Renewable Obligation Certificates Research Articles

The Criminogenic Nature of Food Production Harm Responses: A Case Study of Anaerobic Digestion Technology Subsidies in Northern Ireland

Meat production in its current shape is burdened with multiple environmental challenges. Technological solutions have been touted as a means of reconciliation of economic growth and environmental sustainability. In Northern Ireland, anaerobic digestion (AD) technology was presented as a solution for more sustainable animal waste management and greenhouse gas emission reduction in the context of the Going for Growth (GfG) agrifood strategy. AD sites were also eligible for the Renewable Obligation Certificates (ROCs) subsidy support scheme. While criminological engagement with the issues around food crime is yet inchoate, even less attention has been paid to the issue of the criminogenic nature of responses to food production harm. The paper fills this lacuna by discussing how an ostensibly positive initiative of incentivising AD through subsidy provision may have criminogenic potential: it may exacerbate environmental harm due to its ineffectiveness for dealing with ammonia emissions from animal waste, and create opportunities for deviance, such as breaches in planning regulation and subsidy fraud.

지속가능한 산림바이오매스 정책개발을 위한 영국사례 연구

This study investigated the reference case in the UK where legality and sustainability were systematically established for forest biomass represented by wood pellets. The UK is the country that best utilizes the trade value of wood pellets based on sustainability, with bioenergy accounting for 31% of total renewable energy production. The UK imported wood pellet, estimated 8,697 thousand tons in 2019. The UK government has continuously improved the renewable generation policy system to ensure the sustainability of wood pellets. The weighted average greenhouse gas emissions of a UK biomass power plant that received a Renewable Obligation Certificate (ROC) in 2018-19 was 26.71 gCO2e/MJ. These power plants are expected to meet the upper limit of 72.2 gCO2e/MJ by 2025. To issue an ROC, the biomass power plant must demonstrate that 70% of its total biofuel usage is sustainable. The UK uses the Sustainable Biomass Program (SBP) certification system, which is gradually expanding to other European countries, to prove the sustainability of biomass energy fuels. Global wood pellet production with SBP certification in 2019 was 10.5 Mt. This trend has significant implications for introducing additional sustainability into the wood pellet policy of South Korea.

Vertical integration, recycling mechanism, and disadvantaged independent suppliers in the renewable obligation in the UK

Under the Renewable Obligation (RO) scheme implemented in the UK, electricity suppliers are required to present a certain number of RO certificates (ROCs) depending on the quantity of electricity they sold. Insufficient availability of ROCs, guaranteed by the amendment of headroom, helps boost investors' confidence about their values, but we observe that there was a large variation in compliance by suppliers. Using data from 17 reporting years from 2002–03 to 2018–19, our estimation results show that compliance of subsidiaries of the big six energy companies was 15.46% higher than that of independent suppliers. We trace the movement of ROCs from six generators to show that they prefer to sell ROCs to suppliers within the vertical integration. We develop scenarios and a theoretical model to show that, when the recycling mechanism is in place, integrated generators have the motivation to sell ROCs to integrated suppliers, rather than independent suppliers, while holding spare ROCs is the least favourite option. These predictions are consistent with observations that (i) integrated suppliers have better compliance than independent suppliers, and (ii) nearly all issued ROCs were presented. Therefore, we suggest that, when both vertical integration and the recycling mechanism exist, independent suppliers were disadvantaged in accessing ROCs given insufficient supply. Nonetheless, as a way of refunding unjustified penalties due to insufficient supply of ROCs, the recycling mechanism can promote competition among suppliers for ROCs, compared with a simple refunding method. • Guaranteed headroom ensures insufficient supply of ROCs. • Subsidiaries of the Big Six had better compliance than independent suppliers. • Majority of ROCs were sold/transferred within vertically integrated companies (VI). • VI benefits from this preference given the recycling mechanism. • Independent suppliers were disadvantaged in the ROC market with insufficient supply.

