UK - Energy White Paper keeps show on the road but lacks ambition on renewables

BWEA, the UK’s leading renewable energy trade association, has welcomed the elements of today’s Energy White paper which will boost the development of new renewable generating capacity in the near future.

The proposed changes to the Renewables Obligation* will provide much needed confidence to developing technologies such as offshore wind, and to a lesser extent wave and tidal power.

Equally welcome is the maintenance of support for onshore wind power, which is the technology that is delivering now and will provide the bulk of Government’s current target of 10% of the UK’s power from renewables by 2010.

However, BWEA is concerned that Government appears not to believe in renewables sufficiently to turn its ‘aspiration’ to gain 20% of our power from renewables by 2020 into a firm target. This is especially disappointing in light of the decision by EU leaders in March to set a target of 20% of all energy from renewables in 2020. For the UK, this is likely to translate into a target of greater than 20% for the power sector. That we are only now entering negotiations on the exact share of the EU 20% target the UK will take should not prevent Government from setting targets now, when swift action is required to maximise delivery in 2020.

BWEA CEO Maria McCaffery said:
“BWEA is pleased to see renewables taking a central role in the UK's future low carbon energy policy. We have long been calling for political and economic stability for our industries, and there is much in the White Paper that will help achieve this.

However, BWEA is deeply disappointed that Government has not taken the opportunity to raise the level of ambition and set in stone a 20% target. This undermines long term confidence in our sector. BWEA member companies are ready to build, but we need that confidence to drive the major investments that will drive down the costs of renewables significantly and build new industries for the United Kingdom.”

The industry body also cautions that key issues around planning and grid still require resolution:

Planning:
Monday’s Planning White Paper will not deliver the short term action required to release the 8,000 MW of onshore wind, potentially representing 6% of UK electricity supplies, currently held up in the planning system.

Grid:
BWEA is seeking commitment by Government to drive through the strategic development of the transmission grid, which so far it has failed to do. Government also needs to take a lead on reform of grid management and technical standards so that more renewable generators can be allowed onto existing grids.


Notes to editors

Applications for onshore wind projects representing potentially 6% of UK electricity supplies (8,000 MW) are currently held up in the planning system. The reforms in Monday’s Planning White Paper will not come into effect until 2009 at the earliest, only deal with larger onshore wind projects (>50 MW) and only apply to England & Wales – and thus will have little impact on the current planning queue. See www.bwea.com/pdf/briefings/ukwindplanningstatusMar07.pdf.

A further 8,000 MW of offshore wind capacity will be fundamentally affected by the reform of the Renewables Obligation (see below); as projects are not currently economic to build under the RO as it stands. BWEA will be undertaking its own analysis of the market conditions created by the Energy White Paper to establish if they are sufficient to build offshore wind, in the quantity and time-scales needed.

Background on key issues addressed by the Energy White Paper:

*Renewables Obligation reform: One key outcome of last year’s Energy Review was a proposal to ‘band’ the RO, the system of financial support for renewable electricity, so that different technologies receive different levels of support. A consultation on this idea was held at the end of 2006. The EWP includes the Government’s response to that consultation, setting down the fine detail of the new system, and, crucially, the multiplication factors which will dictate the economics of renewable power projects.

BWEA has made a number of key demands of this reform process. The most important concern the overall resource within the system: the Government’s original proposals attempted to get a third more renewable power, with a mix that includes significant quantities of technologies that are not economic under the current system, for the same amount of money, which BWEA regards as unrealistic. BWEA is worried if Government continues to adhere to the concept of ‘net neutrality’ (number of ROCs in the system equal to number of MWh), even as a “broad aim”. The White Paper is not clear on this point. However, the U-turn on freezing of the Buyout Price after 2015 is very welcome. In addition, BWEA will be scrutinising the multiples proposed: the Association has demanded that onshore wind remain at 1 ROC/MWh (as at present) and is consequently pleased that Government proposes to keep it there; we will be looking closely at the multiple for offshore wind to ensure it is appropriately high; we are, however, very concerned that there will be insufficient resources for the emerging marine renewables as they need a higher multiple plus extra grant funding in order to bring these technologies to market.

Implementing the EU 20% by 2020 target: EU leaders agreed in March to a package of energy measures that included a mandatory target of 20% of all the Union’s energy to be sourced from renewables by 2020. This contrasts with the UK’s ‘aspiration’ to get 20% of our electricity from renewables by the same date – there are no targets for the other main energy sectors of transport fuel and heating. With the UK’s significant renewable resources, it is likely that our national target will be at least 20% of all energy, which, given the small amounts of heating and transport that are currently satisfied by renewables, means that the electricity target will need to go beyond 20%. The only resource that can take us significantly beyond 20% is wind, and in particular offshore wind.

BWEA was looking for an early indication of how the UK Government will be implementing its share of the EU 20% target. How the Government might fund this expansion when the RO will only support 20% renewables by 2020 is a key point. It appears that Government has completely ducked this issue and the renewables sector will have to wait yet more months to get clarity.

Extending and managing the transmission grid for renewables: Unlike traditional generators, where fuel can be transported to them, renewables like wind need to be sited where the resource is, and this is often in remote places where there is a weak grid. Building new grid capacity and managing existing capacity more effectively are therefore vital for developing our huge wind, wave and tidal resources.

BWEA is seeking commitment by Government to drive through the strategic development of the transmission grid, which so far it has failed to do. Government also needs to take a lead on reform of grid management and technical standards so that more renewable generators can be allowed onto existing grids. The Energy Review report of July 2006 contained an annex on these issues, but Government has not proactively sought to implement the solutions it supported there.

In this regard, BWEA has welcomed the publication of a new report on grid at a major renewables conference in Aberdeen today. Making Connections, by Scottish Renewables, sets out a ten-point action plan for developing and managing the grid in Scotland, fundamental to the UK’s targets, as BWEA CEO Maria McCaffery commented:

"BWEA has long been urging action on grid planning and management to release the vast renewables potential of the UK, in which Scotland will play a major role. With Energy and Planning White Papers hot off the press, laying out separate strands of the UK's future low carbon energy policy, the industry is now calling for Westminster and Holyrood to take this opportunity to drive forward the urgent action on the grid required to realise their own xobjectives. The vision set out in Making Connections provides an excellent blueprint."

The full report is available from www.scottishrenewables.com/MultimediaGallery/4b125889-8412-4945-9c7f-f691de33cce6.pdf

The All-Energy Exhibition and Conference is being held at the AECC from 23-24 May. See www.all-energy.co.uk for more details.

Information on the Energy White Paper can be found at www.dti.gov.uk/energy/whitepaper