Renewable Energy Strategy - July 2009
Tuesday 18 August 2009
A 'Severn Obligation'?
The document also put forward proposals to finance a Severn tidal power project, should it go ahead. Options include a market-priced support mechanism such as the RO or a separate "Severn Obligation"; as well as a fixed price support mechanism such as a feed-in tariff.
The Renewable Energy Strategy said: "Initial analysis suggests that a large Cardiff-Weston barrage could not be supported under the RO in view of the volatility this would create for ROC prices and the resulting impact on other renewables investments."
Even so, it added, it might be possible to accommodate smaller barrages or tidal lagoons, still in the running for the Severn tidal scheme, within the current RO.
With just over a decade left to achieve the UK's target of producing 15% of its energy from renewable sources by 2020, the government is hoping that its Renewable Energy Strategy, published last month, is radical enough to bring about a speedy transition to a low carbon energy supply.
Finally unveiled in July after a year-long consultation (see this New Energy Focus story), the Strategy outlines just how the government hopes to achieve its targets by developing renewable heat, electricity and transport fuels in the UK.
The Strategy was launched alongside the Low Carbon Transition Plan, which lays out how the UK will move to a low carbon future and meet its targets to cut emissions by 80% by 2050.
In order to meet the 15% targets, which are legally binding under European law, the government is aiming to produce:
- 30% of the UK's electricity from renewables, up from around 5.5% today (see this New Energy Focus story);
- 12% of heat from renewable sources, which officials hope will come mainly from biomass biogas and solar;
- 10% of transport power from renewables, up from the current level of 2.6%, to be achieved mainly by the electrification of the rail network.
Main proposals
When he published the Strategy, Ed Miliband, Secretary of State for Energy and Climate Change, said that market forces alone would not create conditions for a thriving renewables industry, so the government has committed to taking a much more central role in driving the renewables industry forward.
The main strategy proposals include:
- An overhaul of the grid access system;
- £30 billion of new and extended financial support for electricity and heat;
- A push towards more sustainable bioenergy crops;
- Investment in new and emerging renewable technologies, especially in wave and tidal energy;
- Planning reforms to speed up the consenting process for renewable energy.
Financial support
Renewables Obligation: The Strategy lays out the government's plans for the expansion of the Renewables Obligation (RO), the financial support mechanism for large renewables projects.
Among the plans are proposals to extend the RO by 10 years to 2037, as indicated in the Budget 2009, as well as new measures to stabilise the price of the Obligation, such as setting headroom higher or a floor price.
The government is also consulting on increasing the ROCs allowance for offshore wind from one ROC per MWh to two, and a feed-in tariff and renewable heat incentive.
The feed-in tariff consultation (see this New Energy Focus story) is looking at how to structure a mechanism that will allow householders and businesses to generate small-scale renewable energy and sell it to the grid at a fixed price.
Despite a mixed reaction from the wind industry on the upper cap on the feed-in tariff (see this New Energy Focus story), the government said in the Strategy that it was minded to allow the access to the tariff right up to the 5MW limit, when it is introduced in April 2010.
The Strategy said: "This will allow the feed-in tariffs to be effective not only for households but also for projects of a significant scale, such as wind turbines powering factories or supermarkets."
Meanwhile, the Renewable Heat Incentive (RHI), which is due to be up and running by 2011, could make the UK a world leader in small scale heat mechanisms. But, the Strategy warned that, as there is no international expertise to draw on, the RHI could take some time to develop.
Both the feed-in tariff and the RHI will be open for new projects until at least 2020, which the Strategy said will provide the necessary "long term, stable framework for the renewables industry."
Renewable Transport
Under the Strategy's proposals, the transport fuels support mechanism, the Renewable Transport Fuels Obligation (RTFO), is set to be replaced or amended to take into account higher renewable transport requirements outlined in European legislation this year.
Under the current scheme, fuel suppliers are required to source at least 5% of fuel from renewable sources by 2014, but the government said it is now considering double award mechanisms for advanced biofuels and two-and-a half rewards for electric vehicles.
Planning
Reforms to the planning system, so often the thorn in the side of the renewables industry and the onshore wind sector in particular, are also outlined in the Strategy, which brings together some of the measures enabled in the Planning Act, and puts forward further proposals.
National planning: The Infrastructure Planning Commission, provided in the Planning Act and set to be introduced in 2010, will consider and decide upon planning applications for applications greater than 50MW onshore and 100MW offshore in England and Wales.
The same legislation enables the government to produce National Policy Statements (NPS), which the government plans to use to make decisions on large renewables projects.
The overarching NPS and a suite of energy national policy statements are set to be published in autumn this year for consultation, with a view to adopting them in 2010.
Local planning: The Strategy is pushing for local planners to use a more "evidence-based" approach to decision-making on renewables projects, and actively support renewable and low carbon energy generation. In particular, regions will have to set targets for renewable energy capacity in line with national targets.
