ROC banding review just published

From: Department of Energy and Climate Change <decc@service.govdelivery.com>

Date: 25 July 2012 07:08:03 GMT+01:00
To: chris.moore@mgtpower.com
Subject: Message from ORED
Reply-To: Department of Energy and Climate Change <decc@service.govdelivery.com>

 

Dear Renewable Energy Partners,

The Government is today publishing its decision on the levels of financial support that will be available through the Renewables Obligation (RO) for large-scale renewable electricity generators from 2013-17. This follows a comprehensive, rigorous and evidence-based review of RO subsidies carried out over the last 18 months.

We received nearly 4,000 consultation responses and substantial amounts of new evidence from a wide range of stakeholders as part of a public consultation process. We would like to take this opportunity to thank all those who submitted formal responses or took part in the review in other ways.

The full response confirming RO bands for 2013-17 along with the Impact Assessment and associated documents can be found on the DECC website:

• RO press notice
• RO consultation government response
• main RO webpage

To summarise:

The package provides the level of support for renewable electricity that the evidence shows is needed.

Onshore wind:

• Support for onshore wind from 2013-17 will be reduced by 10% to 0.9ROCs, as consulted on last Autumn. This level is guaranteed until at least 2014 but could change after then if there is a significant change in generating costs. 
• We recognise the risk that costs could fall more or less swiftly than expected.  The Government will therefore undertake a call for evidence on onshore wind costs in the Autumn, reporting in early 2013. If the findings show that one or more of the statutory grounds for a further review exists, for example that there is a significant change in generating costs, the Government will expect to initiate an immediate review of support levels for onshore wind.  Any new arrangements arising from a review would not take effect before April 2014, and there would be grandfathering and grace periods to protect financial commitments.  In any review of support levels, Government would follow the process of public consultation, and our approach would be as rigorously evidence-based as it has been in the current banding review.  We want to ensure that industry have the policy stability that they require to continue to invest.
• While the majority of the public supports the growth of onshore wind in the UK, we recognise that there are concerns from some communities about deployment in their area. Therefore the call for evidence will also examine how communities can have more of a say over, and receive greater economic benefit from, hosting onshore windfarms.  For example, through measures to improve local consultation by developers, enabling local businesses to participate more readily in the economic supply chain, and innovative ways to reward host communities. 

 

Offshore wind:

• Support for offshore wind will remain at 2 ROCs/MWh for new accreditations in 2013-14 and 2014-15. As costs of offshore wind come down, rates of support will also be brought down.  Support will be set at 1.9 ROCs for generating stations accrediting (and additional capacity added) during 2015-16 and to 1.8 ROCs in 2016-17.

 

Biomass:

• On biomass electricity generation the support level for conversion of coal powered plants to biomass is maintained at 1ROC/MWh, recognising the cost effective renewable energy generation and carbon emission reduction benefits that the technology can deliver. Support for enhanced co-firing has been adjusted to stepped levels that better reflect the cost elements of different co-firing levels and what is affordable (for both enhanced and standard co-firing) within the framework. Alongside all these changes the definition of conversion and co-firing will allow for unit by unit changes within a power plant, providing more flexibility to generators to move to full conversion over time. We have also retained a cautious approach to new build dedicated biomass aimed at bringing forward only limited deployment, holding to the 1.5ROC support level degressing to 1.4 in the final year, and there will be a further consultation shortly on a dedicated biomass cap and on further tightening of the greenhouse gas standard in the near future. We are maintaining support to a range of energy from waste technologies. The future developments of the market are extremely difficult to predict and there is a risk that increased demand from bioenergy could lead to price rises for certain biomass feedstocks. We will therefore be working with large power generators on a voluntary disclosure process on the future demand for domestic feedstocks in order to give confidence to the wood products industry and its investors that domestic supplies of feedstocks will continue to be available. 

