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United Kingdom

Industry fails to provide clear policy message

No clear consensus prevails over the best way forward for renewable energy support in Britain. This appears to be the disturbing conclusion to be drawn from the Department of Trade and Industry's (DTI) analysis of responses to its consultation on a new renewables strategy. The analysis, published in July, shows that most organisations and individuals who responded to the government's renewables review would like to see increased levels of support for the renewable industries. But opinions vary widely on the means for achieving this goal.

More than 250 responses were received by the DTI after it launched its consultation in March inviting views on how the government can meet its target of 10% of electricity from renewables by 2010. The renewable and conventional energy industries, environmental groups, local government and the general public are among the sectors who contributed to the debate. Noticeably under-represented, however, is the financial community.

Most responses support the target, others are either sceptical of the government's level of commitment to meeting it, or believe it is over ambitious, given the lack of progress in renewable development so far. Around 50% of replies consider options to stimulate generation of electricity from renewables in the future, but views on how to go about it conflict. A few favour a competitive market as the way forward, others call for "extensive support initiatives", while yet a third group-including the British Wind Energy Association-suggests a mix of both.

According to the DTI's analysis, energy efficiency and demand reduction are seen to be at least as important as renewables in meeting the country's environmental commitments. And nuclear emerges as a strong contender for maintaining its position in the UK's energy mix, provided nuclear waste disposal and financing issues are resolved.

The shortcomings of the Non Fossil Fuel Obligation (NFFO) mechanism comes under fire, with the wind industry in particular seen to be disadvantaged by it. Nonetheless, at least 20% want to see NFFO or a NFFO-type arrangement continue-at least in the medium term. Again, opinions vary widely. Some believe in an obligation alone, leaving it to suppliers to contract for renewables either directly with generators or through the equivalent of the existing Non Fossil Purchasing Agency; others prefer the security offered by guaranteed long term power purchase contracts, which is one of NFFO's chief virtues.

NFFO improvements

Suggested improvements to NFFO include a more regular program of bidding, and consideration of the environmental impacts of projects in awarding contracts. Many respondents call for a more balanced approach to size to allow for small-scale community-based schemes as well as conventional larger projects. Where views have been expressed on the technologies to be supported, the overriding view is that any support mechanism must look beyond the near-commercial activities supported at present, and encourage new and developing technologies.

Whatever type of support mechanism succeeds the existing NFFO, the broad view is that the obligation to supply electricity from renewables should rest with suppliers. The DTI's preferred option of an obligation on distributors, which would have been closest in practice to existing arrangements and therefore simplest to implement, goes largely ignored.

A range of views is expressed over the issue of generation "embedded" in distribution networks. On the one hand the renewable energy industry and environmental groups complain about connection costs and discriminatory pricing, on the other hand the public electricity supply companies argue that distributed generation creates difficulties for local networks.

The planning permit process provokes comment from a substantial 45% of respondents. Many see it as a barrier to renewables development and call for clearer government guidelines, though several respondents, mostly members of the public or countryside groups, are worried that government will force planners to presume in favour of renewable developments. Another area of considerable concern is the Review of Electricity Trading Arrangements (RETA). Fears are that current proposals for a mechanism to replace the British power pool system of trading electricity could disadvantage small-scale and intermittent generators.

Little industry input

Wind energy drew more comment than any other renewable, both from supporters and opponents. Wind's supporters are pressing for progress offshore, while others are calling for protection of certain coastlines. A widespread perception is that wind power contributes little to electricity supplies and CO2 savings and will have little or no effect on climate change. Indeed, despite overall support for the government's 10% target, the apparent endorsement of renewables is effectively little more than lukewarm. This could be due to a lower than expected reaction to the consultation from the renewable energy industry itself; it produced just over 70 responses-less than 30% of the total, despite over 700 companies being involved in the renewables sector, employing some 3500 people, as pointed out in the consultation document.

The DTI says it will consider the responses when drawing up its renewable energy strategy, prior to an Energy Paper. But the timing is vague and will certainly not be before October at the earliest. Moreover, in the wake of July's government reshuffle, the priorities of the new energy minister, Helen Liddell, are unknown. Even if she proves to be as committed to renewables as her predecessor, John Battle, she must fight for funds from a Treasury notably reluctant on the renewables front. Liddell, however, has served time in the Treasury and might know which ropes to pull.

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