Understanding the ROC transfer payment in the renewable obligation with the recycling mechanism in the United Kingdom

Abstract The Renewable Obligation scheme was implemented to promote renewable energy for electricity supply in the UK over 15 years from 2002 to 2017. Renewable Obligation Certificates (ROCs) were allocated to accredited generators for receiving additional revenues from selling those certificates to electricity suppliers. In particular, a recycling mechanism was employed in this scheme. That is, the penalties on missing ROCs from all suppliers are paid into the buy-out fund, which is then redistributed to suppliers in proportion to the number of ROCs they presented. This mechanism complicated the ROC trading in three aspects. First, the recycling mechanism induces strategic behaviour between suppliers in fulfilling the obligation of purchase of ROCs, leading to the equilibrium of a lower transfer payment from suppliers to generators, compared with the scenario without the mechanism. Secondly, under the recycling mechanism, the existence of vertical integration encourages upstream competition between generators, reducing ROC prices and the transfer payment. Thirdly, suppliers may strategically collude with each other to take the advantage of the recycling mechanism, but the existence of vertical integration weakens the collusion and prevents the worst case of nearly zero transfer payment.

Comparing FeeddIn Tariffs and Renewable Obligation Certificates The Case of Repowering Wind Farms

This paper compares support mechanisms for renewable energy with respect to their ex-ante effectiveness in promoting the adoption of innovative technologies. We analyse two stylized policy instruments in the context of the example of wind repowering: renewable quotas and feed-in tariffs. Quota systems, such as the British Renewable Obligation Certificates (ROCs), are based on mandatory renewable quotas. Feed-in tariffs (FITs), such as the German EEG tariffs, guarantee a certain, fixed price for ’green’ electricity over the economic lifetime of the investment. This paper focuses on one aspect of the difference between the two instruments: the allocation of uncertainty. While under ROCs both electricity price and capital cost risks are borne by the owner of the wind farm, under FITs only capital cost risks remain with the owner. The model is calibrated on data for German wind power plants. Our general result is that the owner is more likely to adopt a new technology under price certainty as provided by FITs. Another finding is that electricity price and capital cost volatility have different impacts on the propensity to invest under ROCs. While, even a small positive variation in electricity price volatility increases the propensity to invest, an increase in capital cost volatility does not affect the likelihood to repower wind farms. The last result also applies under FITs.

An optimisation framework for the strategic design of synthetic natural gas (BioSNG) supply chains

A general optimisation framework based on a spatially-explicit multiperiod mixed integer linear programming (MILP) model is proposed to address the strategic design of BioSNG supply chains. The framework considers procurement of feedstocks, plantation of energy crops, and different modes for transportation of feedstocks and final products. The mathematical framework allows researches and policy makers to investigate scenarios that promote the development of BioSNG supply chains in a regional and/or national context. The capabilities of the proposed model are illustrated through the implementation of a set of case studies based on the UK. The results revealed that domestic resources in the UK can supply up to 21.4% of the total gas demand projected by the UK National Grid in the scenario “Slow progression” for a planning horizon of 20years. However, despite the considerable potential for production of BioSNG, the role of the government through subsidisation schemes such as feed-in tariff and Renewable Obligation Certificates (ROCs) is crucial in order to make the development of these resources economically attractive for private sectors.

Techno-economic and carbon emissions analysis of biomass torrefaction downstream in international bioenergy supply chains for co-firing

Ambitious renewable energy targets in European countries drive an increasing biomass demand to a point where domestic resources are insufficient, leading to emergence of international bioenergy supply chains. This work aims to examine the feasibility of biomass torrefaction downstream in long-distance international bioenergy supply chains for co-firing and to investigate the effect of various biomass co-firing ratios on the whole supply and energy conversion system performance from a technical, environmental and economic aspect. A techno-economic analysis together with a CO2 emissions assessment is performed, adopting a whole systems approach. In particular, Palm Kernel Shell biomass from Malaysia is considered for co-firing in UK. Findings indicate that downstream torrefaction is profitable under the current conditions for 100% biomass and marginally unprofitable for 50% biomass co-firing. The financial yield exhibits high sensitivity on the price of coal, biomass, Renewable Obligation Certificates, the torrefaction facility investment and biomass sea transportation costs. From an environmental perspective, higher co-firing ratios lead to higher emissions per unit of renewable energy generated. The findings can support policy makers and investors in adopting lower biomass co-firing ratios with torrefaction instead of 100% biomass conversion, leading to improved environmental benefits from a whole system's perspective.