Marine:

• Support levels for marine energy will more than double from 2ROCs to 5ROCs per MwH. This level of support will only be available for up to 30 MW of installed capacity at each generating station and is only available to generating stations accrediting from 1 April 2013  to 31 March 2017, and to additional capacity added during that period. The level of support for installed capacity above 30 MW will be 2 ROCs/MWh.

Solar: 

• There will be no immediate reduction in support for large-scale solar, but there will be a further consultation this year on reduced support levels given recent dramatic falls in costs.

We are all concerned about consumers' bills and it is vital that support for renewable electricity represents good value for money. That is why compared to current bands, today's announcement represents better value for money – we are getting more renewables at a cheaper average cost.

In announcing the Government response Edward Davey, Secretary of State for Energy and Climate Change, said:

"Renewable energy will create a multi-billion pound boom for the British economy, driving growth and supporting jobs across the country."

"The support we're setting out today will unlock investment decisions, help ensure that rapid growth in renewable energy continues and shows the key role of renewables for our energy security."

"Because value for money is vital, we will bring forward more renewable electricity while reducing the impact on consumer bills between 2013 and 2015, saving £6 off household energy bills next year and £5 the year after."

We would also like to bring you up to date on our latest analysis for jobs and investments in the renewables sector which shows that since April 2011 there have been around £11.3bn confirmed and planned investments with the potential support of around 22,000 jobs. We expect that the support we are announcing today will bring forward a further £20 to £25bn of new investment in the next four years.

Further information, including a renewables jobs and investment map is also available on the DECC website.

Finally we thought you might be interested in the first wave of results from DECC's public attitude tracking survey that have recently been published. The survey tracks public opinion on DECC's main business priorities and the views on renewables are generally positive. The headline results on renewables are:

• Eight in ten (79%) said they supported renewable energy for providing our electricity, fuel and heat, with 32% strongly supporting. Just 5% opposed renewable energy.
• Seven in ten (69%) agreed that renewable energy industries and developments provide economic benefits to the UK.
• Almost eight in ten (78%) agreed that renewable energy developments should provide direct benefit to the communities in which they are located.
• A little over half (55%) agreed that they would be happy to have a large scale renewable energy development in their area.
• Perceptions of a range of renewable energy sources were all positive. Highest levels of support were found for solar (83%), offshore wind (76%) and wave and tidal (75%).
• On-shore wind had good support (66%) so too did Biomass (64%).  

Further information can be found on the public attitude tracking survey on the DECC website.

Best wishes,

Hugh McNeal
Chief Executive, Office for Renewable Energy Deployment

Bernie Bulkin
Chair, Office for Renewable Energy Deployment 

• If you do not wish to receive this email or you would like any of your colleagues to be added to this ORED email distribution list then please email and let us know via ored@decc.gsi.gov.uk

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The Challenge to Project Finance Today: Britain's banks are hoarding

This is on Reuters today:

http://uk.reuters.com/article/2012/06/13/uk-banks-britain-fsa-idUKBRE85C0BK20120613

(Reuters) - Britain's banks are hoarding large amounts of cash and capital because of market pressures rather than regulatory requirements, a top regulator said.

Hector Sants, who stands down this month as chief executive of the Financial Services Authority (FSA), said lenders are worried that markets would perceive them as not being safe if they did not hold so much cash.

"What is determining the amount of cash banks hold is the market climate and not the regulator," Sants told the BBC on Wednesday.

Banks have complained that they cannot lend to businesses to the extent that the government would like while simultaneously building up capital and liquidity buffers.

Britain was the first in the world to force local banks to build up liquidity cushions ahead of globally agreed rules.

Paul Tucker, Deputy Governor of the Bank of England, said on Tuesday that requirements for banks to hold cash cushions could be crimping the impact of the central bank's quantitative easing asset purchases.

RO Banding Delay: 25% Reduction in Wind Tariff?

