BWEA Offshore Wind 09
The World Leading Offshore Wind Market
BWEA was delighted to welcome the new Minister of State for Energy, Lord Hunt of Kings Heath OBE, in his first address to the industry. Read his speech here.
Lord Hunt speech at the BWEA Offshore Wind Conference
Wed, 24 June 09 | Ministerial Speech
Summary
Lord Hunt has told BWEA that as the world looks to reach a new deal on climate change the low carbon economy has to grow quickly in the UK and abroad. And with that in mind he said that the UK would soon join the International Renewable Energy Agency (IRENA) to commit to support renewable energy across the globe.
The Energy and Climate Change Minister said that wind energy would probably be the single largest contributor to meeting climate change and renewable energy goals. He promised that the Renewable Energy Strategy would set out how the UK will meet its EU 2020 targets. And then he announced that the Government had adopted a plan to raise 25GWs of energy from offshore wind power in the UK's seas.
To help make that happen he said the new offshore grid provision regime would go active today, so as to facilitate easier offshore wind farm development. Firms therefore now have the opportunity to bid for infrastructure development that will eventually amount to £15billion worth of investment.
Alongside the development of a new grid regime, Lord Hunt said that the Government's planning reforms should facilitate easier and quicker development. But he stressed that the Government would continue to operate off-shore wind development with a view to minimising the impact on the marine environment.
Speech by Lord Hunt to the BWEA Offshore Wind Conference, QEII Centre, London, 24 June 2009
"I am delighted that one of my first public appearances as Energy Minister is here at the BWEA Offshore Wind Conference.
We can’t negotiate with the science - and the science says we need to cut greenhouse gas emissions by 80 per cent to avoid the most catastrophic and irreversible effects of climate change. The Climate Change Predictions published last week were a sobering reminder of just how urgent this is. They show, for example, that if we follow a ‘high emissions’ path we could be heading for a global rise of over 5.5°C by 2100 compared with the pre-industrial period – that is, a larger change in temperature than between the last ice age and now.
This December in Copenhagen, countries will meet to build the next international agreement to deliver global action at a scale and urgency that is proportionate to this threat. To stand an even chance of keeping global temperature rises below 2°C we will need to reach an agreement that leads to a 50 per cent reduction in global emissions from 1990 levels by 2050.
In this context, we know the low carbon economy is here, we know it will grow exponentially in Britain and abroad; the key for Britain therefore is to focus on areas where change is most urgent and opportunities most attractive.In the UK, this starts with the trinity of the low-carbon economy: nuclear power, renewables and clean fossil fuels.
Before I move on to talk in more detail about offshore wind and the new offshore transmission regime, I would also like to refer briefly to the UK’s role on international renewables. I am pleased to announce that the UK intends to shortly become a member of the International Renewable Energy Agency (IRENA). This demonstrates the UK’s support for the deployment of renewable energy technologies worldwide and reinforces the UK’s commitment to tackling climate change.
I am sure that everyone in the room today is aware of just how important offshore wind will be in the delivery of our targets, both for 2020 and looking ahead to 2050, alongside our quest to cut greenhouse emissions.
Our analysis suggests that wind energy will play a large part in meeting these goals – probably the single largest contributor to the 2020 target.
We will shortly publish the Renewable Energy Strategy, which will set out a package of measures for meeting the UK’s share of the EU 2020 target. We have set ourselves ambitious goals, but we believe they are achievable. We are fully committed to meeting our targets and transforming our energy use.
You’ll all be aware of the significant work that has gone into conducting the recent Offshore Energy SEA. Given its importance for meeting our targets, it gives me great satisfaction to announce today the Government’s decision on the offshore wind element of that work. Our decision is that we have adopted a plan for some 25GW of additional capacity in the territorial waters of England and Wales and the UK Renewable Energy Zone, in water depths up to 60m. I have, this morning, placed a written statement in Parliament to this effect.
This decision enables The Crown Estate to proceed with their Round 3 leasing competition, and to continue with their plan to enter into Zone Development Agreements with their preferred bidders by the end of the year.
The rate of deployment will depend on a range of factors… including market uptake, the relative cost of offshore wind compared to other options, the ability of other technologies to deliver, the potential for energy exports to other countries and the need for increased renewables capacity beyond 2020.
However, we recognise that there is much that we, the Government, can do to facilitate the necessary expansion of the offshore wind industry – and indeed the wave and tidal industries. To that end, we have been working across Government to achieve a balance between the sometimes competing priorities of the different departments concerned.
I am publishing today a policy document called “A Prevailing Wind: Advancing UK Offshore Wind Deployment”, setting out the work that Government plans or has already begun, to enable this massive expansion. I will say more about the wide range of this work in a moment, [and copies of this document are available at the exits for you to take with you during the coffee break].
A key part of this massive expansion of offshore wind will be the provision of a grid connection – on time and at a cost developers can afford.
So I am also delighted to be announcing today “Go-Active” of the new offshore grid regime.
This new and radical approach will involve competitive tendering by Ofgem to appoint new offshore grid companies – “OFTOs” – to build and operate the offshore grid we need.
As a result more parties will have the opportunity to connect offshore generators.
The tenders will be designed to meet generators’ connection needs. Overall we estimate a £1 billion net benefit from this approach. That should mean lower network charges for offshore generators.
A key issue for the Government, throughout the design of the new regime, has been to ensure the coordinated development of the on and offshore grids. We are therefore extending National Grid's system coordination role offshore.
