2005-06 REVIEW OF THE RENEWABLES OBLIGATION
( SCOTLAND )
Analysis of the responses to the proposed Terms
of Reference
Summary
The Scottish Executive received 18 responses to its
Consultation Document on the "Terms of Reference for the
2005-2006 Review of the Renewables Obligation ( Scotland )". A final Terms of Reference is attached at
Annex A, and a list and breakdown of the respondents is
included at Annex C.
Issues Raised
(a) What the Review will not
consider:
The majority of respondents broadly supported the
Executive's proposals on what the review ought to
address. Many expressed the view that developers
and investors would be reassured by the scope of the review
being limited, with positive ramifications for long-term
confidence in the sector.
There was also a call for a roadmap in
relation to any future reviews, to reduce uncertainty.
More than half of respondents indicated their
desire for a support mechanism for renewable heat; half
of those felt that this should be looked at under the
Review of the ROS, with the remainder taking the view
that it should be considered separately.
A very small number raised the issue of co-firing,
with one call for the current dates and limits for
co-firing (which took effect earlier this year) to be
amended. While we recognise that there are some
concerns over the potential effectiveness of the existing
dates and limits applicable to co-fired generation, we take
the view that there should be more time allowed for the
effectiveness of the current rules to be properly
assessed.
(b) On what the Review will consider:
(i) Effectiveness of the ROS to date
There was overall support for the ROS, and its
achievements to date in stimulating renewables development
in Scotland and across GB. There were varied views
regarding the role of the ROS in supporting technological
diversity, or in supporting policy aims removed from
renewables development.
These are picked up elsewhere in this
summary.
(ii) Profile of the ROS
The commitment not to reduce the 25 year lifespan of
the ROS was welcomed by 7 respondents (39%). 3 respondents
(17%) urged an increase in the levels of the ROS after
2015/16, and two suggested that the possibility of
extending the lifespan beyond 2027 should be looked
at. One respondent thought the ROS should be
extended to 2050.
There were no specific suggestions as to
what the levels might be.
The Executive accepts that these issues
should be considered carefully as part of the Review.
(iii) Working arrangements
Where respondents commented on the current working
arrangements, there was unanimity that these should be
reviewed. The comments received incorporated a
number of detailed administrative issues which ought to be
included in the Review:
Creation of a single buy-out fund or
recycling mechanism;
Case for creation of an appeals mechanism
in relation to Ofgem's decisions;
Introduction of shorter obligation
periods;
Increased flexibility in the Obligation
timetable;
Issues affecting smaller companies and
generators;
Issues relating to offsite measurement
for co-firing.
We agree that these issues should be covered by the
Review, in addition to others raised during the
wider UK consultation. There are clearly a number of
issues involved, relating both to the legislation and its
interpretation and implementation, and these will need to
be considered carefully, not least issues of cost and
practicality.
(iv) Emissions Trading Scheme and transition to
market of renewables technologies over time
Slightly less than half of respondents expressed an
opinion on whether ETS should be considered by the
Review. Most took the view that to do so would be
precipitate and would affect investor confidence.
Others recognised that there would be an
effect and that this ought to be considered, despite a lack
of practical experience against which to judge.
A small number of respondents expressed concern at
the potential removal of eligibility from current
projects. There were calls for substantial notice
periods, combined with protection for existing and planned
developments, in order to avoid harming investment in any
technologies likely to be affected.
(v) Energy from Mixed Wastes
Around a quarter of correspondents commented in this
area, with the majority welcoming an opportunity to review
current practise and eligibility criteria for
waste. One respondent felt that it would be unwise
for ROS to be used to influence policy delivery away from
renewables.
Others felt that the composition of the fuel
should be more significant in terms of eligibility than the
technology being used to convert that fuel to electricity.
Attention was also drawn to an inconsistency
at present with the relevant EU Directive.
The Review will consider issues relating to
the eligibility of mixed wastes.
(vi) Combined Heat and Power (CHP)
Around a quarter of respondents commented on the ROS
being used to support CHP, with opinion split fairly evenly
between those in favour (as long as wider environmental
issues were considered) and those against, who believed
that the ROS was not the right type of mechanism to deliver
such support. Some respondents commented on the
importance of supporting biomass CHP, and expressed doubts
that this was the way in which to do it.
One respondent took the view that exempting
CHP would be a very positive means of supporting efficient
heat production and use.
(vii) Other eligibility issues
A very small number felt that, if eligibility were to
be extended at all, consideration should be given to
including large-scale hydro.
(viii) Longer term renewable technologies
Half of respondents commented on the need to support
the development of a wider range of technologies.
All felt that emerging technologies such as wave, tidal and
biomass, for example, were worthy of additional support in
order to benefit the sector and create diversity of supply.
A third of these said that any such support
should be considered separately from the Review.
However, the majority took the view either
that such support might be made available via the ROS, or
that the Review ought at least to explore the issues
involved in using the ROS to support emerging technologies
in this way.
This mirrors a recent call by the Scottish
Parliament's
Enterprise and Culture Committee for a similar debate on the use
of market mechanisms to support renewables.
There is currently a great deal of activity and
focus, both within the Executive and across the UK , on support for emerging technologies. In
Scotland , these matters are being addressed by the Forum for
Renewable Energy Development in Scotland (FREDS), whose
work will also inform our Review. The Executive
remains fully committed to promoting a wide range of
renewable technologies; whilst our view at the present time
is that the additional support necessary to achieve this
diversity can be delivered outwith the ROS, our Review will
examine the points raised in response to this consultation
and by the Committee.
(viii) Other issues
Some respondents took the opportunity to draw
attention to connected areas such as planning. The
relevant planning guidelines in
Scotland are due to be revised over the coming two years, and
work on this process will be conducted
separately.
As several respondents pointed out, the ROS operates
in tandem with the Renewables Obligation in England and Wales to create a strong and fluid GB renewables
market. The need to preserve the strength and
operation of this market will also be a key consideration
underpinning the Review, and we will be working very
closely with colleagues from the Department of Trade and
Industry, other devolved administrations and Ofgem as the
Review progresses.
c) Technical Issues
Our consultation also elicited requests to consider
some technical and procedural issues. A list of
issues which will be considered as part of the Review is at
Annex B.
List of annexes: