Renewables Roadmap reflects progress

Offshore wind has provided a renaissance for many UK ports small and large (Peter Barker) Offshore wind has provided a renaissance for many UK ports small and large (Peter Barker)

The UK’s renewables industries may be grappling with the political froth surrounding the current energy debate but the latest energy roadmap update puts the current situation into context.

The UK renewable energy roadmap, first published by the Department of Energy and Climate Change (DECC) in 2011, lays out the path for the UK to reach the goal of generating 15% of UK energy use from renewables by 2020, covering all forms of renewables. It provides a framework and set of actions for delivery of renewable energy deployment and DECC has now published its second update, providing analysis of achievements and changes during 2013.

Much publicity has accompanied the furore surrounding above inflation increases in UK household energy bills. One side effect relative for renewable energy however, is comments from energy supply companies that in some cases, half the increase is due to the government's green levies. This leads to pressure on politicians tasked with balancing the desire to achieve low carbon energy generation with keeping control of costs which are passed on to consumers. On a positive note, an E.ON senior executive was reported recently as saying that at £155 per MWh, the draft CfD strike price “is good enough… certainly for our Round 3 Rampion project”. An indication of the complicated nature of the subject followed shortly after however when RWE Innogy announced they had stopped development of their Round 3 Atlantic Array windfarm. RWE cited technical challenges including substantially deeper waters and adverse seabed conditions, consequent costs becoming prohibitive in current market conditions. The Crown Estate has agreed to terminate the agreement for the Bristol Channel Zone, removing RWE Innogy’s seabed rights.

LESS IS BETTER

For The Crown Estate, Huub den Rooijen, Head of Offshore Wind signalled a positive assessment of the situation saying: “Now that the industry has been developing projects for a number of years, there is a much deeper understanding of the characteristics of successful projects and we will see further attrition in the time to come. Paradoxically, this is a positive development because it provides greater clarity to key stakeholders such as supply chain and consenting bodies, and brings greater focus to the investment opportunities”. Just days before the announcement, Mr den Rooijen spoke equally positively about a “more investable sector” as the industry begins to see “a healthy attrition as the UK pipeline moves from a potential 40GW towards a figure more in line with the Government’s current thinking for offshore wind”.

In the ministerial foreword to the roadmap update, Edward Davey MP, Secretary of State for Energy and Climate Change, along with ministers from the Welsh, Northern Ireland and Scottish governments reflected on 2012 being one of the most successful years ever for Britain’s renewable energy drive, with “big leaps forward in actual deployment, in newly announced projects and in long term policy completion” and the ambition to “go further than many thought possible just a few years ago”.

The original roadmap included six key areas where activity was needed to tackle barriers: facilitating access to the grid, ensuring long term investment certainty, tackling pre and post consent delays, ensuring sustainable bioenergy feedstock supply, facilitating development of renewables supply chains and encouraging innovation. Progress has been made but it is recognised that a great deal more needs to be done to unlock potential and maximise deployment in a cost effective and sustainable way. The 2013 update includes energy demand and technology cost projections and a ‘bottom up’ review of projects that could come forward.

ANALYSIS & GROWTH

Just one quarter of 2013 saw a 50.9% increase in offshore wind generation compared with the same quarter in 2012, the corresponding increase for wave and tidal (grouped with solar PV) was 22.4%. Estimates to meet the 15% target have been revised downwards slightly in both the 2012 and 2013 update and fluidity with the various elements demonstrates the challenge of achieving a balanced and accurate mix for projects requiring a great deal more than just two years moving from concept to reality. Attention is currently focused on Electricity Market Reform and DECC anticipates the strike price published in the draft delivery plan will bring forward enough deployment of renewable electricity to meet around 32% of UK electricity consumption in 2020 (this was prior to the recent re-alignment from onshore to offshore wind). Reductions in levels of subsidies for the majority of technologies over the next four years is reflected in analysis of expected reduction in the levelised cost of electricity generation up to 2020, the expected reduction for offshore wind stands out in particular here.

