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Industry reaction to DECC announcements

The renewable energy industry in the UK is positive overall, to the announcements from the Department of Energy and Climate Change (DECC).

Here is a selection of industry comments:

RenewableUK’s CEO Maria McCaffery, says: “This statement is good news for renewables and the UK as a whole – the 2050 pathways work shows that wind and renewables will be at the heart of the UK’s energy mix for the long term.

“The Government new figures on cost impact show beyond a shadow of a doubt that wind is not only good for the environment and jobs but for consumers too.”

The Government figures show that by combining renewable energy supply and improving energy efficiency households could keep energy bill rises to 1% at oil prices of US$80 per barrel, and even see a 5% cut if prices rise to US$150.

RenewableUK says that a third of the UK’s current electricity production will need replacing over the next decade. “With the new generation of nuclear unlikely to come on stream by 2020, and clean coal technology not yet commercially viable the choice in replacing them lies largely between a new ‘Dash for Gas’ or a major expansion in renewable energy.”

Although positive to the Government’s statement, RenewableUK is urging the Government to “move quikly to raise its target for the amount of offshore wind it expects to see installed by 2020 from 12 GW to over 20 GW, to ensure a big enough UK market to justify the opening of new factories in Britain, creating between 60,000-70,000 new UK based jobs.”

David Symons, Director at global environmental consultancy WSP Environment & Energy, says: “There is a strong appetite among the public to reduce carbon emissions, and today’s DECC announcements provide further evidence of the Government’s commitment.

“But above all we need to see action – action on increasing renewables, increasing energy efficiency and reducing carbon. Policies provide the direction, but we need to move fast beyond papers and strategies and get into the meat of implementation.

“Business needs confidence that policies are for the long-term – that feed-n tariffs will remain, that renewable heat incentives will be introduced, and that planning policies will actively support the development of renewables across the country.

“While it is easy to get excited about policy announcements, ultimately it is only the implementation of these policies and programmes that will make a difference. The extent to which the proposals will be seen through remains to be seen.”

Roman Webber, Head of Deloitte’s UK Renewable Energy Team, says: “It is helpful for businesses to have this for planning and although it will take time for them to digest the full impact of the 32 actions announced today [27 July], the energy statement should build the Government’s credibility with key stakeholders. In particular there is welcome progress on grandfathering the ROCs for biomass and the offshore transmission transitional regime, which will mean that projects can start moving ahead.

“Through the launch of the 2050 energy pathways, the coalition has demonstrated its desire for greater engagement with energy consumers regarding the costs involved of the UK meeting the objectives of achieving carbon emission targets, energy security and ‘keeping the lights on’.”

Tim Levy, Chief Executive at Future Capital Partners, says: “Although green investment is still a fairly nascent industry, it is no longer the niche market it once was. The global focus on providing renewable energy, and the need for the UK to meet environmental obligations by 2020, has seen the industry emerge as part of the financial mainstream.

“Those of us in the industry have long touted the benefits, both environmental and financial, of investing in green products. The recommendations made by the Wigley Report and the WEF have added weight to the industry’s voice, and the support of major institutions and leading political figures will drive more people to look at investing in the industry.”

Biomass

Alan John, Head of Renewable Energy at law firm Osborne Clarke, says: “Opening up the market for investors should result in biomass becoming a valuable part of the UK’s renewable energy mix, as well as speeding up the development of more cost-effective biomass generators.

“The DECC announcement is a new dawn for biomass and particularly for investors in biomass. Once the future of incentives for investment in biomass energy production is certain, biomass will no longer be the poor relation of the renewable energy world. We’re already starting to hear the right noises from the investment world, and we believe that biomass will gather pace rapidly from here.”

BNP Paribas Clean Energy Partners welcomes the Government’s announcement on the duration of the Renewable Obligation Certificate (ROC) banding system, providing support for biomass projects in the UK.

Peter Dickson, Technical Director at BNP Paribas Clean Energy Partners, says: “For institutional investors seeking a secure income stream, regular cash flow to meet their liabilities and diversification away from equity and bonds, biomass offers an excellent opportunity for solid, risk-managed, valuable investments. We expect to see investors who had been awaiting a decision from the DECC start to commit capital to biomass investments.

“We believe that biomass is one of the only renewable energy technologies that can offer secure, clean base load supplies of power to the UK electricity market. The UK has set itself ambitious targets for renewable energy deployment but has had some difficulty in meeting the expectations created. The establishment of a secure biomass power market has the potential to fill much of the gap between the deployment so far and the targets.”

Smart grids

The Energy Networks Association (ENA) says it welcomes the smart metering prospectus. ENA CEO David Smith, says: “Smart metering brings with it a lot of expectation from consumers and industry as a means of ensuring more efficient energy use and cost savings. Today’s [27 July] prospectus gives us confidence that we are on the right path to meet those expectations by opening the way to smart grids. This unlocks the gateway to the advanced energy networks required in a low-carbon economy.”

Redpoint Energy adviced DECC on a review designed to improve arrangements for managing grid access.

Adrian Palmer, Senior Manager at Redpoint Energy, says: “Britain’s ambitious target of producing 15% of its energy from renewable sources by 2020 requires rapid deployment of new generation sources. Given the remote locations of many renewable energy generation sources such as wind power installations, the local and wider grid network often has to be reinforced to transmit the power from where it is produced to where it is needed.

“The past policy of ‘invest then connect’, where the generator has only been connected once the wider system is ready to accommodate it, has proved satisfactory until now. However, Government recognised that the policy should be reviewed to ensure timely access to grid infrastructure for investors in renewable and other low carbon generation capacity.”

Palmer continues: “Drawing on tools developed in previous work for the Department, our analysis gave DECC the insight it needed to assess the implications of alternative policy options on generator investment decisions and transmission congestion costs. This allowed a more informed analysis of the ideal approach, weighing up the risks of missing renewable targets by not being able to bring new generation on-stream, while managing the costs involved in resolving congestion on the network.”

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Comments

tschevchenko said

29 July 2010
I noticed a scare story on the front page of a well known broadsheet newspaper yesterday. It read "The Coalition's wind-energy plan will ruin Britain without rescuing the planet" or somesuch. I think this highlights the need for excellent communication by the renewables sector to counteract the effects of negative scare speak in the media.
If you read half of yesterday's press they'd have you believe the coalition was going to decomission every single nuclear power plant and replace it with a windmill. So very, very far from the truth...
The other news headline that caught my eye said something along the lines of 'fuel bills set to rise by a third because of government's green policies'. They can't win, can they? Imagine the furore if the governemnt said "ah, we'll just sit back and let energy sort itself out".
But I doubt domestic fuel bills will rise with the increase in renewables any more than they would rise anyway. This is a significant point. And the more renewables that are used, simple economies of scale surely mean that the prices won't constantly rise anyway. Also, some of the more competitively priced energy providers such as Southern Electric - http://www.southern-electric.co.uk/ - are also the largest generators of renewable energy.
The other thing to bear in mind is that if the new generation of electric cars is a success, then we're going to need more electricity. Does it all end happily ever after or with a massive and chronic powercut? One thing's for sure - if we don't do all we can to invest in and support renewables, the latter is more likely. especially in view of what is said in the above article about the next wave of nuclear power not being available by 2020.

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