UK reviews wind power port fund, incentives -govt

Tue Jun 15, 2010 6:54pm BST

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* Coalition reconsiders feed-in tariffs vs ROCs

* No comment on possible carbon floor price

By Kwok W. Wan

FRINTON-ON-SEA, England, June 15 (Reuters) - Britain's multi-million pound offshore wind port fund, cited by turbine manufacturers as a reason for UK investment, is under review, the new energy minister Charles Hendry said on Tuesday.

Announced under the previous government, the 60 million pound competition fund for port infrastructure was highlighted by Germany's Siemens (SIEGn.DE) and U.S. company General Electric (GE.N) as reasons behind nearly 200 million pounds of turbine manufacturing investment. [ID:nLDE62S1UE]

The fund was intended to revamp Britain's ports to handle large offshore wind turbine parts and other supply chain, but the new Conservative-Lib Dem coalition government is reviewing plans in order to cut public spending.

"It comes under the group of projects the previous government wanted to give a lot of money to. We are looking across the board at those commitments that were made," Hendry said at a press briefing in south-east England.

Due to the size of offshore wind turbines, manufacturers consider the renovation of Britain's ports as vital for manufacturing, and may consider pulling out without the fund. [ID:nLDE64K1AM]

"In the course of the review, we're looking at the broad picture, but we are very committed to providing supply chain opportunities," he said.

FEED-IN

Hendry said that the coalition was reconsidering its position on feed-in tariffs and the Renewable Obligation Certificate (ROC) scheme for subsidising renewable power projects in the future.

The Conservatives election manifesto was in favour of feed-in tariffs -- which would guarantee a steady level of payment for renewable power generated -- while the Lib Dem manifesto was not.

The Conservatives also wanted to scrap the ROC scheme for new projects -- a system that pays a subsidy on top of the wholesale market price -- only keeping it for existing projects.

"What we're doing at the moment is exploring the best way forward. But some people have come to us and said that it is easier to secure investment under Round 3 offshore wind project if it was done on the feed-in tariff basis." Hendry said.

Britain awarded around 33 gigawatts of offshore wind farm tenders earlier this year, making the country's hundred billion pound wind market one of the biggest in the world. [ID:nLDE607149]

NUCLEAR

Hendry reiterated the government's stance in favour of building new nuclear power plants, but said that the fleet would most likely not exceed its current position of supplying a fifth of Britain's electricity needs.

"It's going to be some significant time, if ever, before it gets above the 20 percent threshold," he said.

He repeated the belief that the planned floor price for carbon emissions should be enough to encourage new nuclear builds without subsidy, but declined to give a figure on what that floor price may be.

Analysts say Britain must have a high carbon price or reform the market if the country wants to build new nuclear power plants to decarbonise power generation. [ID:nLDE653196]

(Editing by Alison Birrane)

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