DECC analysis suggests reforms of the electricity market could help achieve the additional £100-110bn investment required in the electricity sector between now and 2020, renewables playing a key part in the growth. Since 2010, £31bn worth of private sector investment in renewable electricity has been announced with potential to support over 35,000 UK jobs.

There may be a perceived lack of public support for renewables, the reality is however different, the document reporting that in interviews conducted recently with 2,013 UK adults, 76% of respondents support the use of renewables to generate UK electricity, fuel and heat: only 4% being opposed.

Progress with EMR is described as significant and on track to be published imminently, including final strike price: the first early CfD could be signed early in 2014. Measures to manage the complex task of the transition to the enduring CfD scheme are also addressed.

WIND & MARINE

The update explores the building of supply chains including some projects requiring an approved supply chain plan to qualify for CfD, along with the recent establishment of an Offshore Wind Industrial Strategy involving government and industry. Throughout the document, case studies provide examples of companies achieving success in 2013, those referenced demonstrating the wide-ranging elements making up the supply chain for offshore wind in England, Wales, Scotland, and Northern Ireland.

The “significant strategic economic importance” of offshore wind to the UK is stressed, with mention of expansion of the Offshore Wind Developers Forum to become an Offshore Wind Industrial Council with the goal of driving development as well as tackling barriers to deployment. Government measures to promote cost reductions include: £20m from the Regional Growth Fund for offshore wind, £46m funding over five years for the Offshore Renewable Energy Catapult (a new Offshore Wind Investment Organisation to attract inward investment to the UK), industry-led initiatives to share innovation, conditional support for ports and coastal infrastructure and the ambition for the Green Investment Bank (GIB) to invest a significant proportion of its £3.8bn capital in offshore wind. Additional measures are underway in Scotland, Wales and Northern Ireland. Updates are provided on financial and other support for innovation, test and demonstration sites and direct equity investments by the GIB.

UK wave and tidal resources hold similar potential to offshore wind but the industry generally operates in the shadow of its bigger cousin, offshore wind. It may not be so far along the road as offshore wind but out of the spotlight, good progress is being made for example by the tidal stream sector, moving from individual prototypes to project development of the first arrays and onto commercialisation. Tidal range is also attracting increasing interest. The update acknowledges that while wave technology continues to develop, progress has not been as swift as anticipated and further government action is planned for the sector to move to commercialisation.

Two UK projects developed by Scottish Power Renewables and SeaGeneration have benefited under the EU New Entrants Reserve 300 competition, both projects supported by the Scottish Government. An array of MCT Siemens’ SeaGen-S tidal devices off Anglesey and MeyGen’s tidal device array (recently acquired by Atlantic Resources Ltd) in the Pentland Firth’s Inner Sound have now received planning consents from the Scottish Government.

The Pelamis wave energy device is among the best known in its field and the Energy Technology Institute has launched a £1.4m project with Pelamis Wave Power to boost the effectiveness of large scale wave energy arrays and push the design to commercial readiness. Government is to consider further action to assist the wave energy sector following failure of any projects to secure array demonstration funding from various funding schemes and the Scottish Government has refocused its £18m Marine Renewables Commercialisation Fund in line with industry calls. The 240MW tidal lagoon in Swansea Bay is worthy of mention, now at pre-application stage in the planning process.

Innovation is identified as key in overcoming technological barriers for both the wave and tidal stream sectors. Innovation funding has been carefully targeted, and despite the somewhat erratic progress of both sectors there is evidence that some big names in the renewables world are keeping faith in the obvious long-term potential. In support of this, over £80m of public funds from the current Spending Review period will be available for investment in marine energy innovation, including through various programmes mentioned previously. The list of other developments and deployment pipelines clearly demonstrates the marine renewables sector is a steadily developing one.

By Peter Barker

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