Britain's low-carbon bonanza will go to foreign firms

Tricia Holly Davis
The blueprint for Britain’s green revolution was launched this month at a low-carbon bus factory in Surrey.
Yet as the government attempts to cut emissions and build a low-carbon energy system, the bus plant is likely to be a rare example of homegrown green manufacturing. Today Britain is almost entirely dependent on foreign multinationals to provide the equipment and expertise needed to decarbonise the country. And despite the government’s grand plans, industry executives say it has failed to remove the barriers that have restricted the growth of new firms.
Vestas is a good example. Last week the Danish firm decided to close Britain’s only large factory that makes parts for wind turbines. Workers staged a sit-in protest against the closure and remain at the plant this weekend. The company said it was moving production to America where the demand for onshore wind power was stronger.
“The whole idea of this huge green British industry is a lot of hype,” said Peter Hunter of NEG Micon UK, which built the plant before it was bought by Vestas.
The government has put wind energy at the centre of its plans to remake Britain’s energy infrastructure. Crucially, though, the bane of the industry — planning — remains unresolved. The average onshore windfarm takes two years to get planning approval, one of Vestas’ biggest complaints. The government’s new Infrastructure Planning Commission, which will decide on big applications, should help speed up offshore wind projects but won’t help onshore developers. The commission can only decide on projects of 50MW or greater; the average onshore project is 30MW. Furthermore, the Tories have opposed the planning commission and have vowed to overhaul it.
Critics say it is little surprise, then, that Britain — endowed with enormous offshore wind-power potential — doesn’t have a single homegrown company to provide for the market. Our continental neighbours Denmark, Germany and Spain, on the other hand, are home to six of the world’s top 10 turbine manufacturers and employ 80,000 people in the wind sector. Britain employs 4,000.
The accountancy firm Ernst & Young recently warned that if Britain didn’t resolve the planning issue it would risk a huge drop in investment, with only £53 billion invested by 2015 compared with the £90 billion projected. As a result, it said, Britain would miss its 2020 renewable-energy targets and create 40,000 fewer green jobs.
In the meantime, Britain remains vulnerable to the whims of foreign manufacturers which will, naturally, set up where they can make the most money with the least hassle. Mark Wilson, of the advisory firm Catalyst Corporate Finance, said: “A reliance on overseas investors is alarming for two reasons. First, there is a risk that our clean energy infrastructure won’t get built if investors turn their attention to more lucrative markets, as Vestas has done, and we will therefore miss our renewables targets. Second, most of the returns would flow out of Britain to overseas firms.” According to Nathan Goode, of accountants Grant Thornton, this is already happening under the UK’s renewables obligation certificate (ROC) scheme, the government’s main subsidy programme to encourage the building of low-carbon energy plants.
In April’s budget, the government ratcheted up the ROCs payable to offshore wind, tidal and biomass developers. Goode said the move has had unintended consequences. “The extra subsidy just pays for price inflation on turbines that are being manufactured abroad,” he said. “The money is actually leaking out of the British economy.”
The price of ROCs is also unpredictable. Under the scheme, utilities must source an annually increasing percentage of their energy from clean sources such as wind. They can either buy ROCs from renewable developers to meet their obligation or pay a fine into a central fund that is distributed to providers of clean energy. Utilyx, an energy consultancy, said the value of ROCs could drop by two-thirds, from £18 per kilowatt hour to as little as £5 over the next three years as more projects come onstream. This would be a huge blow for renewable-energy firms dependent on that income.
A recent report by the Institute for Public Policy Research said the government could replace ROCs with more straightforward subsidy programmes that have proved effective elsewhere — such as Germany’s feed-in tariffs or the Danish system of loan guarantees given to projects that use Danish-made turbines.
“Without some radical changes, the only thing likely to land on British shores is the cable bringing in the power,” said Hunter.
GREEN IDEA
Being aware of our energy consumption, like learning a language, would be a lot easier if we were taught from an early age. The inventors of Power-Hog, entrants in the Greener Gadget Competition, think they can help. They have created a piggy bank with a twist. Plug the Power-Hog’s tail into the outlet and whichever electric device you want to use into the snout. Children drop a coin in its back and are given 30 minutes of television or video-game time. Of course, the bright bulbs might just work out how to unplug the Hog and bypass this clever invention.