Renewables auctions will cut Britain's subsidy costs - study

Dec 16, 2013 - A British educational charity is urging the UK to introduce auctions from 2014 for biomass, onshore wind and other mature renewables technologies as one of the steps needed to cut subsidy costs.

In its report “Going, Going, Gone: Auctions for renewable energy”, Policy Exchange gives Brazil and its auction process as an example. Onshore wind in the South American country was sold for GBP 27 (USD 44.03/EUR 32.01) per MWh in 2012, while in the UK the price was GBP 95/MWh, the charity says. It is calling for the introduction of auctions as early as next year for projects that would be commissioned in 2017.

Under Britain’s Electricity Market Reform (EMR), the government plans to launch auctions no earlier than 2018 for projects commissioning after the end of the decade.

Policy Exchange also proposes separate fixed-budget auctions for offshore wind and other immature low-carbon technologies. It explains that such technologies should be subject to a reserve price in the auctions, corresponding to a descending cost structure. If the technology cannot meet that cost in the given time-frame it should lose its subsidy, the charity says. Finally, Policy Exchange says that Britain should abandon its Renewable Energy Target set at the European Union (EU) level as it “imposes unnecessary costs on attempts to decarbonise”.

(GBP 1 = USD 1.631/EUR 1.186)

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