Utility Week

UTILITY WEEK | 1ST - 7TH AUGUST 2014 | 5 £16.6bn The cost to the taxpayer of the early CfDs awarded The UK government will appeal a High Court ruling that Drax should be included in its 'fast track' subsidy contract round in a hearing set for Friday 1 August. The UK's Court of Appeal confi rmed the hearing date, but Utility Week under- stands that a ruling is unlikely to be made the same day. The appeal comes less than two weeks after Drax won its case against the Department of Energy and Climate Change (Decc), with a High Court ruling that government was wrong to deem one of its planned biomass conversions ineligible for fi nancial support. Decc argued that it ran "a fair and robust" bidding process for the contracts, but followed the court's ruling that it should reconsider the application. The government has since said that pending the outcome of this next legal step, and subject to European Commission approval, Drax will receive its contract. ELECTRICITY Drax CfD appeal is set for Friday Best value for consumers? Government's intention with CfDs is to enable the transition to a low-carbon economy at the lowest cost to consumers. But following last week's dra budget announcement, a number of groups – including Renewable UK, the Renewable Energy Association and the Solar Trade Association – threw doubt on whether this will be achieved through the current proposals. In particular, the early CfDs awarded to ƒ ve o„ shore windfarms, two coal to biomass conversions and one biomass CHP scheme (see map, le ) caused concern. A National Audit O ce report following the announcement said: "The National Audit OŒ ce is not convinced that the government suŒ ciently protected consumers' interests by awarding without competition £16.6 billion worth of early contracts to eight renewable generation projects at risk of investment delay. This decision may provide higher returns to contractors than needed to secure the investment and also limits the amount of remain- ing budget subject to competition in later rounds." Read the report in full at: www.nao.org.uk/report/ early-contracts-for-renewable-electricity A blog from manufacturing trade body EEF's senior environment and energy policy adviser, Richard Warren, jumped on the NAO report and said: "The new system of CfD will only o„ er value for consumer money once it moves away from awarding government-set strike prices to a system of competi- tive, technology-neutral auctions. The hubris required to think that a single, inflation-linked, government calculated price for each technology could result in the most cost-e„ ective solution to meeting our renewables target is really quite something." Read the blog in full at: www.eef.org.uk/ environmentblog EARLY CfD ALLOCATIONS/FINAL INVESTMENT DECISION ENABLERS Project Developer Size (MW) Location 1 Beatrice Beatrice Offshore Windfarm Ltd 664 Outer Moray Firth, Scotland 2 Burbo Bank extension Dong Energy Wind Power A/S 258 Liverpool Bay, at entrance to Mersey 3 Drax Unit 1 Drax 645 Selby, North Yorkshire 4 Dudgeon Dudgeon Offshore Wind Ltd 402 The Wash north of Cromer, Norfolk 5 Hornsea 1 Dong Energy Wind Power A/S 1,200 North Sea, off the Yorkshire coast 6 Lynemouth Lynemouth Power Ltd 420 Ashlington, Northumberland 7 Teesside MGT Power Ltd 299 Middlesbrough 8 Walney extension Dong Energy Wind Power A/S 660 Irish Sea off Walney Island, Cumbria weeks after Drax won its case against the Department of Energy and Climate Change (Decc), with a High Court ruling legal step, and subject to European Commission approval, Drax will receive its contract. ▲ 1 ▲ 2 ▲ 4 ▲ 5 ▲ 8 ● 3 ● 6 ■ 7 ● ■ ▲ Offshore wind Biomass conversion* Dedicated biomass with combined heat and power* * Biomass projects are yet to be approved by the European Commission. See story opposite "[This] will be the powerhouse of the British economy, supporting up to 250,000 jobs by 2020" Energy secretary Ed Davey justifi es the government's CfDs allocation decisions

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