1. Harmonising renewable support mechanisms Dr David Toke: Senior Lecturer in Environmental Policy, University of Birmingham and also Energy Expert, World Future Council

2. What is a REFIT? Guaranteed minimum price for electricity sales Long term contract for power purchase (15-20 years) Different to NFFO and RO

3. What is a renewable electricity certificate scheme (RECS) Electricity suppliers given renewable obligation RE projects sell certificates (and energy) Electricity suppliers buy certificates or pay penalty

4. Use of systems REFIT dominant in Europe (over 80 per cent of EU wind power installed under REFIT) Less than 10 per cent of EU wind power installed under RECs RECs used in USA, but underpinned by ‘rich man’s REFIT, the Federal ‘Production Tax Credit’

5. Why a REFIT? Less income uncertainty, higher project IRR for a given income level

6. CountryTariff in p/KWh 2004 Average capacity factor (%) Annual Return per installed MW (£) 2004 Germany (REFIT) 5.51887,000 United Kingdom (RECS) 5.228128,000 Spain (REFIT) 4.528110,000

7. 2005-2006 Country Tariff in p/KWh Average capacity factor (%) Annual Return per installed MW (£) Germany (REFIT) 5.6 (declining) 1888,000 United Kingdom (RECS) 7.328179,000 Spain (REFIT) 5.928145,000

8. UK RO confusion? Uncertainty over future price of renewable obligation certificates (ROCs) Uncertainty over future value of electricity Banks use low estimates of future income In practice projects earn much more than what they would if income stream was secure RO not cost effective But local investors deterred by insecurity

9. REFIT = transparency for local and small investors Local investors often need lower returns Local investors have better networks to gain planning consent REFIT better for higher cost renewables such as solar power

10. Advantages of harmonisation

11. Theoretical advantages of harmonisation Investment would flow to where it is most efficient All countries would be forced to participate

12. Harmonised EU-wide RPS? Great uncertainty over certificate value Lack of competition in several countries (eg France, Germany) Bottlenecks in some countries (eg UK) Loss of local investment Some countries would refuse to participate

13. A single REFIT? Local conditions (esp wind speeds) differ Some countries would object

14. Harmonised transferability UK RO de-stabilised Germans would pay for Danish etc renewables No efficiency advantages

15. Contacts ‘Making Renewables FITTER’ report available at http://www.worldfuturecouncil.org/http://www.worldfuturecouncil.org/ Dr David Toke: d.toke@bham.ac.ukd.toke@bham.ac.uk Miguel Mendonca (WFC): miguel@worldfuturecouncil.org miguel@worldfuturecouncil.org