Ofgem, resposible for overseeing gas and electricity prices throughout the UK, has called for an end to the Renewables Obligation the government’s support mechanism for renewable power. Ofgem says that the system is unfair to the consumer, renewable power generators are receiving an over-generous subsidy under the Renewable Obligation (RO), while electricity customers can be landed with higher bills. The way the RO operates means that customers end up paying even if renewable generation doesn’t get built, for example, if projects are delayed by planning problems, which is frequently the case. The RO also fails to link the level of support to the price of electricity or the price of carbon emission allowances under the European Union Emissions Trading Scheme. So existing and future renewable generators will benefit, at customers’ expense, from much higher electricity prices. It says that the cost of saving one tonne of carbon dioxide under the RO is £184-£481 , compared to £12-70 under the EU Emissions Trading Scheme. Ofgem chief executive Alistair Buchanan said: “We think that a review of the scheme could provide more carbon reductions and promote renewable generation at a lower cost to customers, who are already facing higher energy bills.” But the British Wind Energy Association, who’s members are supported substantially by RO payments, has accused the regulator of forcing prices up by failing to prioritise work on the national electricity grid which would allow more renewable capacity to come on line. Maria McCaffery, BWEA chief executive, said: “The problem is not the Renewable Obligation mechanism, which is delivering many times the build rate ever achieved before. The fact that delivery is still not enough and ROC prices are a little high is partly because Ofgem themselves have failed to prioritise issues of grid reinforcement and access which have slowed the ability of the industry to deliver.” McCaffery added: “We all need to be very careful about jumping to conclusions at a time when we urgently need stability in the market place – both to enable delivery of wind energy projects which are required to meet the Government’s 10% renewable energy target by 2010, but crucially to maintain investor confidence in a UK market which now only represents 5% of the global wind energy industry.” Previously the RO has attracted criticism for failing to provide support to all technologies, as utilities have opted for wind power, because it is the cheapest renewable electricity source.

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