The Guardian newspaper ran this article yesterday. The current trade rumour is that the bands will be confirmed either around 15- 17th June, when Edward Davey is speaking at the Rio +20 conference, or 15th July immediately preceeding Parliamentary Recess. If the last few years are any guide, expect the latter.

http://www.guardian.co.uk/politics/2012/jun/02/george-osborne-cuts-windfarm-subsidies

George Osborne demands massive cuts to windfarm subsidies

PM's 'greenest government ever' claim undermined by chancellor's move, which follows pressure from Tory MPs

Royd Moor in Yorkshire: windfarms currently receive £400m a year in public funding. Photograph: Christopher Thomond for the Observer

Plans for dramatic cuts in government subsidies for onshore windfarms are being drawn up by the Treasury in a move that seriously underminesDavid Cameron's claim to be running "the greenest government ever".

The Observer has learned that George Osborne is demanding cuts of 25% in subsidies, a reduction the industry says would "kill dead" the development of wind power sites. The Treasury's stance has put the chancellor at loggerheads with the Liberal Democrat energy secretary Ed Davey, whose party strongly supports more renewable energy.

Osborne, whose reputation has taken a dive following his widely criticised budget and a subsequent string of U-turns, has been under heavy pressure from Tory MPs to reduce the billions spent on green commitments.

In February more than 100 Conservative backbenchers wrote to the prime minister demanding cuts to the £400m a year public subsidies for windfarms which they see as evidence of too much Lib Dem influence over coalition policy. A prominent opponent of onshore wind power is the Duke of Edinburgh, who is said to have described turbines as useless and to believe they will never work.

Tim Yeo, Tory chairman of the all-party energy and climate change select committee, said the Treasury and the Department of Energy and Climate Change (Decc), which is headed by Davey, were following different agendas. "This is an example of where Decc's attempts to stimulate renewable energy are being hampered by Treasury intervention," he said. "The way to deal with this – and realise the savings the Treasury wants to achieve – is to have more onshore renewable energy, which requires lower levels of subsidy, and less offshore, which requires more. We need to change the balance."

Critics accuse the chancellor of pandering to Conservative backbenchers who do not want turbines built in their constituencies, believing they will damage their prospects of re-election. They argue the cuts make no economic sense, because alternatives, such as siting the turbines in the sea, would be much more expensive. "This is a reckless act of political opportunism by a chancellor keen to boost his popularity among his backbench MPs," said Juliet Davenport, chief executive of renewable electricity supplier Good Energy.

However, Chris Heaton-Harris, a Tory MP who led the backbench campaign for cuts, said he was greatly encouraged. "I want to see a dramatic cut," he said, arguing that onshore wind power was expensive compared with gas and that it would drive up fuel poverty.

However, proponents of wind power point to rocketing gas prices and the air pollution and climate change benefits of renewable energy technologies, of which onshore wind is the cheapest.

"It is crackers to kill dead the deployment of the cheapest renewable technology if you genuinely are worried about the cost," said Gordon Edge, policy director at industry group RenewableUK. A source at one of Britain's big six energy companies said: "It's perverse – you get less renewable energy bang for your buck. It only makes sense if you don't like windfarms in your constituency."

After becoming party leader in 2005, Cameron adopted the slogan "vote blue, go green" as he made the environment the centrepiece of his drive to modernise the Conservatives. Shortly after entering a coalition with the Lib Dems he promised to lead the "greenest government ever", adding that "nowhere are long-term decisions more needed than actually in the fields of energy and climate change and environment".

But Osborne has made clear that he does not believe the green agenda can remain a priority when cash is short and the deficit needs to be reduced. With his own political fortunes on the slide, Tory MPs believe he can be persuaded to back their anti-green campaigns. This year the government angered green campaigners by announcing plans to slash subsidies for solar energy, a move the industry roundly condemned.

There are more than 3,000 wind turbines in the UK countryside and the debate has become more polarised in the past two years, with a tripling of local opposition. However, a large majority of the public remains in favour of wind power, even if it is placed within a few miles of their home.

