Existing assessment tools

The Renewable Energy Strategy (RES) and the UK Low Carbon Transition Plan set out the UK's 2020 vision for the switch towards a low-carbon economy and society.  The effort to increase renewable energy consumption is shared across the EU with the 2009 EU Renewable Energy Directive setting a binding target of achieving 20% of energy consumption from renewable sources by 2020, with the UK legally bound to reduce their output by 26% under the Climate Change Act. The UK must source 15% of its energy from renewable sources too. There has been no indication so far of how this may change when the UK leaves the EU.

The RES sets out the overarching policy framework for how this will be achieved and identifies a possible scenario for where this renewable energy will come from. It proposes that:

• over 30% of our electricity may come from renewables compared to 5.5% in 2008 - this could be made up from 29% large scale electricity generation and 2% small-scale electricity generation;
• 12% of our heat may come from renewable sources; and
• 10% of road fuel may come from sustainable biofuels.

The Renewables Obligation (RO) has introduced feed-in tariffs (FITs) to provide better support for small-scale renewable electricity. The Energy Act 2008 established enabling powers for the introduction of FITs to supplement the RO and incentivise small-scale low-carbon electricity generation, up to a maximum limit of 5 megawatts (MW) capacity (50 kilowatts (kW) in the case of fossil-fuelled combined heat and power). It also provides powers to implement a new Renewable Heat Incentive (RHI) aimed at renewable heat installations of all sizes, which the UK was originally going to implement in April 2011 (see below).

Feed-in tariffs were introduced in April 2010 with the key features being a triple benefit of:

• a fixed payment from the electricity supplier for every kilowatt hour (kWh) generated (the 'generation tariff');
• a guaranteed minimum payment additional to the generation tariff for every kWh exported to the wider electricity market (the 'export tariff'); and
• the benefit of on-site use: where generators use the electricity they generate on-site it can offset against electricity that would otherwise have been purchased.

This also has the effect of giving:

• support for the following technologies from 2010: wind, solar photovoltaics (PV), hydro, anaerobic digestion, biomass and biomass combined heat and power (CHP) and non-renewable micro CHP; and
• the design of a simple and user-friendly system in order to maximise take-up.

From 1 April 2010 installations under 50kW installed capacity that are eligible for FITs only have the option of receiving FITs. However it is proposed that larger installations (with installed capacity of between 50kW to 5MW) will retain the right to choose between the RO scheme and the FITs.

In practice, the FIT scheme has been very successful and has given rise to a large number of solar farms, wind farms/turbines and PV cells on roofs. However, larger schemes have taken the lion’s share of the money; the government has therefore reduced the allowances for all schemes but eliminating them where over 50kW, focusing the money on the smaller private residential schemes rather than commercial projects. The government did however try to introduce these changes part way through a consultation on the pricing system, and after being taken to court, it was held that this was illegal and the date for the reduction in tariffs was put back to April 2012. The argument was that with the capital cost of PV cells decreasing, and the demand for funding high, the rate of return had increased to unacceptable levels and a reduction in the FIT was required in order to keep the rate of return appropriate and to be able to spread the available money across more schemes.

Renewable Heat Incentive (RHI)

The RHI was launched for domestic schemes on 9 April 2014 covering England, Wales and Scotland. The mechanism is run by Ofgem and is similar to FITs, whereby a payment is made to the householder who owns the eligible system for the amount of energy produced. The scheme is open to owner-occupiers, private and social landlords. The rates will increase with the Consumer Price Index (CPI) with cash payments made quarterly for 7 years, with applicants having 12 months to apply to the scheme following installation of their system.

Relevant technologies include biomass boilers, air source heat pumps, ground source heat pumps and solar thermal panels and must be listed on an eligibility list again produced by Ofgem. The Non-Domestic RHI provides for quarterly payments for 20 years, covering similar technologies as the domestic RHI plus biomethane. Businesses, public sector and non-profit organisations can also apply. The tariffs have regularly been reduced during the schemes’ lifetimes to counter the effect of technology and systems becoming cheaper to produce and buy, and so the annual DECC budget for the scheme is not breached. (See also.)