By ANDREW TAYLOR
UNITED KINGDOM, Oct. 5, 2000 (Financial Times)Electricity suppliers will be required to buy up to 10 percent of their power from renewable energy generators under “green power” plans to be announced by the UK government Oct. 5.
Companies must meet renewable energy targets or pay financial penalties, Stephen Byers, chief trade and industry minister, will warn. Industry leaders said the move could add about 2 percent to electricity bills by 2010. Mr. Byers wants the proportion of electricity generated from renewable energy sources such as wind, hydro-electric schemes and methane gas produced from landfill sites to rise to 5 percent by 2003 and 10 percent by 2010.
The proposals, part of the government’s climate change strategy, will replace the non-fossil-fuel obligation under which a small proportion of income from electricity bills has been set aside to subsidise renewable energy projects. Officials say the proposals will allow the market to decide which are the most cost-efficient schemes.
Electricity suppliers will receive green certificates to verify how much renewable power they have bought. Suppliers unable or unwilling to meet targets will be given the choice of paying a penalty of 3p a kilowatthour or buying certificates from companies with surpluses.
Industry analysts say the notional cost of increasing renewable energy sales to meet the 10 per cent target would be about
OM, the Swedish-based exchange operator bidding for the London Stock Exchange, has expressed interest in establishing a market for new renewable energy certificates.
Only about 3 percent of the country’s power is currently generated from renewable fuels. About half of this comes from large hydro-electric schemes, which are opposed by many environmentalists.
The government’s consultation paper excludes hydro-electric schemes of more than 10MW and production of energy from burning household waste from qualifying for green certificates.
Mr. Byers proposes that end-users buying from renewable energy generators, with the exception of large hydro-electric schemes, should be exempt from the climate change levy due to be imposed next year.
Offshore wind schemes and projects to grow crops such as fast-growing willow to burn in power stations, which are strongly favoured by environmentalists but expensive, would be eligible for capital grants.
This would be in addition to aid promised by ministers for renewable energy schemes under climate change levy proposals. The British Wind Farm Association has criticised the funding currently available as insufficient.
Details of how much more money the industry can expect to receive has still to be decided.
To see more of Financial Times, go to http://www.ft.com.
©2000 Financial Times. All Rights Reserved.