The Treasury declined to comment, but a spokesman for the Department of Energy and Climate Change, which runs the subsidy scheme, said: "It is vital that our support for renewable electricity both encourages investment and represents value for money for consumers. The government will publish the new support levels shortly."

According to sources, the decision has been delayed by the Treasury "crawling all over" the new rates put forward by Davey.

Decc's initial proposal in October, delayed by wrangling, was for a 10% cut in the support for onshore wind under a scheme called the "renewables obligation". But the Observer was told the Treasury has demanded a 25% cut.

"The delay means the whole of the UK's renewables investment portfolio is being jeopardised by Osborne's pandering to Tory backbenchers," said a source. "It is total prioritisation of politics over the economic interests of the country."

Davenport said: "The 10% proposal was the product of independently commissioned analysis by Decc. If the Treasury swoops in at the last minute and shortcuts that process, the credibility of the government's renewables policy will be in tatters, along with the prime minister's claim to be the greenest government ever. Of course, some might argue that is precisely what the chancellor wants to achieve."

The setting of subsidy levels is a negotiation between industry and government, according to Michael Liebrich, chief executive of analysts Bloomberg New Energy Finance, who made an influential presentation to David Cameron and the world's leading energy ministers in May.

"If you cut too fast, you damage the industry and the supply chain, but if you go too slow, you create subsidy junkies," he said.

Liebrich's presentation showed the global average cost of onshore wind was falling, but he said using that to justify cuts in the UK was wrong: "Just because the best windfarms in the world are competitive [with gas] does not mean the average ones are yet." He added that large scales, fast planning and good grid connections made US windfarms much cheaper than those in the UK.

There are 320 onshore windfarms in UK, a third of them in England. Many more are awaiting construction or planning permission.

ArgusMedia: UK’s Decc to announce Roc banding by mid-July http://t.co/0YA9u1SK

ArgusMedia: UK's Decc to announce Roc banding by mid-July http://t.co/0YA9u1SK

Argus Media (@ArgusMedia) on Twitter

ArgusMedia: UK's Decc to announce Roc banding by mid-July http://t.co/0YA9u1SK

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Argus European Biomass Trading Event

We have had a lot of our partners call us up to see if we are free to meet on Thursday / Friday 19^th / 20^th April next week when they are in London for the Argus conference.

Whilst we are not planning to attend this years conference, our offices are very close by and so please feel free to drop us a line or call if you would like to meet up.

We look forward to seeing you!

Best Regards
Chris Moore
Chief Executive Officer
MGT Power Limited
16 Old Queen Street London SW1H 9HP
+442031785452 / +447884231261

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This week's Prime Minister's Questions caught our attention:

Nigel Adams MP:

Following the renewable energy subsidy review, will the Prime Minister assure taxpayers that the Government will focus their support on technologies that are cost-effective and reliable, such as biomass, rather than inefficient, costly, large-scale onshore wind farms?

The Prime Minister:

My hon. Friend will know that the consultation on the renewable obligation banding review has just closed. It proposed targeting only the most cost-effective onshore wind farms, recognising that that is now one of the mature and cheaper technologies. We should, as he says, increase support for an expansion in sustainable biomass generation, which is reliable and cost-effective, and will help us to meet our renewables target.

It's great to see this government's focus on getting value for money in reducing CO2 and acknowledgement that biomass is great bang for your buck.

Join the Campaign! Support Biomass - 2 days left to register

With only 2 more days to go before the closure of consultation on the UKs revised Banding of its Renewable Obligation, now is the time for you to click the link below to register your support for biomass. The following text is taken from the "Back Biomass" campaign website here: http://www.backbiomass.co.uk/join-the-campaign.php.

We are facing an energy crisis... UK energy prices are rising, and the UK Government is making some hard decisions as to how to produce energy, cheaply, efficiently, and cleanly for the long-term.

