Hogan Lovells welcomes the UK government’s announcement on strike prices for renewables

Hogan Lovells has welcomed the UK government’s recent announcement on strike prices for renewables — set out as part of the Electricity Market Reform process.

The government set out indicative strike prices for six of the major renewable technologies in the UK in HM Treasury’s policy note entitled ‘Investing in Britain’s Future’.

The announcement is ahead of schedule and gives developers and potential investors an idea of the level of FiT CfD strike prices that are likely to be available for renewables.

According to Lis Blunsdon, of-counsel in Hogan Lovells’ energy group, the market will certainly appreciate the extra visibility that this announcement brings.

‘It will be interesting to see how the market responds in the short term and whether different technologies gravitate towards ROCs or CfDs in the ‘window of choice’ from 2014 to 2017, when projects will be able to choose between FiT CfD or Renewable Obligation support,’ she said. ‘We will, however, have to wait for the Energy Bill to be implemented to see how theory can be turned into practice,’

Omitted from the announcement were the strike prices for nuclear and carbon capture and storage (CCS) — both capital-intensive technologies.

Generally, levels of support are broadly in line with the current arrangements. However, offshore wind has reportedly taken a slight hit in terms of the relative support it will receive under the new regime, as has large solar. Biomass would seem to have reached a plateau in its development, with no reduction in the strike price over the next five years and wave/tidal receiving the highest level of support.