Levy doubts limit green-energy use

28 June 2000
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29 June 2000 | David Arminas

The uptake of renewable sources of electricity is being hampered by uncertainty over which ones will be exempt from the climate change levy.

Anna Walker, the Department of Trade and Industry's (DTI) director-general for energy, assured delegates at the recent Energy Information Centre's annual market convention in Birmingham that the government is moving ahead with plans to cap the price of green energy after the climate change levy takes effect next April.

"We will have to discuss with industry where the cap will be," she said, adding that the government is looking at a cap of about 2p per kilowatt hour above the current average prices.

The levy is intended to encourage the use of electricity that is generated from renewable sources, which is currently more expensive than power from non-renewable sources.

Walker added that the DTI is in discussions with the Treasury, as part of the government's annual spending review, about funding new technologies for generating green power via offshore wind farms, photo-voltaic cells and other methods.

Walker had no doubt that more companies would commit themselves to renewable energy if they knew which sources would be capped.

She told SM: "We will be consulting widely on the details of this policy and invite comments from industry, so that we can get the policy right."

Bob Hillman, director of finance and corporate services at Bexley Council in Kent, welcomed Walker's comments. Around 20 per cent of the power supplied to two of the council's main sites comes from renewable sources, the contracts for which are likely to be reviewed this autumn.

Hillman said that so far he has had little difficulty in sourcing renewable energy, on which the council spends around £750,000 a year. "But if we wanted to use more, the suppliers might not be there."

His words were echoed by Paul Keightley, group managing director of gas and electricity supplier Total Energy UK. "We get inquiries about renewable sources, but we haven't got access to them. That's the problem."

Darrell Marchand, energy services manager at Oxford-based property-management company WS Atkins, said suppliers had told the company they could provide the green energy, but not guarantee that it would be exempt from the levy.

"They are concerned about the levy's implementation," he said.

Bob Spears, technical director at the Utility Buyers' Forum, welcomed the cap on renewable sources: "If the government told us to take 10 per cent of electricity from renewable sources, regardless of price, that would be the best incentive for every wind farm in the UK to push the prices up."


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