The UK Renewable Energy Association (REA's) Back Biomass initiative is an industry-led and government supported initiative to inform the debate around the merits of biomass power and CHP as a proven, practical, secure source of low-carbon energy. We want to deliver a clear message to Government that if it puts the right policy framework in place, the biomass industry is ready and willing to assist in meeting the UK's renewables target.

This technology can boost energy security, produce clean electricity and heat, and create new markets and jobs driving economic development in rural and urban areas. It is also uniquely able to provide stable power to balance grid peaks created by inconsistent renewable energy sources. Together with carbon capture and storage, it could even provide 'the holy grail' of negative emissions.

A key part of the campaign is around driving up standards in the sustainability and conservation of forestry, helping to ensure that biomass is cleaner and more sustainable than it has ever been. The industry welcomes the introduction by Government of rigorous new Sustainability Criteria from 2013 meaning that only sustainably-sourced biomass which complies with strict environmental regulations can receive UK subsidy. Biomass feedstock therefore cannot be taken from protected areas, and must have a 60% overall lower lifecycle greenhouse gas emissions compared to fossil generation.

The Government believes biomass is a huge opportunity for the UK, but they need to know you agree. Please click here to send a letter to the UK Minister and his team, backing their policy on biomass.

Note: If the email does not open automatically please download the Consultation Response Email text in the right hand column. Alternatively, please copy and paste the following text and email to robr@decc.gsi.gov.ukand ps.charles.hendry@decc.gsi.gov.uk


Dear Minister,

I am writing to support Government proposals to back the UK biomass power and CHP industry.

I believe this technology represents a huge opportunity to strengthen energy security and grow our green economy using a controllable, dependable supply of home-grown renewable energy.

Biomass is one of the few renewables technologies which can provide reliable, baseload power to meet peaks in demand, meaning it will have a key role as more intermittent renewables come online in coming years. The Climate Change Committee has also found that without sustainably sourced bio-energy, it will be almost impossible to meet our 2050 emissions reductions commitments.

Your continued backing will stimulate further employment and expansion in the biomass sector which already supports thousands of jobs, directly and in its supply chain across industries including manufacturing, forestry, agriculture and transport.

I support your priority of ensuring the sustainable use of UK and global resources, and welcome the incoming Sustainability Criteria which will help the biomass industry become cleaner and more sustainable than ever before.

We must see continued and increased investment in biomass, to help reduce our dependence on fossil fuels, achieve our carbon commitments, keep the lights on and energy bills down.

Please ensure that, in the current review of the Renewables Obligation, you maintain support for biomass power and CHP.

Energy from biomass: the size of the global resource | UK Energy Research Centre

Over the weekend there have been a large number of press articles under the title "How Biomass Can Provide 25 of Global Energy without Affecting Food Production". For example, ScienceDaily (Nov. 25, 2011) — A new report suggests that up to one fifth of global energy could be provided by biomass (plants) without damaging food production.

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See Also:

Plants & Animals

• Agriculture and Food
• Extreme Survival
• Food

Earth & Climate

• Energy and the Environment
• Sustainability
• Renewable Energy

Reference

• Biomass (ecology)
• Biomass
• Trophic level
• Food chain

The report reviews more than 90 global studies. It has been produced by the Technology and Policy Assessment function of the UK Energy Research Centre (UKERC), which addresses key controversies in the energy field, and aims to provide authoritative and accessible reports that set very high standards for rigour and transparency.

A debate has been raging about the role biomass could play in the future energy system: some say it could play a major role in fuelling the planet, others argue it risks an environmental disaster. To get to the heart of the controversy, UKERC scientists at Imperial College London have undertaken the first systematic review of the evidence base.

The report finds that the main reason scientists disagree is that they make different assumptions about population, diet, and land use. A particularly important bone of contention is the speed with which productivity improvements in food and energy crop production can be rolled out.

"If we make the best use of agricultural residues, energy crops and waste materials then getting one fifth of current global energy supply from biomass is a reasonable ambition," says Dr Raphael Slade, the report's lead author and a Research Fellow at Imperial College London. The report finds that getting more than this is technically possible but requires assumptions about food production and changes in diets that look increasingly challenging, especially as people in Asia and Latin America begin to adopt a high meat western diet as incomes rise.

