Ernst & Young comments on announcement by DECC on the Renewables Obligation Banding Review
Arnaud Bouillé, Ernst & Young Energy and Environmental Infrastructure Director, comments on today’s announcement by DECC on the Renewables Obligation Banding Review:
“DECC's banding announcement is great news for the sector and will bring some short-term relief for the industry as a whole. For independent power producers however, the availability of long-term off take contracts remain an issue, affecting the availability and cost of financing. DECC's on-going consultation on this matter should not only confirm that this is a significant challenge but also identify the need for a continued obligation on UK suppliers to purchase 'green' under the proposed CfD/EMR environment.
“For onshore wind especially, the 0.9 ROC decision is a critical milestone and will give the industry some comfort over the government's commitment to the sector. Nevertheless, the affordability and value for money debate that took place in recent months is not about to go away and will already be on the agenda for the next review in 2014.
“With an oversupply in the wind turbine market, we would expect costs to reduce and the sector to be gradually wound-down off subsidies in the medium term. Onshore wind may slowly be entering the brave new world of mainstream market economics.”