Tiny Invetsment in Wind Energy reaps huge returns for UK

Subsidies paid to renewable energy generators is governed by the Renewables Obligation system which came into force in April 2002 as part of the Utilities Act (2000). It was designed as a market mechanism to increase the uptake of renewables and requires power suppliers to derive from renewables a specified proportion of the electricity they supply to their customers or pay a penalty.

Eligible renewable generators receive Renewable Obligation Certificates (ROCs) for each MWh of electricity generated. The system covers renewable energy generators of all types (wind, hydro, wave, tidal etc) and in 2009 a system of differentiation of support by technology (banding) was introduced.

Onshore wind currently receives less support than many other forms of renewable energy generation including tidal, wave, solar, biomass and offshore wind.

It is important to note that support for wind through ROCs is based on generation, not capacity, in order to encourage efficient deployment. ROCs are only paid when electricity is generated.

The 2010/11 annual report by the energy regulator Ofgem on the Renewables Obligation showed that the total cost of the system per household energy bill was £15.15 last year. The contribution of wind (both onshore and offshore) to this was just £7.74 per household per year, which equates to less than 15p per week. The cost per household of onshore wind alone was less than this still at £4.68 per household per year [1].

[1] Renewable UK (15 March 2012), New Ofgem figures show tiny investment in wind energy reaps huge returns for UK, available at: http://www.bwea.com/media/news/articles/pr20120315-2.html

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