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System fuels the scramble for cash
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Last week, The Journal revealed how the Government’s Renewables Obligation system is prompting a scramble for wind farm sites in the North-East.
It sets a target – which rises year by year – for what proportion of electricity suppliers must source from renewables.
To hit their target, suppliers must buy Renewables Obligation Certificates (ROCs) from generating firms who use renewable technology.
One ROC is awarded for every megawatt hour (MWh) of renewable power produced. The generators can sell these ROCs to suppliers for about £46 each.
The cost that suppliers pay for these ROCs is passed on to consumers. At present, about £7 of the typical annual household bill pays for suppliers’ expenditure on ROCs, though this is expected to rise to £20 as the targets increase.
Our report described how generators are favouring on-shore wind farms because they are much cheaper to develop than technology such as offshore wind or tidal power.
Therefore, the Government is considering changing its policy to offer more ROCs per MWh for more expensive technology. This could reduce the amount of money companies can make from wind farms. However, this will not change until 2009, and any wind farm that is already established by that point will not be affected.
For that reason, there is a suspicion that firms are racing to acquire sites before the cut-off point – and the huge amount of money they can make from ROCs mean they can afford to offer large payments to landowners who are willing to allow turbines to be erected.
By Ross Smith
The Journal
30 April 2007
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