To aid coordination, National Grid will develop an “Offshore Development Information Statement” by the end of the year – which builds on current industry views for future offshore networks. And I am pleased to also announce The Crown Estate and National Grid have started to work together to ensure the appropriate information is available for that Statement We estimate that up to £15 billion of new investment in the offshore grid could be needed.
The announcement today by Alistair Buchanan of the first £1 billion of assets being tendered shortly – is a great opportunity to enter this new market.
Opening this major investment opportunity to new players will bring real benefits. Additional sources of low cost finance will be opened up – and the Government and Ofgem will be working with the European Investment Bank to secure funding to support the delivery of this new network.
This is all very good news for the offshore wind industry. But I’m sure you will agree that the grid network alone will not enable deployment on this scale. The policy document we are publishing today, A Prevailing Wind, sets out the key work – ongoing and planned – that Government believes is necessary.
We know, for example, that we need a smooth and effective planning process. We need the right level of financial support for offshore wind. We need to create the right climate for investment in the supply chain. And we as a Government must achieve the right balance between a range of marine interests.
Clearly, while we believe 25GW of new offshore wind is feasible without unacceptable impacts – and that is the basis of the decision I am announcing today – individual proposals for development will have impacts at a local level. It is not possible to resolve all issues upfront. Site specific assessment, and local consultation, will remain vital. As will the implementation of appropriate mitigation measures.
The Government’s planning reforms, which are well underway, will streamline and improve the planning process for Nationally Significant Infrastructure Projects, including offshore wind farms over 100MW, with the aim of providing planning decisions within 9 months of the start of the examination process. The principles set out in A Prevailing Wind will feed through to the renewables National Policy Statement, which will be the basis for those decisions.
Among those principles set out is the Government’s belief that a balance can be reached to enable offshore wind deployment whilst minimising disruption, economic loss and safety risks to other users of the sea. Government has a key role in facilitating liaison between the various industries offshore – a role we take very seriously.
Another of the key principles we set out in A Prevailing Wind is that we firmly believe offshore wind development is consistent with the Government’s aim of conserving the marine environment.
We recognise that offshore wind farms can have a number of significant effects on the marine environment. To enable developers to make the right decisions at the scoping stage, and to develop the right mitigation measures, we know we need clear guidance for industry – and we’ll continue working across Government to provide that.
We know too that while our Offshore Energy SEA has greatly improved our understanding of the effects of offshore wind on the marine environment, gaps in the information base remain. So we will do what we believe necessary to fill those gaps.
But based on the evidence to date and lessons already learned, we do believe that on the whole, a risk-based approach should be adopted for offshore wind deployment in UK waters.
On the subject of risk, we know that the costs of offshore wind farms reaching financial close have risen markedly in the past few months, due to a combination of factors. That is why we announced in the Budget a review of the level of support for offshore wind under the Renewables Obligation. If the review and subsequent consultation confirm the evidence we have been presented with, we propose to provide even more incentive to offshore wind projects, building on the recent uplift to 1.5 Renewables Obligation Certificates under a banded RO. We expect the additional support being proposed would protect up to 3GW of planned investment over the next two years - enough to power an estimated 2.8 million homes.
We are clear – as I am sure you are – that we need to see costs coming down in the medium term, for our offshore wind ambitions to be realised. The maturing of the supply chain will be critical.
With the whole of Europe seeking to meet stretching renewable energy targets, at the same time as sharply increased investment in renewable energy around the rest of the world, the existing manufacturing and installation sector will be stretched to its limits. To deliver the renewable energy we need, the manufacturing base will need to develop far more quickly than has happened to date.
Renewables deployment over the next decade presents a huge opportunity for UK industry. We are already the world’s number one market in offshore wind. With the right support, we can grow our renewables industry to become world-leaders in these technologies, supporting tens of thousands of high value, "green collar jobs".
We have some big advantages. We’re close to the deployment sites – and ever larger turbines are likely to be shipped directly from the factory to the installation site. We’ve got several excellent port facilities and coastal land ready for development. We have a skilled and flexible workforce – with decades of experience of offshore work and advanced engineering – and a world leading research capacity. And we have a track record of supporting successful inward investment.
All of this means we are in a good place to make the most of this huge commercial opportunity, and secure maximum benefit for UK industry.
This year will see a ramping up of our business development activities, to support our offshore wind ambitions. We’re fully committed to developing this sector to increase capacity and reduce costs going forward.
We need to continue attracting inward investment. US turbine manufacturer Clipper Windpower’s decision to design and manufacture offshore turbines in the UK was an excellent start, and we intend to build on this. We’ll go on supporting the UK supply chain to enter the wind market, seeking out new companies ripe for diversification from the aerospace, defence or automotive sectors.
And following on from the ports report published earlier this year, we’ll do more to support the development of key infrastructure needed for renewable manufacturing operations.
We also want to ensure the UK uses its world leading skills in innovation to best advantage. At the end of May, we invited bids for a £10m fund to demonstrate next generation technology in offshore wind. Already this has generated considerable interest. There is also significant support from ETI and The Carbon Trust for demonstration activities.
No one underestimates the scale of the task in hand. However, I firmly believe that we can achieve our ambitious goals. Remember, it took almost eight years to reach around 600 MW of generating capacity, a figure which will almost double during the course of this year.
What we are talking about today is I believe an inspiring vision of the future. Government has set the framework. But we cannot do this alone. We will not be able to meet our ambitions unless others play their part – and that includes you."
Lord Hunt of Kings Heath OBE
To receive email updates about forthcoming BWEA events, click here.
|
