The importance and the policy impacts of post-contractual opportunism and competition in the English and Welsh non-fossil fuel obligation

The non-fossil fuel obligation (NFFO), which consisted in a competitive auction for the deployment of renewable electricity, was the main policy for almost a decade in England and Wales. Once also used in Ireland and France, it has recently been abandoned in all countries. Many critics of the NFFO have focused on its inability to develop a national industry and promote a climate of stability among investors. This paper focuses on the incentives faced by developers bidding for a NFFO contract and shows that the low deployment rate under this scheme is likely to have been a predictable outcome of how the policy was structured and implemented rather than an unfortunate accident. The importance of the NFFO goes beyond the lack of an intense deployment of renewable electricity generation observed in the years in which the policy was on place. In fact, the NFFO has contributed to: promoting hostility against wind farms; creating false expectations of a price competitive renewable electricity sector; creating a playing field giving advantages to big players; preventing the creation of a wide renewable lobby coalition and the effective solution of planning constraints encountered by several renewable developers. (c) 2005 Elsevier Ltd. All rights reserved.