United Kingdom

United Kingdom

The government consults again -- A British renewables strategy

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Extending and increasing the current support system for electricity from renewables is a major plank in the British government's proposals for a renewable energy strategy to help the UK meet its new European target of 15% green energy by 2020. The target will require a jump from around 25 TWh of renewable energy in 2006 to 260 TWh in 2020. The government is airing its proposals in a public consultation exercise.

Around half of the green energy target will need to come from the electricity sector. This means that renewables will have to provide 30-35% of the country's electricity, with most of that -- around 28 GW -- coming from wind, half onshore and half offshore. The government intends to maintain the current market structure dictated by its Renewables Obligation (RO) legislation, which requires electricity retailers to include specified quantities of renewables in their supplies. Changing the market structure at this stage would jeopardise meeting the target and could end up costing the consumer more than the RO, says the government.

It accepts, however, that changes will be needed. In particular, the sunset date for the RO will need to be extended beyond the current 2027 cut-off. Furthermore, the 20% cap on the level of renewable obligations on electricity retailers will need to increase -- or even be removed. The consultation document is also seeking views on incentives for new grid infrastructure and a speedy removal of barriers to grid access for renewables. Binding regional targets for local renewable energy capacity are being considered along with financial incentives to stimulate investment, possibly in the form of fixed power purchase prices for micro-generation and renewable energy heating.

Prime Minister Gordon Brown says the strategy will require a £100 billion investment program over the next 12 years. "It will turn the North Sea and our other coastal waters into the equivalent for wind power of what the Gulf of Arabia is for the oil industry," he says. "By 2020 we will have installed around 14 gigawatts -- that is around 3000 offshore wind turbines -- meeting up to 50% of our renewable electricity." There will be more onshore wind turbines too, he added. "And we are determined that they will be sited in the right not the wrong places and that communities will benefit from them."

According to accountancy company Ernst & Young, meeting Britain's low carbon targets could cost customers at least an extra 20% by 2020, adding £213 to household bills each year. But from the RES Group, one of Britain's leading international wind power companies, Ian Mays points out that conventional energy prices are already rising rapidly and will continue to do so as oil and gas decline. "So investing in renewables will be an investment in keeping prices down as they eventually become the cheapest forms of energy available," he says.

The government's consultation period closes on September 26, with the final strategy expected to be in place by spring 2009. The wind industry gave the strategy an enthusiastic welcome, but Douglas Wright of renewable developer RES UK & Ireland says that quick action is needed now to make it happen. That will require a "positive" project permitting system, a remit for energy regulator Ofgem that is consistent with national energy policy, a long term strategy for grid infrastructure investment and action to deal with the supply chain and skills shortfalls in the wind industry, says Wright. "We are keen that the Renewables Obligation remains in order to protect investor confidence."

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