Tracking Economic and Environmental Indicators of Exported Wood Pellets to the United Kingdom from the Southern United States: Lessons for Policy?

This study estimates the abatement cost of greenhouse gas (GHG) emissions for a unit of electricity generated in the UK from wood pellets imported from Southern USA. We assumed that only pulpwood obtained from loblolly pine (Pinus taeda) plantations was used for manufacturing exported wood pellets. The use of imported wood pellets for electricity generation could save at least 69.9 % of GHG emissions relative to coal-based electricity in the UK. The average unit production cost of electricity generated from imported wood pellets (US$222.3 MWh−1) was higher by 30.0 % than the unit production cost of electricity generated from coal (US$171.0 MWh−1) without any price support. In the presence of payments from the established price support mechanisms of Renewable Obligation Certificates (ROCs) and Levy Exemption Certificates (LECs), the unit production cost of electricity generated from imported wood pellets (US$142.9 MWh−1) was lower by about 16.0 % than the unit production cost of electricity generated from coal. Policy makers should consider 1 MWh of electricity generated from imported wood pellets equivalent to 0.58 ROCs or 0.71 ROCs in presence and absence of payments from LECs, respectively. This will ensure zero abatement cost and lead to economic efficiency in reducing GHG emissions. However, a more in-depth analysis focusing on the market risks for power-generating companies and other wood pellet supply chains is required before modifying existing equivalency factors for ensuring continuous use of imported wood pellets for displacing coal-based electricity in the UK.

Comparative techno-economic assessment of biomass and coal with CCS technologies in a pulverized combustion power plant in the United Kingdom

The technical performance and cost effectiveness of white wood pellets (WWP) combustion in comparison to three types of coal namely U.S., Russian and Colombian coals are investigated in this study. Post-combustion capture and storage (CCS) namely with amine FG+, and oxy-fuel with carbon capture and storage (oxy-fuel) are applied to a 650MW pulverized combustion (PC) plant. The impacts of the Renewable Obligation Certificate (ROC) and carbon price (CP) policy in accelerating the CCS deployment in the framework of GHG emissions mitigation, are also evaluated. The operational factors affecting CCS costs and emissions in the power generation plants are taken into consideration, hence, the Integrated Environmental Control Model (IECM 8.0.2) is employed for a systematic estimation of plant performance, costs and emissions of different scenarios of fuel and CCS technologies.This study showed that the utilization of white wood pellets (WWP) in electricity generation can annually avoid about 3M tonnes CO2 emissions from a 650MW power plant. However, this mitigation process had impact on the plant efficiency and the cost of electricity. Further, the BECCS using white wood pellets has showed a better efficiency and lower cost of electricity with the oxy-fuel technology than the post-combustion CCS technology. However, in order to boost biomass energy CCS (BECCS) deployment with the WWP, an increase of the ROC for biomass power plants, or, an increase of the carbon price for the coal power plants is recommended. It was found that, the sensitivity of COE towards the ROC was higher than towards the carbon price variation. This result can be interpreted as the ROC has more positive impact than the carbon price, on the COE from the point of customers view without adding more burdens on the power generation companies.

