Question

To ask the Secretary of State for Energy and Climate Change, what estimate he has made of the support cost over 15 years of (a) 1gw of field solar generating capacity procured with renewable obligation certificate or Contract for Difference support, (b) 1gw of biomass generating capacity procured with renewable obligation certificate or Contract for Difference support and (c) 1gw of gas fired power station capacity procured with capacity market payment support.

In order to make a fair comparison between the RO and CfD, my officials have looked at the differences in support costs between the two support mechanisms over the full support period (20 years for the RO, 15 years for CfDs) for solar and biomass CHP.

The Government also supports biomass conversions under both the RO and CfDs. Given that the Government support for biomass conversion ends on 1^st April 2027, support costs for biomass conversions have been modelled over 11 years (from 2016/17).

Table 1: Comparison of Total Discounted RO and CfD Support Costs

*Estimates based on new capacity commissioning in financial year 2016/17. Values are in £2012 real prices and discounted to the first year of generation (2016/17), using the Government's 3.5% discount rate.

It is not possible to directly compare renewables support costs (offered via the Renewables Obligation and Contracts for Difference), with support costs offered via the capacity market, as support under the Capacity Market is offered only for capacity and does not vary directly with the amount of generation produced by a plant.

Under the Capacity Market, all successful capacity will receive the clearing price of the auction in which they bid. The first capacity market delivery year is in 2018/19. Our latest estimate of the average clearing price over the first 15 years of the Capacity Market is £34/kW/year (in 2012 prices). For 1GW of de-rated capacity this corresponds to £500m over 15 years.