Government moves to promote the UK renewable energy industry

Tuesday, December 30, 2008

Mike O’Brien, Minister of State for Energy and Climate Change

The creation of a new Department [the Department for Energy and Climate Change] demonstrates the strength of the Government’s commitment to meeting our twin challenges of climate change and security of supply.Wind power has an enormous potential help us meet those challenges and can help to cut the UK’s carbon emissions, generate thousands of new jobs and help us meet our 2020 renewables target.I fully recognise the scale of the challenge, particularly in the current economic climate. We are working to create the right conditions to speed up the deployment of renewable energy.The credit crunch will put pressure on finance but investment in renewable energy is a project for the long term. The Government has a strong commitment to renewable and the Chancellor has already said we need to do what we can to bring forward energy projects to stimulate the economy.[Recently] I saw the real benefits of long term investment in renewable – I had the privilege of visiting the Lynn and Inner Dowsing wind farms off the Lincolnshire coast.The combined capacity of Lynn and Inner Dowsing – 194 megawatts of clean, green energy – will provide enough power for the equivalent of 130,000 homes. As a result, Britain has overtaken Denmark as number one in the world for installed offshore wind capacity. I am sure it is the first of many achievements to come. As the Prime Minister said [recently], we’ve also broken through the 3 gigawatt barrier for generation of wind energy on and offshore. The offshore wind sector is certainly challenging, but it is growing rapidly. We currently have over 1500 megawatts of offshore wind either operating or under construction in the UK – and this time next year we should be celebrating passing the one gigawatt mark for offshore wind generation… and the four gigawatt mark for total wind power. I want to see the UK harnessing the enormous potential of our wind resources. [We are currently making plans for] up to a further 25 gigawatts of offshore wind, in addition to the 8 gigawatts already planned. We are currently undertaking a Strategic Environmental Assessment to ascertain the feasibility of up to 33 gigawatts of offshore wind. We want to issue the Environmental Report in January. A three-month formal consultation will follow and we anticipate announcing a Government Decision in the spring.With more than ninety UK and international companies registering their interest with the Crown Estate for Round Three, the expansion of offshore wind remains very much on course. The Queen has gone green and the Crown Estate are leading the way in tackling environmental issues. Of course there will be problems and set backs. Business, like politics is often a bumpy ride. Some projects will slow or stop, others will accelerate and go ahead. This is an industry ready for take-off. It has the capacity to deliver real change and massive investment. The Government will work with you, clearing the planning obstacles with our new Planning Bill in parliament and creating the right base for energy law in our Energy Bill. So, the pace of deployment is definitely speeding up. But we know that there is still more to do if we are to meet our challenging targets. We need to create the regulatory certainty to achieve this. The Government has committed to a package of reforms to speed up renewables deployment.I recognise that delivering the necessary growth in renewable electricity will require significant levels of new investment. The credibility and certainty provided by Government policy on renewables provides a stable, long-term climate for investment - and I can assure you we are committed to maintaining this. That is why the Secretary of State [recently] confirmed that complementing the Renewables Obligation for large-scale projects, guaranteed prices for small-scale electricity generation, feed-in tariffs, have the potential to play an important role, as they do in other countries. We therefore plan to bring an amendment to the Energy Bill to make this happen. But we also need investment in our grid infrastructure to reinforce and expand the existing grid network - both onshore and offshore. We are also working jointly with Ofgem to develop a new regulatory regime for offshore electricity transmission so that significant amounts of renewable offshore generation can be connected to the onshore grid. We recognise the importance of compatibility between the onshore and offshore regimes, so we have decided that the onshore regime should be extended offshore, except where the specific circumstances of offshore generation mean that changes should be made. I am also aware that supply chain issues are becoming increasingly important. This is particularly the case for wind turbines due to the growth in demand which has lead to developers having to accept long lead times for delivery. The UK will require a ten-fold increase in renewable energy by 2020. We have the skills and capabilities to be at the forefront of opportunities opened up by the move towards a low carbon economy. With the right support in place, we can grow our renewables industry to become a world-leader in green technologies. Despite the credit crunch, the UK is still a good place to invest in green energy. It is reassuring to see that many key projects are still planning to go ahead. For example, [the recent] announcement that Masdar will invest in the 1000 megawatt London Array offshore wind farm, which will provide around 1% of the UK’s electricity when built. And in the Energy Bill, we are intending to ‘band’ the Renewables Obligation (RO) to provide greater support for emerging technologies such as offshore wind and wave and tidal. Our proposals would increase the number of Renewables Obligations Certificates (ROCs) for offshore wind to 1.5, recognising the special challenges involved in developing offshore projects.The regulatory reforms outlined above will help in providing a long-term pipeline for projects and certainty on market size, enabling you to invest in the short-term as well. They will go a long way to helping to overcome the barriers to renewables deployment. Together, they will speed up renewables deployment in the UK and provide confidence to investors. And we are committed to delivering them quickly.Wind is hugely important to help realise our renewables goals. Of course it’s not just about wind. Other renewable technologies such as biomass and wave and tidal stream will also play their part. And we are currently considering all the proposals submitted for a Severn Tidal power project, which could contribute up to 5% of our electricity generation in the future.I know that the planning system is another key barrier to renewables deployment in the UK. And that is why we have proposed radical reforms in the Planning Bill to speed up and streamline the planning system in England and Wales. As part of these reforms, we are proposing the establishment of an independent Infrastructure Planning Commission (IPC) in England and Wales to take decisions on nationally significant infrastructure projects for energy - including large scale renewables of over 50 megawatts.This has been a great year for wind deployment in the UK with landmark projects moving ahead and milestones broken.I want to be absolutely clear today that wind will make a crucial contribution to meeting our 2010 target for 10% renewable electricity. And wind will be crucial to meeting our share of the 2020 EU target. It is no secret that we have set ourselves challenging, ambitious targets. But we fully intend to meet them.___________________________This is an edited version of a speech given to the British Wind Energy Association annual conference on October 22 2008