HC Deb 25 November 1997 vol 301 cc507-10W
Ms Keeble

To ask the President of the Board of Trade if she will make a statement on the outline arrangements for the fifth round of bidding for electricity from renewable sources of energy. [18055]

Mr. Battle

Following consultation earlier this year with the renewable energy trade bodies, and, through the Renewables Working Group, the Office of Electricity Regulation (OFFER) and the Regional Electricity Companies (RECs), I can now announce my outline policy proposals for the fifth Non-Fossil Fuel Obligation for renewables in England and Wales, NFFO-5.

Government policy is to secure additional generating capacity from renewables in order to help them enter the commercial generating market. I am currently carrying out a review of what would be necessary and practicable to achieve 10 per cent. of the UK's electricity needs from renewables by the year 2010. NFFO-5 will therefore become the first step in our new and strong drive for renewables and I expect NFFO-5 will contribute substantially to reducing greenhouse gases and encouraging internationally competitive industries.

I have considered the representations made to my Department on the proposed fifth Order, NFFO-5. Renewable Energy Bulletin No. 7 summarises the submissions which have been made. In the light of these representations, I propose to make a fifth renewables Order (NFFO-5) in the late 1998 in respect of the 12 RECs in England and Wales in their capacity as Public Electricity Supply Licencees. I understand that the RECs expect to initiate the competitive tendering process for NFFO-5 shortly.

For the NFFO-5 Order, I am considering separate bands for new generating capacity from: Landfill Gas from existing licensed sites where tipping was being carried out prior to 25 November 1997; Municipal and Industrial Waste, including the use of non-gaseous sewage matter (up to 10 per cent. on a dry-weight basis); Municipal and Industrial Waste using combined heat and power (CHP), including the use of non-gaseous sewage matter (up to 10 per cent. on a dry-weight basis); Small Scale Hydro from stations with a total capacity of less than 5 MW DNC;

On-shore Wind Energy, which may be split into separate bands for: (a) small-clusters/single-machines, with the split-point at 1.0 MW DNC or less, and, (b) other windfarms not included above.

In setting the size of the Order I will take into account the cost and quality of the proposals received. This new competition is expected to stimulate further reductions in the electricity prices contracted under NFFO but I do not expect such a rapid rate of fall in prices as has happened to date. However, I may decide to omit a band if the cost or quality of proposals received does not justify its inclusion.

I expect projects to demonstrate high standards of environmental performance. This will require developers to consult widely on their project proposals so that their projects meet the concerns of the community likely to be affected.

For example, I expect energy from waste projects to encourage an integrated approach to waste management and so demonstrate that they provide environmental benefits beyond those available from alternative methods of waste management. Award of a NFFO contract does not confer any special privilege in the planning approval process which must be carried out in the normal way.

In order to promote diversity among developers of renewable energy projects, I reserve the right to limit the number of projects or the total capacity for which any particular developer can gain contracts in this round of bidding or limit the capacity of individual projects or adopt a combination of these measures.

My intention is that the Order should run for 15–20 years. This would enable the RECs to offer generators contracts for premium payments for up to 15 years. The difference between the NFFO contract price and the pool price is financed through the Fossil Fuel Levy paid by licensed electricity suppliers and reflected in electricity bills. I understand that the RECs expect to select projects through a competitive tendering process and that contracts will be offered to successful bidders at their bid price.

I have discussed prospective arrangements with the Director General of Electricity Supply and the RECs, to whom I am providing further guidance about my proposals in respect of the proposed NFFO-5 Order. The details of that further guidance will be published in 'Renewable Energy Bulletin No. 7' (REB-7).

Those project developers who have not already put their name on the mailing list for REB-7 should contact:

  • Renewable Energy Enquiries Bureau,
  • ETSU, Harwell,
  • Oxfordshire OX11 ORA
  • (tel: 01235 432450 or 433601, fax: 01235 433066).

In addition those project developers who have already done so should also register their interest in NFFO-5, by letter or fax, to:

  • Non-Fossil Purchasing Agency Ltd.
  • 4th Floor, Block D, Portland House,
  • New Bridge Street,
  • Newcastle upon Tyne, NE1 8AN
  • (fax: 0191 210 2888).

Generators with existing NFFO contracts need not register with the Non-Fossil Fuel Purchasing Agency (NFPA), as they will automatically be sent a copy of the Information Notes which explain the tender process.

OFFER has considered what site-specific evidence of the extent of the renewable energy resource it will require from developers when making their technical submissions for NFFO-5. It is understood that OFFER has decided that: developers of landfill gas projects will be required to submit data from on-site pumping trials over a period of not less than 30 days of continual measurement; developers of waste-fired projects will be required to submit data about the real and timely availability of waste, and where contracts for the fuel supply have not been agreed should provide information about the timing of any tender process, together with confirmation that the applicant will be eligible to take part in that tender process; developers of waste-fired combined heat and power projects will be required, in addition to the foregoing, to submit data on conditional contracts to supply heat (such contracts to be conditional upon their projects being awarded NFFO contracts and going forward to commissioning); developers of hydro projects will be required to submit data concerning site hydro capacity based on:

  1. (i) the mean flow data for the water course covering a period of at least 15 years, available from the Institute of Hydrology; or
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  3. (ii) 15-years rainfall data from a given catchment area, making due allowance for absorption, runoff and evaporation rates, to calculate the river flow at the off-take point for the generating station; or
  4. (iii) on-site data over a period of two years, normalised to the mean average rainfall over a period of at least ten years;
developers of wind energy projects will be required to submit data on site wind resource over a minimum period of 12 months, which must include at least 13 weeks continual measurement on site which shall include measurements made over a winter period.

The Government are currently reviewing their policy for new and renewable sources of energy. From work undertaken so far, it seems that the achievement of 10 per cent. of the UK's electricity from renewables by 2010 would almost certainly require bringing forward technologies in addition to those proposed to be supported under NFFO-5, including offshore wind energy and energy crops. Whilst I cannot anticipate the outcome of the renewables review, I expect to announce the outcome next year.