A glimmer of hope

The UK government plan to replace the Non Fossil Fuel Obligation (NFFO) with a renewable obligation on electricity suppliers that relies on market forces. Under the NFFO, the Non Fossil Purchasing Agency paid renewable generators a premium price for electricity that is guaranteed throughout the entire length of the contract (usually 15 years). Under the new system, generators will have to negotiate their own power purchase agreements (PPA) directly with electricity suppliers. Without the security of long-term contracts, hydro's biggest problem will be getting finance for new schemes. Hydropower is disadvantages by its high initial construction costs. The short-term future under the government's proposed policy appears to point to amalgamation and aggregation within the hydro industry, particularly for PPAs for existing schemes.