Renewable Energy

The Carbon Reduction Commitment Energy Efficiency Scheme - the full name adopted by Government for this programme since October 2009 (known as "CRC") - is primarily aimed at encouraging energy efficiency measures within organisations that in 2008 used more than 6,000MWh. However, whilst the focus of CRC may be energy efficiency, on-site renewable energy schemes will also have a role to play and in certain locations could generate income to help reduce energy bills and/or CRC costs whilst enhancing a organisation's reputation through the renewable energy generation league tables that will be published annually under CRC legislation.

"Wind generation... is likely to provide most of our renewable generation in 2020" The Government's UK Low Carbon Transition Plan (July 2009).

Renewable energy covers many technologies including wind, solar, wave, tidal, hydro and biomass. However, it is wind energy that is widely recognised as best placed to meet the Government's targets up to at least 2020 for two main reasons; firstly, because it is a well established technology and one of the world's fastest growing energy technologies and, secondly, because the UK has the best wind speeds in Europe with 40% of the total European wind resource!

In order to make renewable energy generation more accessible, the Government will be introducing Feed-in Tariffs (FITs) in April 2010 - coincidentally the same date for the start of CRC - in order to encourage greater take-up of relatively small renewable energy schemes (covering, for example projects up to 2 wind turbines of about 120m height or solar power projects covering about 9 hectares). FITs have proved very effective in other European countries and provide the owner/operator of a renewable energy project with a guaranteed level of support, based on the amount of renewable energy generation, over the life of the project (typically 15-25 years).

In the UK, FITs are likely to provide a fixed payment for each unit of electricity generated through a Government-backed generation tariff. The tariff will vary with the scale and type of technology used. In addition, the electricity generated by the on-site renewable energy scheme will also either be used on-site and therefore reduce the organisation's electricity bill or if the electricity is surplus, it will be sold on to the grid at a fixed export tariff set out in the FITs legislation. At present it is assumed that it is more advantageous to an organisation to claim FITs as opposed to using the generation to reduce the need for CRC allowances. However, this is based on the assumed allowance price of £12/tonne CO₂; if this increases significantly in future, the benefits of on-site renewable generation under the CRC will increase dramatically.

Further information about wind energy and FITs will be available shortly.