emissions every five years, known as Nationally Determined Contributions (NDCs).
For more information visit: http://unfccc.int/paris_agreement/items/9444.php
The twenty-second session of the Conference of the Parties (COP 22) and the twelfth session of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (CMP 12) held in Bab Ighli, Marrakech, Morocco from 7-18 November 2016.
For more information visit: http://www.cop22-morocco.com/
The Renewables Obligation (RO) is one of the main support mechanisms for large-scale renewable electricity projects in the UK. The RO will close to all new generating capacity on 31 March 2017. There are also a number of early closures which are in force for specific technologies. Generators who are eligible to apply for a grace period can gain entry to the RO after these closures for a specified amount of time.
For more information visit: https://www.ofgem.gov.uk/environmental-programmes/ro/about-ro
Second Contracts for Difference (CFD) Allocation Round opens
On 9th November 2016, BEIS reconfirmed the budget of £290m annual support for less established technologies including offshore wind in second CFD allocation round.The CFD Budget Notice sets out information on budget, strike prices, delivery years and details of any minima / maxima applying to the second CFD Allocation Round. Eligible projects will compete for an annual budget of £290m for the delivery years 21/22 and 22/23. Proposed Administrative Strike Price for offshore wind is £105/MWh and £100/MWh for delivery year 2021/22 and 2022/23 respectively.
For more information visit: https://www.gov.uk/government/publications/contracts-for-difference/contract-for-difference