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United Kingdom

United Kingdom

Special Report Europe 2020 - Directive sparks a surge in expectation - UK market set for explosive growth to meet targets

The UK has arguably the furthest to go of all the 27 EU member states obliged to meet targets under the renewable energy directive. Its goal is for 15% of energy to come from renewable energy sources (RES) by 2020, a ten-fold increase on the 1.5% supplied in 2006. Electricity will account for around half of the 2020 target. Table: Wind development activity in the UK. The table lists the status of onshore GW and offshore GW whether it is operating, under construction, consented, in planning or in the pipeline.

Government plan looks to wind to supply nearly 70% of the electricity needed from renewables.

The UK has arguably the furthest to go of all the 27 EU member states obliged to meet targets under the renewable energy directive. Its goal is for 15% of energy to come from renewable energy sources (RES) by 2020, a ten-fold increase on the 1.5% supplied in 2006. Electricity will account for around half of the 2020 target. If achieved, RES will supply 120 TWh a year, accounting for 32-35% of all electricity consumed in the UK, up from just 5% in 2008.

The target is a measure of the country's wealth in terms of renewable energy resource. While short on large-scale hydro, the island nation boasts Europe's best wind resource and is surrounded by sea, providing not only good potential for wind development, but also marine and tidal power. Under current policy, RES share of final energy will reach just 5% by 2020, so the government is drawing up a new strategy.

The final plan is due this spring, but wind power is expected to be the dominant fuel source for meeting the 15% by 2020 target. A nine-fold increase on today's 3.3 GW of installed wind capacity (Windpower Monthly, March 2009) is likely to be required. According to the government's draft strategy published last year, within the next 11 years the UK could realistically have 28 GW installed, split equally between onshore and offshore development. Annual electricity generation from onshore plant would be around 34 TWh, accounting for 28% of total RES electricity. Offshore plant will generate 50 TWh, accounting for a further 40%. Wind power would therefore meet around 22% of total forecast electricity demand in the UK come 2020, it says.

Achieving the 28 GW by 2020 goal should be no problem, says the British Wind Energy Association (BWEA). Onshore, there is already over 14 GW of projects in the system (table), including those operating, under construction, permitted or with planning applications pending, says BWEA's Gordon Edge. Even allowing for the UK's typical 33% refusal rate on wind farm planning applications, over 11 GW of these should be delivered. In addition, a further 10 GW onshore is also in the development pipeline. "We should not limit ourselves to 14 GW," Edge therefore believes. "If the UK had the same density of wind turbines in the landscape as Germany does today, we would achieve 15 GW."

More offshore

In aiming for 14 GW of offshore wind development, Edge says the government is being "distinctly unambitious." The target would not be enough to tempt turbine manufacturers and component suppliers to invest significantly in the UK, he adds. "People would shut up shop and go home," he says. "We are arguing that 20 GW should be the 2020 objective for offshore wind." The extra 6 GW should easily be achievable provided the majority of offshore projects in the pipeline go ahead, he says, noting that up to 25 GW of site licences are yet to be allocated under the Crown Estate's forthcoming third round for offshore development. If 20 GW were built, offshore would provide up to 72 TWh a year, meeting over 50% of the target for renewable electricity.

The government says it bases its 14 GW offshore target on presumed supply chain constraints going forward, but Edge says these are being exaggerated. Supply chain capacity is already ramping up, he says. According to Edge, the UK will achieve an annual installation rate of some 1 GW from 2010. That will need to rise to 3 GW a year in the next decade. "I do not see why that kind of growth rate is going to be a problem," he says. "There is enough time and enough warning. The question is can (the government) give the market enough confidence."

With businesses treading cautiously in the wake of the global credit crunch, confidence has already taken a knock. Even accounting for an increase from April in the level of support for offshore wind - which Edge says was calculated using development costs which have since risen - some companies have warned they are reconsidering their offshore plans. E.ON says the economics of its 1000 MW London Array project are looking "difficult." Likewise, Centrica says it is reviewing its investment plan for up to 1370 MW of offshore projects. Both blame increased costs for materials. Edge remains optimistic that both will continue as planned. Steel prices are now falling, he says, and the industry is seeing more competition in installation vessels. Moreover, as the global recession bites, the demand for wind turbines is easing. "That should soften turbine prices for everyone," he says.

The government, meanwhile, plans to keep the UK's existing support system, the Renewables Obligation (RO), as its main incentive for large-scale deployment. This requires electricity retailers to buy a rising percentage of their power from green sources or pay a penalty to "buy out" of their obligation. They fulfil their obligation by buying Renewables Obligation Certificates (ROCs); one ROC is equivalent to 1 MWh. To achieve its EU 2020 RES target, the government acknowledges it needs to extend the RO beyond its current cut-off date of 2027 to 2035 or later. It will also increase, or remove, the current 20% cap on the level of renewable obligations on electricity retailers (Windpower Monthly, July 2008). Progress is also being made on removing transmission access barriers, reports Edge (Windpower Monthly, March 2009).

Janice Massy, Windpower Monthly.

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