SmartestEnergy: The transition to new renewable subsidy schemes June 2015
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Transcript of SmartestEnergy: The transition to new renewable subsidy schemes June 2015
The transition to new renewable subsidy schemes
David Taylor, VP Sales and Marketing
5th June 2015
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Source to supply...
600+ projects in the UK
From community schemes and local landowners to major renewable developers
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Wholesale cost; 43.0%
Taxes and Levies ; 28.5%
Systems and Network charges ; 27.0%
Supplier Costs ; 1.5%
October 2015
What makes up a typical business Electricity Bill?
*Estimated based on a typical SmartestEnergy business electricity fixed contract (quoted February 2015).
Wholesale cost; 53.0%
Taxes and Levies ; 21.0%
Systems and Network charges ; 25.0%
Supplier Costs ; 1.0%
October 2014
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Subsidy schemes changing under Electricity Market Reform (EMR)
UK grid is changing, existing infrastructure dates back to the 1950-60’s
the UK needs investment to achieve low carbon targets
Existing subsidy schemes being replaced or reviewed:Renewables Obligation (RO)Small Scale Feed-in Tariff (FiT)
Electricity Market Reform (EMR) introduces new cost recovery schemes
Contracts for Difference (CfD)Capacity Market
What will the new government bring to the energy market?
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Renewables Obligation (RO) still significant despite being replaced by FiT CfD
2015-16 2016-17 2017-18 2018-1912
12.5
13
13.5
14
14.5
15
15.5
16
12.86
14.11
14.83
15.28
Previous Central Case
Possible Im-pact of Early Onshore Wind Review
Central Case£/M
Wh
The RO is due to close for new projects on the 31st March 2017
2014/15 saw significant solar activity
1.28GW of solar capacity commissioned*
Will there be a last minute push for onshore wind?
Forecast suggests an increase in the cost is linked largely to
Higher load factors Additional capacity Lower UK demand
*Renewables and CHP register, Ofgem
6
Feed-in Tariff (FiT) remains open for <5MW projects even after CfDs
2014-15 2015-16 2016-17 2017-183
3.2
3.4
3.6
3.8
4
4.2
4.4
4.6
4.8
5
3.31
4.15 4.45
4.58
Previous Central Case
Possible Impact of Summer Review
Central Case
£/M
Wh
Small changes to FiT due to demand and inflation
FiT review scheduled for the summer
Review objectivesNew tariffs for wind Level of export payment Vs wholesale prices
The results of the first FiT CfD auction:
27 projects in total Budget of £315m 2.1GW capacity
New scheme brought in uncertainty at high cost to bid
Clearing price of c£80 for onshore wind and solar
Round 2 of the auction is expected to be later this year.
Solar18.5%
Onshore55.6%
Energy from waste7.4%
Gasifica-tion
11.1%
Offshore Wind7.4%
The first Feed-in Tariff Contracts for Difference (FiT CfD) auction taken place
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Solar3.3%
Onshore35.0%
Energy from waste4.4%
Gasifica-tion2.9%
Offshore Wind54.3%
Source: DECC
Project allocation
Capacity
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Newest charges on business electricity bills as part of FiT CfD
2015-16 2016-17 2017-18 2018-19 2019-20 2020-210
500
1,000
1,500
2,000
2,500
3,000
3,500
0
5
10
15
20
25
30
35FiT CfD cost snapshot
Forecast Budget Still Available Announced Projects Cost
Biomass Conversion Costs Contracted Generation£m
n
TW
h G
enera
tion
Early generation volumes are coming from big Biomass conversations
Big question around the timing of commissioning these projects
Expect unused budget to be released into future auction rounds
How will the cost be recovered through consumer bills?
Forecasted consumer rate/MWh 2016/17 - £1.66 2017/18 - £2.74 2018/19 - £5.20 2019/20 - £7.35
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Capacity Market
Payments made to generators to ensure there is capacity on the grid during peak times
No black outs New charge in winter peak times Recovered through consumer bills
First capacity auction secures 49.2GW for the winter of 2018/19
68% will be provided by existing plant 25% by refurbished plant Only 0.4% by DSR and the rest is new build
Expected costs £80-£100/MWh for 2018/19 onwards Some costs to begin in 2016/17 - demand response onlyCharged during the capacity market charging period
Nov-Feb, Weekdays, 4pm-7pm
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In summary…
Non-energy charges will continue to rise in the short-medium term
Existing schemes (i.e. RO) will continue to have an impact on bills whilst the schemes continue to operate
Continued growth of renewables will require support
Growth of intermittent generation and peak charging will mean increasing opportunity for responsive demand
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Questions…
Will competitive CfD auction drive better value for consumers?
Is peak charging enough to change behaviour in energy consumption?
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