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Harmonising renewable support mechanisms

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What is a renewable electricity certificate scheme (RECS) ... Making Renewables FITTER' report available at http://www.worldfuturecouncil.org ... – PowerPoint PPT presentation

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Title: Harmonising renewable support mechanisms


1
Harmonising renewable support mechanisms
  • Dr David Toke Senior Lecturer in Environmental
    Policy, University of Birmingham and also Energy
    Expert, World Future Council

2
What is a REFIT?
  • Guaranteed minimum price for electricity sales
  • Long term contract for power purchase (15-20
    years)
  • Different to NFFO and RO

3
What is a renewable electricity certificate
scheme (RECS)
  • Electricity suppliers given renewable obligation
  • RE projects sell certificates (and energy)
  • Electricity suppliers buy certificates or pay
    penalty

4
Use of systems
  • REFIT dominant in Europe (over 80 per cent of
  • EU wind power installed under REFIT)
  • Less than 10 per cent of EU wind power installed
    under RECs
  • RECs used in USA, but underpinned by rich mans
    REFIT, the Federal Production Tax Credit

5
Why a REFIT?
  • Less income uncertainty, higher project IRR for a
    given income level

6
(No Transcript)
7
2005-2006
8
UK RO confusion?
  • Uncertainty over future price of renewable
    obligation certificates (ROCs)
  • Uncertainty over future value of electricity
  • Banks use low estimates of future income
  • In practice projects earn much more than what
    they would if income stream was secure
  • RO not cost effective
  • But local investors deterred by insecurity

9
REFIT transparency for local and small investors
  • Local investors often need lower returns
  • Local investors have better networks to gain
    planning consent
  • REFIT better for higher cost renewables such as
    solar power

10
Advantages of harmonisation

11
Theoretical advantages of harmonisation
  • Investment would flow to where it is most
    efficient
  • All countries would be forced to participate

12
Harmonised EU-wide RPS?
  • Great uncertainty over certificate value
  • Lack of competition in several countries (eg
    France, Germany)
  • Bottlenecks in some countries (eg UK)
  • Loss of local investment
  • Some countries would refuse to participate

13
A single REFIT?
  • Local conditions (esp wind speeds) differ
  • Some countries would object

14
Harmonised transferability
  • UK RO de-stabilised
  • Germans would pay for Danish etc renewables
  • No efficiency advantages

15
Contacts
  • Making Renewables FITTER report available at
    http//www.worldfuturecouncil.org/
  • Dr David Toke d.toke_at_bham.ac.uk
  • Miguel Mendonca (WFC) miguel_at_worldfuturecouncil.o
    rg
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