The planning authorities' guides to decision making on climate change and renewable energy - Planning Policy Statement 1 (PPS1) and Planning Policy Statement 22 (PPS22) - are also up for review, with a consultation on a new combined climate change PPS expected by the end of 2009.
Furthermore, there are plans to extend the scope of permitted development rights - by which some small renewables projects are automatically assumed planning permission - to businesses and public services. Ground and water source heat pumps are currently permitted under the regulations, as are some solar PV and thermal installations, but the government is now also considering extending it to small wind turbines and air source heat pumps by 2010.
The Strategy also outlines plans to give planning appeals on renewable energy proposals priority over other projects, when they are passed on to the planning inspectorate for a consents decision.
Supply chain
A number of measures are in the pipeline to shore up the supply chain that will support the renewables industry.
The industry will need easy access to equipment, manufacturing facilities, skilled personnel, and finance.
Chief among the strategy's proposals are:
• The establishment of an Office for Renewable Energy Deployment, that will be responsible for ensuring the renewables industry gets the support it needs;
• £120 million in financial support for large scale manufacturing production that will support the offshore wind industry;
• £10 million increase in funding for second generation offshore wind technologies;
• Engaging the financial sector with the publication of a summary of renewable energy investment opportunities in the UK;
• A comprehensive review of the skills market in the UK, to be led by sector skills council EU Skills.
Grid
Major works to extend and improve the electricity transmission network, and reforms to the grid access regime, are needed to reduce connection lead times and speed up renewables deployment, the Strategy said.
Grid access: The government has decided to use powers set out in the Energy Act to introduce grid access reforms.
It plans to launch a consultation this summer on a grid access regime for new entrants, but it is expected that the new regime will follow a "connect and manage" model, by which applicants are automatically offered a grid connection date and contract.
Under this system, failure by the operator to get the connection ready on time will result in financial penalties payable to the generator, similarly if the generator is not ready to connect on time, extra payments will be payable to the operator.
Transmission network: The Strategy also outlines proposals for new onshore and offshore grid transmission links around the UK, with Ofgem expected to finalise an enhanced investment incentives regime before the summer of 2010.
Offshore, the government is hoping to fulfil the UK's full potential of offshore wind power, which has been estimated to total 39GW, so a grid to accommodate that much capacity is therefore viewed as critical.
The Crown Estate, which holds the development rights to the seabed, is set to work with the National Grid to develop a 20-year planning statement on offshore grid by December 2009.
Smart grid: According to the Strategy, a "smarter" UK grid will be essential to deal with the changing energy demand, as householders begin feeding energy into the grid as well as taking it out, and as an intermittent wind energy supply grows. The government aims to publish its "vision" for a UK smart grid this summer, and a 2050 energy road map next year that will lay out how the vision will be delivered.
New Technologies
The government has said it will pick certain "families" of technologies to support to the next stage, with marine high on the agenda, along with next generation offshore wind and electric vehicles.
In particular it is looking to support new technologies that are yet to be developed or proved commercially viable.
Marine: Marine is still an emerging technology, and the government has put forward measures to make the critical move from research and development to commercialisation:
Measures to support marine include:
• A Marine Action Plan, set to be delivered by the end of the year, that will consider the barriers to marine deployment and seek to remove them;
• £10 million investment in UK marine energy infrastructure including the NaREC test centre;
• Doubling in support for the Wave Hub project in Cornwall;
• A £22 million Marine Renewables Proving Fund.
The £50 million Marine Renewables Deployment Fund will be retained for devices reaching demonstration stage in 2011-2014.
Severn: The Severn project itself is currently undergoing a two year feasibility study, which will be followed by a consultation on the scheme which is expected in 2010. The government is hoping that two unproven technologies - tidal reefs and tidal fences - will still be able to make a contribution to the project.
Offshore wind: The government wants to encourage the next generation of offshore wind turbines, which are expected to be much larger than their predecessors, possibly reaching ratings of 10MW. DECC is already running a £10 million competitive call for offshore wind demonstration projects, and government has earmarked £120 million to support a "step change" in offshore wind.
At the same time, the Energy Technologies Institute is testing new offshore wind turbines that will be suitable for deep-water deployment, and could be ready by late-Round Three.
Geothermal power: The government said in the Strategy that it would commit up to £6 million to explore the potential for deep geothermal power in the UK.
Electric vehicles: Plans to encourage use of electric vehicles are outlined in the Strategy, with the aim of helping the UK reach its target of 10% of transport coming from renewable sources. Take-up plans include an incentive scheme that will offer motorists up to £5,000 to buy electric or plug-in hybrid vehicles and £20 million to fund electric vehicle charging points across the UK.
Advanced biofuels: Simultaneously, the government is looking to support advanced biofuels with a £6 million fund administered by the Carbon Trust, and an industry-funded a biofuels demonstration plant in England.
