Under the proposals, which are now out to consultation until December, electricity suppliers would have to ensure that 5% of their electricity was from renewable sources by 2003 and 10% by 2010 or to purchase tradable "renewable obligation certificates" guaranteeing generation of an equivalent amount of renewable power.
A third element of the proposed scheme is an option for electricity suppliers to "buy out" of the obligation if renewable energy or green certificates on offer are too expensive. The government is proposing to set a fixed rate of UK£0.03 (euros 0.05) per kilowatt hour as the buy out price in the obligation's first period. "It is felt that this price offers the best balance between the probability of meeting the 10% target...and an acceptable level of additional cost to the consumer," it says. All proceeds of buy out payments would be recycled to suppliers that had met their renewables obligation.
Finally, the proposal includes special funding for offshore wind and biomass, because they are not expected to be able to offer electricity at UK£0.03/kWh or less.
Most immediate reaction to the plan has focused on the government's proposal not to include energy from municipal waste incineration under the obligation. While the government claims this is because the sector has already demonstrated itself to be commercially viable, environmental groups have welcomed the move as a victory for their argument that incinerators produce "dirty energy" (ENDS Daily 6 September).
Solar Century, a photovoltaic firm, reacted angrily to the plan, arguing that the buy out price suggested by the government would effectively exclude the solar industry from the renewables market for many years. The British Wind Energy Association welcomed the government's pledge of support for offshore wind energy, but feared that too little money would be available.
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