The Environment: Renewables

Renewable energy generating capacity has been used commercially for many years. Technologies include solar, wind, hydro, tidal, wave and biomass. With the exception of hydro, application of these technologies has, until recently, been generally on a small scale. With climate change rising up the political agenda, renewable technologies are becoming more mainstream. In the UK, the development of renewable energy generating capacity has largely been driven by government policy, the most significant being the Renewables Obligation (RO).

Under the RO, all licensed suppliers are required to source a specific, and increasing, proportion of electricity generated from renewable sources or pay a 'buyout' fee for that proportion of electricity supplied. The level of this obligation in 2003/4 was 4.3%. A Renewable Obligation Certificate ('ROC') is issued with each MWh of renewable energy generated.

Companies have responded to this obligation using a combination of:

1. Developing renewable energy generating capacity to produce ROCs
2. Purchasing ROCs on the open market
3. Paying the buy-out fee

EDF Energy is looking to strike a balance among these three options. We currently operate two onshore wind farms and are burning biomass fuel in our coal-fired power stations. We are looking to develop a further six onshore and two offshore wind farm sites, as well as seeking to increase our capacity to burn biomass.

Our activity on the open market has been characterised by deals with renewable generators such as Fibrogen, a biomass generator in Yorkshire, and Kentish Flats, the 90 MW offshore windfarm currently under construction in the Thames Estuary. The latter deal will provide an anticipated 300GWh per annum once production starts.

The remainder of our obligation has been managed by paying the buy-out fee. The decision of the balance between purchasing ROCs and paying the buyout fee is largely a commercial one.

In 2003/4, we presented 1,514,956 ROCs, representing approximately 20% of the total presented by all supply companies, giving EDF Energy 71.5% of our total compliance met through ROCs against an average compliance of 55.8%.

We are also a major supplier of LEC-backed renewable electricity to business and residential customers. LECs (Levy Exempt Certificates) demonstrate that the energy was produced from renewable sources.

Our residential customers purchase renewable electricity through our Green Tariff. The premium paid by these customers is matched by EDF Energy and paid into a green fund which is then donated to small scale renewable generation schemes.

From July 2005, all energy suppliers in the UK will be required to produce a declaration of the mix of the generation sources of the electricity provided to their customers.