Guest Blog: driving forward wind and marine in the UK
By Felicia Jackson.
The second UK Wind & Marine Energy Business Barometer, covered recently in a UK, The Times newspaper supplement, Wind & Marine Energy, reveals findings from an annual survey of 450 senior executives in the sector. In this guest post, Felicia Jackson, author of Conquering Carbon, introduces this wide-ranging study while discussing the key challenges facing the sector’s development. (Details on how to obtain the full report can be found at the end of this post).
The UK wind and marine industry is at a pivotal point. The potential for growth is immense, but there are many unanswered questions about how that growth can be achieved, especially in times of economic austerity.
The second UK Wind and Marine Energy Business Barometer highlights industry awareness of the challenges to be overcome. Governments are struggling with the challenge of the affordability and security of energy supply in a time of economic constraint and energy demand growth. These challenges are inherently political because of their impact on economic competitiveness and consumer energy prices. This means both cost of generation and economic contribution are paramount.
Wind and marine energy has been accused of being more expensive than conventional gas generation. While plant capital cost may be higher today, costs are falling across a range of technologies. The recent drop in solar component costs is a key example of how increased deployment causes costs to fall. But debates about the cost of renewables pale into insignificance when considering the global scale of energy subsidies. In 2010, the fossil fuel industry was subsidised to the tune of $406 billion versus renewables $66 billion and, despite that, 2011 saw renewable generation capacity outstrip fossil fuel for the first time.
The vital contribution that wind and marine energy can make to the UK economy must also be considered. Both play a crucial role within the UK’s green economy. A July 2012 report from the CBI, The Colour of Growth, reported that nearly one million people were employed in green business in 2011/12 and a third of the UK’s economic growth came from the sector. At the same time, the UK has a £5-billion trade surplus in green goods and services, and the CBI believes it could add as much as £20 billion to UK GDP in 2014/15.
According to some projections, the tidal industry alone is expected to be worth £3.7 billion to the UK by 2020. Renewables also have a critical role to play in the mitigation of rising power prices. Over the last five years in the UK, rises in wholesale gas prices have been responsible for 80 per cent of increases in consumer energy bills. There is no question that effective management of affordability issues and security of supply will require a mixed energy generation portfolio.
In the UK, the government is attempting to address these challenges through Electricity Market Reform (EMR). The Energy Bill will see its second reading in November and many hope the Bill, and it’s supporting documentation, will supply answers to many of the questions that remain about EMR, such as the strike price for low carbon power, indexation terms, acting counterparty and a reference price for Contracts for Difference (CfD).
This survey explores industry’s view of investment, where capital might be sourced in the future and expectations of growth, the influence of different factors in driving investment, and projected capacity over time. It explores industry’s view of government policy, its effectiveness and support for the sector, and where incentives and obstacles to development can be found. It also looks at industry’s view of potential employment in the sector, challenges to growth and explores how safety records can be improved.
While there were differences in perception of the market dependent on size and position within the supply chain, most respondents shared a clear view that the future of the industry is reliant on the creation of an effective, stable long-term policy framework to encourage investment and drive growth.
The path to growth requires attracting investment and that means the sector needs policy consistency, clarity and confidence. As the UK Wind and Marine Energy Business Barometer provides a snapshot of where the wind and marine energy industries are today, it is hoped that the forthcoming Energy Bill will bring solutions.
To purchase the full UK Wind & Marine Energy Business Barometer 2012 please email email@example.com, or call the Raconteur research team on 020 3428 5230.
Posted 23/11/2012 by David Hopwood
wave & tidal
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