"The more bio-energy you want the harder it becomes to reconcile demand for food, energy and environmental protection" says Slade. Replacing all fossil fuels with biomass would be equivalent to all of global agriculture and commercial forestry combined, and would only be possible if we can grow more food on less land.

Technical advances could be the least contentious route to increased bio-energy production, but policy will need to encourage innovation and investment. A renewed focus on increasing food and energy crop yields could deliver a win-win opportunity as long as it is done without damaging soil fertility or depleting water resources. The report highlights the potential for policy to promote learning by encouraging development of sustainable biomass now, rather than waiting for the definitive answer on the ultimate potential.

"The main mistake is to think of this as all or nothing. There's plenty of scope for experimentation to make sure we get it right," says Dr Slade.

Energy is an essential input into global agriculture, and the interactions between these two areas need to be better understood. The report stresses the need for scientists working on food and agriculture to work more closely with bio-energy specialists to address challenges such as water availability and environmental protection. If biomass is required to play a major role in the future energy system the linkages between bio-energy and food production will become too important for either to be considered in isolation.

"Bioenergy may need to play a part in a future low carbon energy mix," says Dr Ausilio Bauen, Head of Bioenergy at Imperial College's Centre for Energy Policy and Technology. "Ensuring bio-energy, food and forests don't compete for land won't be straightforward. But, if we use land more productively, and make better use of available plant material, we should be perfectly capable of producing bio-energy, feeding a growing population, and conserving the environment all at the same time."

The report is available on the UK Energy Research Centre here.

http://www.ukerc.ac.uk/support/tiki-index.php?page_ref_id=3026

US Forestry Study Confirms no carbon debt from biomass energy.

A team of researchers from the U.S. Forest Service, several universities, and natural resource and environmental organizations has published a new report that confirms that energy produced from forest biomass merely returns recently absorbed carbon to the atmosphere, and essentially results in no net release of carbon, provided overall forest inventories are stable or increasing.

The following summary, published by Science Daily (http://www.sciencedaily.com/releases/2011/11/111109093852.htm) provides a useful overview:

A recent report provides new ideas surrounding carbon and energy benefits forests and forest products provide. The report, Managing Forests Because Carbon Matters: Integrating Energy, Products, and Land Management Policy, summarizes and analyzes the most recent science regarding forests and carbon accounting, biomass use, and forest carbon offsets.

A team of researchers from the U.S. Forest Service, several universities, and natural resource and environmental organizations coauthored the report, which appears as a supplement to the October/November 2011 issue of the Society of American Forester's Journal of Forestry.

"This work should help policymakers reconsider the critical impact forests have on our daily lives and the potential they have to solve problems that confront our Nation," says Bob Malmsheimer, lead author of the report and a professor at State University of New York (Syracuse) College of Environmental Science and Forestry. "We believe our science-based findings should lead toward positive reforms that encourage investment in this vital renewable resource."

The report suggests that U.S. environment and energy policies should be based on the following science findings:

· Sustainably managed forests can provide carbon storage and substitution advantages while delivering a wide range of environmental and social benefits including timber and biomass resources, jobs, economic opportunities, clean water, wildlife habitat, and recreation.

· Energy produced from forest biomass returns to the atmosphere carbon that plants absorbed in the relatively recent past; it essentially results in no net release of carbon as long as overall forest inventories are stable or increasing (as with U.S. forests).

· Forest products used in place of energy-intensive materials such as metals, concrete, and plastics reduce carbon emissions (because forest products require less fossil fuel-based energy to produce and they also store carbon for a length of time based on their use and disposal), and they provide biomass residuals (i.e., waste wood) that can be substituted for fossil fuels to produce energy.

