Transitioning from RO to CfD
Gordon Moran, writing for the European Energy Centre (EEC), examines the
impact of the Contracts for Difference (CfD) market on the sector so far
ast year the UK government introduced Contracts for Difference (CfD) to replace the
Renewables Obligation as the primary financial support mechanism for the large scale
renewables industry in the UK.
In short, the scheme works by distributing support in the form of a variable additional
payment on top of the wholesale electricity price, up to the limit of a pre-demarcated strike price. The strike
price is based on a CfD with generators; they will receive a top-up when the average wholesale price is
below the strike price and revenues will be capped at the strike price to avoid overcompensation.
The first round of CfD was held recently and there has been some criticism of the initial roll out
of the scheme with some technologies, such as solar, receiving relatively little support. This has led to
concerns that larger projects with larger economies of scale from more established technologies may win
a disproportionate number of contracts. However, consideration has also been given to more fledgling
technologies: the more established technologies compete in a common auction and start up technologies are initially to receive allocated
budgets to promote research and development.
In addition, the funding for the measures is provided via levies on energy producers rather than out of general taxation, which means
that funding should remain secure for the long term. The strategic importance and long organisational timeframes of energy infrastructure
development mean that whatever the stripes of the next UK government, it is unlikely to substantially alter the regulatory framework further
and renewables should receive strong support for the foreseeable future.
To learn more about renewable energy and energy efficiency through learning courses visit www.EUenergycentre.org
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Commercially minded
Liz MacFarlane, Zenex Solar, identifies a number of barriers to increasing PV
deployment in the commercial market
’ve had a fascinating insight this
week in to the potential for some
really innovative PV installations.
It’s easy to get lost in our daily
supply of PV equipment for standard domestic,
commercial and ground mount schemes and
to forget how entrepreneurial we’ve had to be
to grow the market where we can.
From motorway verge PV, flotillas of solar
on our reservoirs and the growing car-port
market, it’s all going on.
Of course, we still need to focus on the
commercial rooftop arena, which is still
under-represented. It’s not difficult to see the
potential here and also to recognise some of
the barriers to entry.
The government’s ‘lift and shift’ idea which
enables the owner to take their system with
them and continue to benefit from their
investment should they move premises
I
goes some way to tackle the issues around
landlord/tenant complications on commercial
property.
Our market is very different to that of our
foreign counterparts with a large amount of
UK commercial sites being landlord held. This
leads to all kinds of issues around tenancy
agreements, length of tenure and value of
PPA. Then there is the general nervousness
of landlords after disappointment in other
investment, and the perceived issues around
repairs and maintenance. And finally, there’s
the basic confusion around some of the solar
supply-chain politics.
If commercial roof-space is an area you’re
trying to break in to, then my one piece of
insight is this; The people who are succeeding
here seem to be speaking to the whole
sphere of influencers, as well as the decision
makers. They are keeping the process simple,
providing a holistic service and keeping some
of the background market politics away from
their customers.
www.renewableenergyinstaller.co.uk | 15