Economics
Through the Renewables Obligation, British electricity suppliers are now required by law to provide a proportion of their sales from renewable sources such as wind power or pay a penalty fee. The supplier then receives a Renewables Obligation Certificate (ROC) for each MW·h of electricity they have purchased. The Energy Act 2008 introduced banded ROCs for different technologies from April 2009. Onshore wind receives 1 ROC per MW·h, however following the Renewables Obligation Banding Review in 2009 offshore wind now receives 2 ROCs to reflect its higher costs of generation. Wind energy receives approximately 40% of the total revenue generated by the RO. The ROCs are the principal form of support for United Kingdom wind power, providing over half of the revenue from wind generation.
A 2004 study by the Royal Academy of Engineering found that wind power cost 5.4 pence per kW·h for onshore installations and 7.2 pence per kW·h for offshore, compared to 2.2p/kW·h for gas and 2.3p/kW·h for nuclear. By 2011 onshore wind costs at 8.3p/kW·h had fallen below new nuclear at 9.6p/kW·h, though it had been recognised that offshore wind costs at 16.9p/kW·h were significantly higher than early estimates mainly due to higher build and finance costs, according to a study by the engineering consultancy Mott MacDonald. Wind farms are made profitable by subsidies through Renewable Obligation Certificates which provide over half of wind farm revenue. The total annual cost of the Renewables Obligation topped £1 billion in 2009 and is expected to reach £5 billion by 2020, of which about 40% is for wind power. This cost is added to end-user electricity bills. Sir David King has warned that this could increase UK levels of fuel poverty.
Small wind systems under 50 kW previously received 2 ROCs, but are now eligible for support under the Feed In Tariff.
Read more about this topic: Wind Power In The United Kingdom
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