Ministers pore over incentives to save growth of green energy

The Times
March 27, 2009

Robin Pagnamenta, Energy and Environment Editor and Lewis Smith, Environment Reporter

Ministers were last night considering fresh incentives designed to spur investment in renewable energy amid evidence that the credit crunch is threatening government energy targets.
The Energy Minister hit back at claims that the Government was failing to deliver on an ambitious plan to foster a green energy revolution by building thousands of onshore and offshore wind turbines. Mike O’Brien told a meeting of renewable-energy chiefs that he was determined that Britain would meet its goal of generating as much as 35 per cent of all UK electricity from wind, wave and solar power by 2020, up from less than 5 per cent at present.
Responding to news of a further collapse in financing for the UK wind industry, he said that the Government was examining new ideas to increase investment, which has been hit by the recession as banks rein in lending and the price of conventional fuels plunges.
Mr O’Brien said: “We are fully aware of the investment challenges facing some parts of the industry. We are examining how we can help ensure there is sufficient finance and other support available for viable projects which are short of the investment they need.”

Mr O’Brien was speaking after The Times revealed yesterday that Iberdrola Renovables, the Spanish energy company that is the world’s largest investor in wind energy, plans to cut its UK investments in renewable electricity this year by up to 40 per cent from as high as €700 million in 2008 to €400 million (£374 million).
Iberdrola, which blames the cut on the global economic crisis, said that it remained committed to the UK market and hoped to raise the level of investment when conditions improved. However, Xabier Viteri, the chief executive, also cited delays in securing planning permission and access to National Grid connections as threats to industry investment in the UK.
Doug Parr, the chief scientist of Greenpeace, said the UK renewables industry was moving “at a snail’s pace” and called for urgent action by the Government to accelerate its plans for a green energy revolution.
“It really is a case of getting off their backsides and doing what they said they were going to do,” Dr Parr said.
Lifting the UK’s share of renewable electricity generation to 35 per cent will cost an estimated £100 billion, but a string of investments have collapsed in recent months because of the credit crunch. Onshore wind energy generated only 1.14 per cent of UK electricity in 2007 and offshore wind accounted for only 0.2 per cent. Hydroelectric schemes, some of which were built decades ago, accounted for the biggest single slice at about 1.3 per cent.
“No sector is immune from the economic downturn, and that includes the energy sector,” Mr O’Brien said. “To meet our commitments on renewables, we have changed the planning laws and increased support for the sector.
“We also are working with National Grid and Ofgem to ensure sufficient access to the grid and we very much welcome the announcement last week about the timetable for an extra 450MW of grid connection.”
Meanwhile, a skills shortage in nuclear engineering is threatening the Government’s hopes that new nuclear plants will be operating by 2020, a Commons committee says today in a report. Many of the engineers working in the industry are approaching retirement and not enough young people are being trained. Failure to increase the number of qualified engineers entering the nuclear field will leave Britain dependent on foreign experts, who are already in great demand abroad.
Expressing concern at the “lack of a clear and detailed plan for delivering the next generation of nuclear power stations”, MPs on the Commons Innovation, Universities, Science and Skills Committee called for ministers to create a “master road map” for all big engineering projects to address issues such as the numbers of engineers available.
Phil Willis, the chairman of the committee, said: “If there’s a great drive postrecession to deliver on civil nuclear power, we will be competing in a small pool for that talent. The difficulty then is delivering on time at a cost we can afford.”
The report says that the Government is neglecting the potential of geoengineering to limit climate change if a greenhouse gas treaty cannot be reached.