Oct 19 2015

Delays to NER300 projects revealed

Following an ‘access to documents’ request, the EC has published the amended Award Decision that details the current status of NER300 projects selected in the first and second calls.

The document shows changes to the dates that projects intend to begin operating and to the manner in which their award is paid to them, as well as, in two cases, changes to the project name and reductions in the award.

The updates reflect the wishes of project sponsors and their host Member States as at late spring 2015, when the EC initiated this year’s annual process to amend the Award Decision.


25 RES projects out of 38 have requested a change, including, invariably, a later ‘date of entry into operation’. Of those 25 projects, the mean delay to entry into operation is of 27 months. This figure excludes any requests for extensions already granted to first-call projects in January 2014.

This means that now 17 projects, which is 45% of all projects, are right up against the latest possible date of entry into operation according to current NER300 rules. This compares to 13% in 2012 and 34-36% in 2014. All French, Spanish, Cypriot and Greek projects are in this position.

Money for construction

More and more projects wish to take advantage of the ‘upfront funding’ possibility, where the award is paid in advance, with the risk that it will need to be paid back if the project underperforms. Five projects were granted this in 2015 (the EC suggests half of all requests are declined — see Impact Assessment).

Further interesting features of the Amended Award Decision

  • UK OCNb Kyle Rhea Tidal Turbine Array changed its name from ‘Kyle Rhea’ to ‘Stroma’. The most likely reason is to reflect a change of the project’s location as both names refer to places. This is supported by the fact that the project’s award was reduced in January 2014 because of a reduction in its ‘Relevant Costs’, which is to be expected if the new site has a better tidal stream resource than the original one.
  • The award of PVa concentrated PV project PT PVa Santa Luzia Solar Farm has been reduced. This implies the Project Sponsor has recently taken his Final Investment Decision, even though the project will only enter into operation in mid-2019.
  • Among the seven countries that successfully lobbied for two-year extensions to some key NER300 deadlines, including projects’ date of entry into operation — France, UK, Germany, Italy, The Netherlands, Sweden and Finland — The Netherlands and Italy did not subsequently go on to apply for extensions for any of their projects.

The text of the EC’s amended Award Decision is available here. A file showing the evolving status of each project is available here.

Three projects are operating, two in bioenergy (IT BIOg BEST, DE BIOh Verbiostraw) and one in wind energy (SE WINf Windpark Blaiken).

The CCS project, White Rose, did not request an extension, but the deadline for doing so had passed before Drax announced its pull-out. Also, the result of UK’s CCS Commercialisation competition is not yet known. White Rose is one of two entries in line, potentially, for 1 bn GBP of capital funding.

Oct 02 2015

White Rose CCS project down but not out

***UPDATE 18 Apr 2016: ICIS reports that on 14 April 2016 White Rose was refused planning consent, further jeopardising the project.***

***UPDATE 26 November 2015: All UK CCS projects are dealt a severe blow by the UK government’s cancellation of the CCS Commercialisation competition, which would have awarded 1 bn GBP in funding to large-scale CCS demonstrations.***

The future of the UK’s White Rose CCS project is in doubt, and with it up to 300 M EUR of NER300 money. Drax, one of the consortium of three companies developing the project, announced that it would not join its partners in proceeding to the investment phase.

Speaking on the UK radio show, The Today Programme, Drax CEO Dorothy Thompson said she “thought [White Rose] was a really good project and important technology”, but Drax lacks the cash to construct. “We’re in a different financial situation today than we were two years when we decided to invest in the [White Rose] project. There have been some changes to the government’s renewable policy but there have also been dramatic movements in the commodity markets that have greatly reduced our profitability. The government has removed a tax exemption for renewable power sold to industry and we’re the largest generator of renewable power in the UK,” she explained.

The CEO is referring to the climate change levy, which is a tax on UK business energy use (details on OFGEM website — UK electricity market regulator). Businesses could escape the tax by handing in Levy Exemption Certificates covering their energy use. Until 1 August 2015 (when a change in the law came into effect), a renewable energy supplier like Drax could create Levy Exemption Certificates, which it could sell to its customers for a price up to the value of the tax. Drax had warned in July that it expected its revenue to drop by 30 M GBP in 2015 and 60 M GBP in 2016 because of the end of LECs.

Carbon Pulse reported that the other two partners in the White Rose consortium, Alstom and BOC “were committed to completing the project”. Drax, meanwhile, will pursue “rapid decarbonisation with the deployment of the latest biomass technology, which is the most affordable, reliable and fastest way to move away from fossil fuels.”

Bellona, a pro-CCS NGO, said Drax is one of many utilities seeking capacity payments in order to survive. Bellona decries such payments “as a form of blackmail to ‘keep the lights on'” and would prefer to see an electricity market design that would encourage Drax to invest in CCS instead. Its statement is here.

Drax’s press release is here.