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Low Carbon Economy Measures

Most of the measures announced in the Pre-Budget Report for supporting low carbon growth will cost the Government very little, and will take quite some time to percolate through to the economy. The largest measures will impact people and businesses through their utility bills, rather than through their tax bill.

Offshore windfarms given further incentives to invest

Commenting on the implications of the UK government’s extension of double-ROC eligibility for offshore wind projects to 2014, David Donnelly, a director specialising in renewable energy at international accountancy firm Mazars said:

“The extension to the “double ROCs” (Renewable Obligation Certificates) eligibility period to March 2014 will give utilities much needed investment certainty to continue to take on the substantial risks of developing large-scale offshore wind farms.

These measures for supporting offshore wind, as well as those announced for carbon capture and storage demonstration projects, will be recouped by utilities entirely through UK consumers’ and businesses’ energy bills, and not their tax bills.

To earn “double ROCs” – worth around 7.5p per unit on top of the market electricity price – the date by which offshore wind farms must start producing is extended from to March 2014. Depending on future market electricity prices, the cash payback period should be around 7-10 years, well short of the wind turbines’ 20 year expected lives. For those projects which succeed in controlling the construction costs and risk inherent in large offshore engineering, this additional support should help these become very attractive investments for the project developers.”

Further push needed for small-scale renewable energy

Commenting on the UK government’s announcement today of £350m additional support for cleantech industry research, and residential sector energy efficiency measures, David Donnelly, a director specialising in renewable energy at international accountancy firm Mazars said:

“The £350m spending announced today on a mix of cleantech industry research, residential sector energy efficiency measures, and low carbon transport is welcome. However, the generous clarification that householders can sell electricity tax-free is actually hot air until enough people install green energy generators to benefit from clean energy cash-back and feed-in-tariffs. That will only happen when the electricity sector properly launches the metering, grid, and consumer education changes that enable large-scale roll-out. Only when that occurs, will the small-scale renewable energy industry become a major contributor to the UK low carbon economy.”

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