· Fossil fuel-produced energy releases carbon into the atmosphere that has resided in the Earth for millions of years; forest biomass-based energy uses far less of the carbon stored in the Earth, thereby reducing the flow of fossil fuel-based carbon emissions to the atmosphere.

"Perhaps this report will inspire fresh efforts to find management strategies that folks can agree on," says coauthor and Forest Service scientist Jeremy Fried. "The forest inventory and analysis data collected by the Forest Service on all forested lands in the U.S. provided the data necessary to explore how forests can be managed to provide climate benefits. Full life-cycle analyses of U.S. forests show that the best opportunity for these forests to provide even more climate benefits requires a combination of factors. Those factors are: sustainably managed forests, a healthy market for long-lived forest products, and renewable energy generated from forest and mill residues."

The report emerged from the Society of American Foresters Task Force on Forest Climate Change Offsets and Use of Forest Biomass for Energy. Authors include Robert Malmsheimer, State University of New York (Syracuse) College of Environmental Science and Forestry; James Bowyer, Professor Emeritus of University of Minnesota; Jeremy Fried, U.S. Forest Service; Edmund Gee, U.S. Forest Service; Robert Izlar, University of Georgia; Reid Miner, National Council for Air and Stream Improvement; Ian Munn, Mississippi State University; Elaine Oneil, University of Washington; and William Stewart, University of California-Berkeley.

Read the paper online at http://www.safnet.org/documents/JOFSupplement.pdf

David Cameron comments in the FT

Following is a quote from an article written by David Cameron (UK Prime Minister) in the Financial Times today:

"In terms of future productivity, this infrastructure deficit is as serious as our budget deficit. In terms of job creation today, getting construction projects off the ground is critical.

Too often projects get hobbled by planning restrictions, funding blockages or regulatory burdens. So this autumn the government is on an all-out mission to unblock the system and get projects under way."

And amen to that.

MGT Power welcomes UK Government's Ongoing Support for Low Cost, Sustainable, Large Scale Forestry -Backed Biomass

Chris Moore, Director of MGT Power, welcomed the proposed ROC banding for large scale biomass announced today by the Department for Energy and Climate Change.

Chris said:

"After a long wait the biomass industry finally has the combination of clarity over the future ROC band for dedicated biomass, along with agreed 20 year grandfathering of ROCS, and confirmation of robust rules governing biomass sustainability standards. As a result MGT's fully permitted flagship biomass project at Teesside, North East England will now move into its final stage of development and financing.

We welcomed the Government's "Renewable Roadmap", published in June, because it anticipates 6,000MWe of large scale biomass by 2020, an increase of more than 100% from today's level, equivalent to more than 10 new build projects of the scale of MGT's Teesside project.

MGT fully supported DECC's decision to legislate for strong Sustainability Criteria for Solid and Gaseous Biomass for Generators, and we welcome both the follow-on Ofgem consultation published in September, and DECC's re-iteration of their commitment to legal sustainability standards in today's announcement. These commitment's are seen by many as Europe's strongest national framework for biomass sustainability, and give further investor and market confidence that the growth in the biomass industry will be robustly sustainable, ensuring a truly renewable energy resource that will be there for as long as we need it.

MGT has argued for many years that large scale biomass power stations, designed for low capital cost and high thermal efficiency, represent one of the most cost effective forms of large scale renewable energy. These power stations have the huge additional benefit of operating predictably 24 hours a day so that no standby generation is required, and have very low external grid costs compared to some other technologies.

Armed with today's good news, we are now mobilising our final phase of financing negotiations with lenders and investors to achieve full financial close and start of construction within less than 6 months. It is therefore imperative that the Government maintains its planned confirmation of the ROC bands as soon as possible following the end of consultation on the 12th January, in order for this industry to continue to contribute to the UK economic recovery.

The 295MW Teesside Renewable Energy Plant is a fully dedicated biomass power station project and is fully consented. The site is located at Teesport, near Redcar.