Biochar and renewable energy generation from poultry litter waste: A technical and economic analysis based on computational simulations

The technical and economic analysis of generating biochar together with electricity and/or heat from poultry litter (PL) waste is the subject of this study. To carry out this study, the process simulation software ECLIPSE is used. Modelling and simulation have been conducted over the selected system: the pyrolysis/gasification process integrated with an Organic Rankine Cycle (ORC). The facility will be capable of processing 1500kg of PL every hour. The simulation shows that when a reference PL is used the yield of biochar from the process is around 398kg/h with a 38% carbon content. Electricity generated by the ORC system is 388kWhe. Recovered low grade heat for space heating is estimated at 1831kWhth. The results of the economic analysis suggest that when paying £20/tonne for handling and storing the feedstock without any options of selling either heat or electricity, the break-even selling price (BESP) of biochar is around £218/tonne. If the sale of electricity and heat produced is considered to be around £60/MWhe and £5/MWhth, the BESP will decrease to £178/tonne. The case studies also indicate that when a gate fee of £10/tonne is introduced the BESP can be further reduced to £65/tonne, equivalent to a 63% reduction. On the other hand if biochar generated has an average price of £150/tonne in the market and the plant receives one Renewable Obligation Certificate (ROC) from the Government, the Levelised Cost of Electricity (LCOE) for the electricity generation will be £46/MWhe, which is compatible with electricity generated by fossil fuel power plants.

Estimating the Price of ROCs

Under the U.K. government's Renewable Obligation system of tradable quotas, each unit of generation from renewables creates a renewable obligation certificate (ROC). Electricity generators can earn ROCs through their own production, purchase ROCs in the market, or pay the buyout price to comply with the quota set by the RO. A unique aspect of this regulation is that all entities holding ROCs receive a share of the buyout fund – the sum of all compliance purchases using the buyout price. This setup ensures that the difference between the market price for ROCs and the buyout price should equal the expected share of the buyout fund, as regulated entities arbitrage these two compliance options. An analysis finds that minimum temperature in the U.K. is correlated with the buyout price differential, while the price of natural gas is not.

Valuation of Wind Energy Projects: A Real Options Approach

We address the valuation of an operating wind farm and the finite-lived option to invest in it under different reward/support schemes: a constant feed-in tariff, a premium on top of the electricity market price (either a fixed premium or a variable subsidy such as a renewable obligation certificate or ROC), and a transitory subsidy, among others. Futures contracts on electricity with ever longer maturities enable market-based valuations to be undertaken. The model considers up to three sources of uncertainty: the electricity price, the level of wind generation, and the certificate (ROC) price where appropriate. When analytical solutions are lacking, we resort to a trinomial lattice combined with Monte Carlo simulation; we also use a two-dimensional binomial lattice when uncertainty in the ROC price is considered. Our data set refers to the UK. The numerical results show the impact of several factors involved in the decision to invest: the subsidy per MWh generated, the initial lump-sum subsidy, the maturity of the investment option, and electricity price volatility. Different combinations of variables can help bring forward investments in wind generation. One-off policies, e.g., a transitory initial subsidy, seem to have a stronger effect than a fixed premium per MWh produced.

Techno-economic Analysis of BioChar Production and Energy Generation from Poultry Litter Waste

The technical, environmental and economic analysis of generating electricity and/or heat together with biochar from poultry litter (PL) waste is the subject of this study. To carry out this study, the process simulation software ECLIPSE is used. Modelling and simulation have been conducted over the selected system: the pyrolysis/gasification process integrated with an Organic Rankine Cycle (ORC). The facility will initially be capable of processing 1500kg of PL waste at 30% moisture content every hour. The expansion plans of the facility are underway to deal with 3000kg of PL waste per hour. Based on the data gathered, the key technical, environmental and economic issues have been examined. The ECLIPSE simulation shows that when using the reference PL the yield of biochar in the process is around 391kg per hour with 37% of carbon content and the producer gas has a calorific value of 4.72MJ/Nm3. Electric power generated by the ORC system is 398kWhe. Recovered low grade heat for space heating is estimated at 1879kWhth.The results of the economic analysis demonstrate that when using the reference PL and paying 20£/tonne for receiving, handling and storing the feedstock without options of selling either heat or electricity, the Break-even selling price (BESP) of the biochar is estimated at £222 per tonne. If the sales of electricity and heat produced are considered to be about 60£/MWhe and 10£/MWhth, the BESP value will go down to £155 per tonne. The case studies also indicate that when a gate fee of 10£/tonne is introduced the BESP can be further reduced to £40 per tonne, accounting for 74% reduction. On the other hand if biochar generated has an average price of £120 per tonne in the market, the plant is still paying a receiving and handling fee of 20£/tonne for the PL feedstock but will receive one Renewable Obligation Certificate (ROC) from the UK Government, the Levelised Cost of Electricity (LCOE) for the electricity generation will be 51£/MWhe, which is compatible with electricity generated by fossil fuel power plants.

