RENEWABLES ONLY With Renewable Power Generation, the end user faces at present the cost of the electricity paid via the Renewables Obligation - 1ROC for onshore wind power in approx terms £100/MWh and 2 ROCs or £150/MWh for Offshore wind, Biomass and 3 or 4ROCs for solar PV and wave, and tidal stream etc., , NOT FOAK/NOAK MML/Ove Arup/E&Y cost estimates, which were/are used to judge the banding levels of ROC payments every 3 or 4 years (Comment - this should be shorter as technology and practice is moving fast. mk.)
If the Electricity Market Review brings about an auction process FITs with Contracts for Differences this should bring costs down more into line with estimates or lower as each technology and its critical mass improves.
As indicated to me by DECC Katie Gillingham, reducing the cost of investment is a key objective of the EMR, CfDs reduce risk and uncertainty for developers and so should also reduce the cost of capital. Therefore, all other things being equal, a lower level of support should be required to deliver a given investment.
Under the RO transitional arrangements outlined in the White Paper the RO will remain open to new accreditations until 31 March 2017 and between the introduction of the CfD mechanism and the closure of the RO to new accreditations, generators will have a choice between the two mechanisms.(Comment - why should there be a choice if reducing the cost of investment is a key objective of the EMR? mk)After 31 March 2017 the RO will be vintaged so that schemes accredited under the RO can continue to be supported by that scheme for the remainder of their support lifetime i.e., 20 years or with FITs and RHIs 25 years.