Quantitative Evaluation of Financial Instruments for Renewable Heat -- Phase II
1 September 2008
By Daniel Radov et al.
In this report for the Department for Business, Enterprise and Regulatory Reform (BERR), a NERA team led by Associate Director Daniel Radov presents the results of research to quantify the potential costs of policies to achieve certain target levels of renewable heat within the UK by 2020. This is the second of two reports by NERA for BERR presenting analysis of financial instruments to support the use of renewable heat in the UK. NERA's Phase I report (published in June 2008) presents a qualitative analysis and evaluation of a range of potential support mechanisms and provides a shortlist of policies requiring further analysis. This Phase II report presents the results of a quantitative assessment and cost-benefit analysis of these policies, which would help the UK meet the challenging renewable energy targets set for it as part of the European Union's Energy and Climate policy package. The report explores the cost differences between "feed-in" style policies, which offer a fixed level of support per MWh of heat, and "certificate" policies, under which the level of support is allowed to fluctuate. One important finding of NERA's research is that the overall costs of the policies are very dependent on assumptions about the availability and price of biomass fuels such as wood chips and pellets imported to the UK.