Techno-economic assessment of biofuel development by anaerobic digestion of European marine cold-water seaweeds

The techno-economic characteristics of macro-algae utilisation from European temperate zones was evaluated in a selected Anaerobic Digester (AD) using the chemical process modelling software ECLIPSE. The assessment covered the mass and energy balance of the entire process followed by the economic feasibility study, which included the total cost estimation, net present value calculation, and sensitivity analysis. The selected plant size corresponded to a community based AD of 1.6MWth with a macro-algae feed rate of 8.64tonnes per day (dry basis). The produced biogas was utilised in a combined heat and power plant generating 237kWenet electricity and 367kWth heat. The breakeven electricity-selling price in this study was estimated at around €120/MWh. On the ground of different national and regional policies, this study did not account for any government incentives. However, different support mechanisms such as Feed-in-Tariffs or Renewable Obligation Certificates can significantly improve the project viability.

Contracting for Wind Generation

Difference (CfD) or a premium FiT, pFiT. The CfD entitles the generator to receive (or pay) the strike price less a reference price (which could be negative, requiring the generator to make a payment), but the generator must sell the power for whatever price can be secured in the market place. The pFiT is an agreed fixed payment per MWh produced that supplements the generator’s sales in the market. These should be contrasted with the classic FiT in which the generator receives a fixed amount per MWh regardless of the market price and is automatically dispatched without the need to secure a buyer, and the current system of supporting renewables in the UK, which is a via Renewable Obligation Certificate, ROC. Under the ROC scheme an onshore wind generator would be issued one ROC per MWh that they could sell in the market for ROCs, as well as selling their power. Suppliers would be required to secure and surrender a certain number of ROCs proportional to their sales, or pay a buy-out price that would be returned to generators in proportion to their ROCs, amplifying the value of these ROCs to the generator. Figure 1 shows the evolution of the ROC value and the wholesale (day-ahead) price, which together provide the return to on-shore wind. (Off-shore wind receives two ROCs/MWh, reflecting the need for greater subsidies to cover the higher cost.) It shows that the ROC scheme looks rather like a pFiT, in that the ROC price, corresponding to the pFiT premium, is fairly stable, although its future predictability and credibility may

Waste to energy in the UK: policy and institutional issues

A sustainable waste management policy is necessary to manage the growing stream of municipal solid waste in ecologically sustainable ways. Although landfill has been the dominant form of waste management in the UK there is a need to comply with the European Union landfill directive. Waste to energy (WtE) is a viable waste management option to reduce the reliance on landfills and reap the energy benefits of waste. The first waste-fired power plant was built in the UK in 1885 but several barriers have constrained the use of WtE. This paper assesses the policy and institutional context for the development of WtE in the UK. It discusses how public opinion and choice of technology are important factors in achieving a wider acceptance of WtE in the UK. There is a need to devise coordinated policies on sustainable waste management at the regional and local levels. Furthermore, making all WtE technologies eligible for renewable obligation certificates could support the development of the technology and divert waste from landfills. The absence of efficient heat delivery networks is also a barrier to fulfilling the potential for WtE in the UK.

