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Green Paper gives amber light to renewables

BWEA cautious about whether 'cocktail of measures' can deliver the goods on time

Tuesday 11 July 2006

BWEA today commends the Government’s intention to put the UK on track towards a sustainable future through committing to an extension to the Renewables Obligation (RO) to support the generation of 20% of electricity supplies from green sources.

The Association is concerned however at the absence of a timescale in which this is to be achieved, and indeed the failure to translate the ‘aspirational’ 20% target to a firm commitment. BWEA is further concerned that momentum may be lost in the short term while proposed changes to the RO are consulted upon and implemented.

The cocktail of measures proposed – including extending the RO from 15% to 20%, accompanied by a consultation on banding to boost offshore wind and other renewable technologies – has both positive and negative implications.

The proposal outlined to evolve the RO towards a banded mechanism after 2010 is a welcome recognition that extra support is needed for the offshore wind sector, but BWEA has reservations that this is the best way forward. Certainly, a new policy impetus for offshore is essential to underpin the UK’s pioneering position in this new technology. Our ambitious programme of offshore development makes this country pivotal in the creation of a new technology sector, which could result in revenues for UK plc of up to £2 billion per annum by 2020, half deriving from exports.

However, BWEA urges caution, as BWEA CEO Maria McCaffery MBE comments:

“The RO is a market-based mechanism which has been very successful in incentivising new investors in the renewables sector. BWEA believes that any proposal to alter the support mechanism for renewables must satisfy some key criteria, paramount of which is maintaining the momentum of onshore wind through retaining the confidence of these new investors. It is in no one’s interest for development of the most cost effective renewable energy technology to be hindered by policy changes.

“BWEA is particularly pleased at the protection afforded to onshore wind development which has spearheaded renewables delivery, but urges Government to move swiftly on the proposed consultation to boost other technologies so as not to impede the momentum of renewables as a whole.”

The intention to speed up planning decisions are welcome news for a sector which can experience delays up to four years to get a project through the planning system. There are currently 11,000 MW of wind energy projects awaiting decisions; measures to speed up their determination will bring forward delivery of new clean and sustainable electricity generation, urgently needed to help close the energy gap and keep the UK on track for carbon emission reductions. BWEA is concerned that continued consultation will lead to further delay: decisions for onshore wind projects must be made by the end of 2007 in time to be built by 2010 to meet almost half of the Government target for renewables.

BWEA CEO Maria McCaffery continued:

“Inevitably the devil will be in the detail, but BWEA looks forward to working with Government without delay to develop a support framework. It is imperative that we satisfy the key criteria we believe are essential for effectiveness in enhancing offshore wind and other marine renewables and continuing to build a new and sustainable energy sector for the UK.”

 

Notes to editors
The British Wind Energy Association (BWEA) is the UK’s leading renewable energy association, with over 300 companies in membership.  Formed 28 years ago, BWEA is at the forefront of the development of the UK wind and marine renewables industry, representing these sectors to Government, business, media and the public. BWEA is helping to ensure that the knowledge gained through the development of offshore wind energy is transferred into the emerging marine renewables, ensuring as smooth a path as possible for the development of wave and tidal stream energy in the UK.

Wind energy has now started a major expansion in the UK and will be the single greatest contributor to the Government’s 10% 2010 renewable energy target and 20% 2020 renewable energy aspiration. Together, wind, wave and tidal power can supply 21% of the UK’s projected electricity needs by 2020, resulting in over £16 billion of investment in UK plc, and potentially avoiding the emission of 32 million tones of carbon dioxide.

 

The Renewables Obligation
The Renewables Obligation (RO) is the primary legislation in the UK to deliver the Government’s targets on renewables. The RO and associated Renewables (Scotland) Obligation came into force in April 2002, and require power suppliers to derive a specified and increasing proportion of the electricity they supply to their customers from renewable energy sources. Originally set at 3% in 2003, this now stands at 6.7% in 2006/7, rising incrementally to 10.4% by 2010 and 15.4% by 2015.

More than half of the revenues received under the RO in the last financial period – 53% - went to landfill gas and co-firing, with a further 18% going to hydro projects while onshore wind received less than a sixth – 15.87%.

BWEA’s key criteria for any proposed changes to the support mechanism for renewables are:

  • Does it enhance value for money for consumers?
  • Does it protect investor confidence in onshore wind?
  • Does it successfully promote offshore wind and marine renewables?
  • Does it ensure maximum renewable TWh delivery?
  • Does it promote long-term stable markets for the supply chain?

 

Wind energy now
There are currently 127 wind energy projects, with 1618 turbines with a combined capacity of 1694 MW. This provides 4.4 TWh of electricity generation, equivalent to 1.25% of total UK electricity supply, or the annual electricity needs of 950,000 homes and currently prevents the emission of 3.8 million tonnes of carbon dioxide.

A further 11,000 MW of wind energy capacity is in the planning system, roughly equivalent to a further 9% of UK electricity supplies.

 

Wind energy in the future
The key findings of BWEA’s work for the Energy Review are that wind energy, on and offshore, and wave and tidal power will be providing the bulk of the UK’s renewable electricity growth in the period to 2020, with potential installed capacities of:

  • 12,500 MW of onshore wind
  • 11,500 MW of offshore wind
  • 3,000 MW of marine renewables
  • up to 1,200 MW from micro and mini wind turbines

This level of installed capacity would generate an annual average of 78 TWh of electricity, equivalent to the needs of two in three UK homes, and if displacing gas-fired electricity generation would reduce gas imports by 14.6 billion cubic metres annually, equivalent to 324 tanker shipments of Liquefied Natural Gas, and avoid the emission of 32 million tonnes of CO2.

The installation of 12,500 MW of onshore wind and 11,500 MW of offshore wind would result in investment of over £16 billion in the UK in construction and infrastructure works, including £740 million in business rates, £797 million in landowner income (including £212 million to the Crown Estate) and some £195 million in community income.

While onshore wind is leading the way in delivery of renewables capacity, with some 6,000 MW able to be installed by 2010, equivalent to almost 5% of UK electricity supply and representing almost half of the Government’s targets on renewables for that year, progress offshore is not as rapid as had been hoped, with a maximum of 2,000 MW possible by 2010. However, with a new policy impetus, offshore wind can deliver up to 8,000 MW by 2015, equivalent to 6% of projected electricity supply

The renewable contribution of 20% in 2020 is deliverable, but the key to unlocking this potential is getting the financial mechanism right for emerging as well as existing lower-cost renewables. If no extra resources are provided for newer technologies or the RO not evolved to direct more resources to them, offshore wind will not be delivered in the quantities required to establish the sector and attract investment in the supply chain that will bring costs down. Should offshore wind not deliver, then it will be difficult for investors to show confidence in Government providing the right framework for the nascent technologies of wave and tidal stream.

For more details see www.bwea.com/energyreview

The Energy Review website is www.dti.gov.uk/energy/review