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Renewable Energy: Finance

Energy and Climate Change written question – answered on 18th January 2011.

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Photo of Chuka Umunna Chuka Umunna Labour, Streatham

To ask the Secretary of State for Energy and Climate Change what recent estimate he has made of the expenditure required in the UK in order to meet renewable energy obligations.

Photo of Charles Hendry Charles Hendry The Minister of State, Department of Energy and Climate Change

The UK has a legally binding 2020 target of delivering 15% of energy consumption coming from renewable energy. To meet this, it is estimated that around 30% of electricity, around 12% of heat and around 10% of transport demand will come from renewable sources.

In order to deliver these levels of renewable energy, expenditure defined as tax and spend by the Office for National Statistics will be incurred through the Renewables Obligation, Feed-in tariffs, the Renewable Heat Incentive and the Renewable Transport Fuels Obligation.

The spending is estimated at £32 billion* from 2011 to 2020 under the Renewables Obligation(1); £3.6 billion* under small-scale feed-in tariffs(2); £9.8 billion* under the Renewable Heat Incentive(3); and £8.9 billion* under the Renewable Transport Fuels Obligation(4).

Note that these figures represent the total spending. Analysis in 2009 was published showing lower figures based on the additional level of spending resulting from the increase in renewables ambition, on a different price basis. These figures are based on the latest published analysis for the RHI and FITs and do not take into account announcements in spending review 2010.

Spending through these renewable financial incentives at the point of operation/energy use will leverage significant amounts of up-front private sector investment in new renewable generating capacity. 2009 analysis estimated that there would be around £100 billion of investment opportunities in renewable electricity and renewable heat to 2020.

"*" = In 2010 prices discounted at the social discount rate of 3.5% to 2011.


(1) DECC calculations and modelling by Redpoint Energy, 2009

(2) DECC modelling and analysis for the Final Impact Assessment of Feed-in Tariffs for Small-Scale, Low Carbon, Electricity Generation, February 2010

(3) DECC calculation and modelling by NERA for the Renewable Heat Incentive consultation document, February 2010

(4) Department for Transport analysis

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