An over painted oriental arts: Evaluation of the development of the Chinese renewable energy market using the wind power market as a model

China is now the largest CO 2 polluter in the world. However, the renewable energy policies in China are controversial and one can easily draw the wrong conclusions that Chinese renewable energy development has taken off from a surface assessment of the policies. By investigating and summarizing the first-hand experiences of participation in the Chinese renewable market (mainly wind farm development) in the past five years, this paper provides another dimension of policy analysis and independent review of the current issues facing the market. An investigation of policy changes and consequences clearly demonstrates the transformation of the Chinese renewable market. The domestic manufacturing quality and unprofessional design of wind farms made most developers’ financial returns unrealistic in the wind market. Despite the difficulties and inconsistency in the system, China is tackling environmental issues seriously and heading in the right direction. With centrally controlled management, the Chinese strategies do not have to be justified financially. It is envisioned by the authors that re-organizing over 70 existing Chinese wind turbine manufacturers is unavoidable. Establishment of an internal renewable market, such as Renewable Obligation Certificate (ROC) system in the UK whose effectiveness is another subject of debate, would be an effective means by which the Chinese government in their post-2012 strategy could make the wind market more financially viable.

Techno-economic performance of energy-from-waste fluidized bed combustion and gasification processes in the UK context

This paper presents the technical and economic performance of energy-from-waste (EfW) fluidized bed combustion and gasification processes and reports on the implications of different scales and technologies on costs and efficiencies. Mass and energy balances of the processes were performed and the cost effectiveness of the different waste treatment options, for the generation of electric power, was assessed using a discounted cash flow analysis. For the different waste treatment options, the study concludes that gasification processes have higher overall system efficiencies than combustion processes. In particular, fluidized bed gasification with combined cycle gas turbine (CCGT) is the most attractive treatment option in terms of cost and efficiency. Although fluidized bed gasification has limited commercial operation in the UK, they are compatible with high levels of source segregation and, therefore, have the potential to contribute towards integrated waste management practices. The operational reliability of the systems will be further improved as more facilities are commissioned and operated at commercial scales. Furthermore, financial incentives, such as Renewable Obligation Certificates (ROCs), supportive policies and active R&D by major industry players and research institutions are important factors for the full commercialisation of the gasification processes, especially, for plant scales larger that 50 ktpa.

Stuck between a ROC and a hard place? Barriers to the take up of green energy in the UK

This paper examines the UK mechanisms for ensuring future investment in renewable energy through consumer adoption of green energy tariffs and the Renewable Obligation Certificate (ROC) system. Using a national survey and focus groups the stated willingness by UK customers to pay a premium for renewable or green energy and actual take up of such tariffs is assessed. Substantial differences between willingness to pay for and the adoption of green energy tariffs are reported. This disparity is linked to a range of factors including consumer confusion, lack of supply, complexities of constructing ‘green source’ tariffs under the ROC system and a lack of customer trust. It is concluded that the re-definition of the green energy market in favour of ‘green source’ tariffs, greater direct compliance with the Renewable Obligation by addressing supply constraints, and efforts in providing clearer information and choices for consumers via a compulsory green energy accreditation scheme are required if willing consumers’ are to contribute to investment in renewable energy.

U.K. Wind Power

An increasing amount of activity is taking place in the U.K. capital markets with respect to wind power financing, coinciding with an expected long-term shift out of growth stocks and into high-income securities. The market is now asking the question of how much risk is involved in the U.K. regulatory system for wind power. The U.K. system is market-based and is riskier and more complex than the fixed-price tariff regimes found elsewhere in Europe. However, it is also one of the only systems to offer upside potential to investors. Renewable Obligation Certificates (ROCs) are the tradable instruments that sit at the center of the system. Understanding the mechanics of the U.K. Renewables Obligation and the drivers of ROC prices is fundamental to the valuation and assessment of U.K. wind power investments. We introduce the ROC Price Map to simplify analysis and to establish reasonable price bands within which ROCs are likely to trade.