******

Notes to Editors:

1. MGT Power (www.mgtpower.com) was established in December 2007 to develop biomass generation projects in the UK and Europe. The management team includes Chris Moore, Ben Elsworth, Thiago Azevedo, Anju Sanehi and Mark Puckett who have backgrounds in UK power generation and the supply of renewable energy feedstocks. The company's main shareholders include Trafalgar Asset Managers and MKM Longboat Capital Advisors.

For further information:

MGT Power Ltd (www.mgtpower.com)

Chris Moore/Ben Elsworth: 020 3178 5852

UK Government Announces 2013 ROC Banding Consultation

The consultation went up on the DECC website literally minutes ago, here is the link:

the result for stand alone biomass is 1.5 ROCs/MWh for plant commissioning in 2013, 2014 or 2015, dropping to 1.4 ROCs/MWh for plant commissioning in 2016 or 2017.

We now have a lot of reading to do (the document is over 150 pages long!) to get the detail, but the mood here is very positive so far.

At least another day to wait

Rumours are flying round thick and fast, but it now looks like the banding consultation will be announced tomorrow with Chris Huhne appearing before Parliament at 10:30am.

It looks increasing possible that there will be a cut in RO banding for onshore wind, something which has been occasionally rumoured over the past couple of months. The Times* has run an article today by Robert Lea with the following quote:

"There was growing speculation last night that the government is on the verge of cutting multibillion-pound financial incentives to build wind farms.

"Such a move, which could come as early as tomorrow, would have a profound effect on the British wind industry, which has stated its intention to become a world leader in renewable energy".

Actually we suspect the impact would be rather greater on the European turbine manufacturers, but no doubt if a cut does come, intermediate quality wind projects will suffer for a few years.

So far no mention of a cut for biomass (fingers crossed), but we are also hearing rumours that tomorrow will also bring an announcement on Carbon Capture and Storage, possibly a rather negative one.


* Sorry we can't give you a link but The Times online edition sits fully behind a paywall, you can sign up here: http://www.thetimes.co.uk/tto/news/

Renewable Obligation Banding Proposal Announcement Tomorrow 0930?

We are hearing from various sources that tomorrow at 0930 London time DECC (Chris Huhne) will hold a press conference and release written statement regarding the banding announcement. Our analysis of the details will be here as soon as possible.

Sunday Times - Banding Article

Sunday Times, 9th October 2011 (Marie Woolf):

"The chancellor is rebuked by David Cameron for failing to rubber stamp new prices that power companies will pay for renewable energy"

“At a meeting on Monday the prime minister’s most senior official, Jeremy Heywood, gave a dressing down to an Osborne adviser over the chancellor’s failure to rubber stamp the new price that power companies will pay for renewable energy such as solar, wave and wind power.”

3rd party verification of what we have suspected for a while. The article goes on:

"The prices have already been approved by Cameron, Vince Cable, the business secretary, Philip Hammond, the transport secretary, and Chris Huhne, the energy secretary, and will now go out for consultation. Danny Alexander, chief secretary to the Treasury, and Nick Clegg, the deputy prime minister, also support the pricing structure."

Bearing in mind that the Arup Report shows a medium cost scenario for Round 3 offshore wind of £198/MWh, we’re not altogether surprised that Treasury had some questions, although given the length of time that the whole review has taken, and the damage that this delay is causing to the industry, it’s very disappointing that this didn’t happen earlier in the process.

You can find the full article in the Times here: http://www.thetimes.co.uk/tto/news/ although unfortunately it is behind a paywall.

Banding update

I've just come from a presentation by the Department of Energy and Climate Change (DECC) to members of the Renewable Energy Association.

An update on the ROC banding process was provided by Olivia Knibbs who is a member of the Renewables Obligation team at DECC:

"the banding consultation will be published shortly and I do mean shortly"

She also confirmed that it was still DECC's intention to pass the new bands into legislation by April 2012, although she acknowledged that the timetable was now "squeezed".

So, still no firm timescale, but at least DECC seems aware of the urgency.