Posted By Hugh McNeal,
01 July 2016
In the light of the referendum result, it’s certainly tempting in these unprecedented times, in the period of uncertainty and of market volatility since the vote, to focus only on the challenges ahead, on the difficulties we know we will face over the coming weeks and months.
Energy companies, National Grid and energy policy experts are starting to give voice to what’s at stake in terms of investment, jobs and consumer bills, if we lose access to the European Energy Market. In public and private the fears are very real, the stakes very high.
But it is precisely now, at this moment which is so unpredictable and uncertain, that we should reflect both on what we can still offer Britain in the future; cheap, home grown, low-carbon sources of electricity, and large scale capital investment at a time when we know we will really need it.
We are not expensive - we are cheap. We are not inefficient subsidy junkies but innovators, market disruptors, the risk takers on which a dynamic economy depends, investing in energy storage, developing new business models, driving change, creating jobs. We are not alone, out of step with the rest of the world, but part of a global investment story which now dominates from China to the United States and from Africa to Europe.
As I have argued recently, onshore wind is now the cheapest form of large scale, new electricity generation available in Britain. A remarkable position given how so many of our critics attack us on the grounds of cost. It’s crucial this is known more widely, and equally vital that politics doesn’t get in the way of consumers benefiting from this plentiful, good value resource, and the cost reduction the industry has achieved in recent years. Give us a chance to compete and let us show what we can do.
The Chancellor George Osborne has set out three challenges we all share, whatever our view of last week’s referendum result. First to deliver immediate financial stability, second to resolve our relationship with the EU and third to reassert the values of our country.
How can we, in the renewables sector, contribute to this stability? There remains in Scotland, Wales and Northern Ireland a pipeline of onshore wind plants that are ready to build now, ready to be deployed, ready to be financed, projects which can generate economic activity and capital investment, projects it makes sense to build given the benefits they will bring and the challenges we now face. This represents hundreds of millions of pounds in capital investment for our economies over the next few years, helping companies all over Britain just at a time when we most need it most.
Surely now is the time to all work together and get building. To achieve this, it is vital that onshore wind retains an ability to compete and to build a route to market, as part of the nations’ balanced and secure energy mix. We need to build on the transformation we have witnessed over recent years, attracting investment and creating jobs to help support Britain.
The offer is there. We now need to work to build a broad coalition, one that reaches out across the energy sector, across industry, across all political parties, all parts of Britain and Northern Ireland, to help deliver it.
This blog first appeared in BusinessGreen
Posted By Mark Davies,
21 June 2016
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Good afternoon everyone. Can I add my thanks to all of our sponsors too without whose support we would not be able to put on an event like this, and to all of you for joining us over these 2 days.
What a fantastic morning we have had. It has been great to walk the floor of the exhibition meeting so many of you, to see the standing room only Share Fair event, to see businesses doing business. It is one of the great pleasures - of many - of this role.
I am of course conscious that many of you are nervous of what may happen this week, and the implication of the judgement of the British people on your businesses, on your plans, and on your futures. But I hope in the next 10 or 15 minutes to remind you of how much you have achieved and most important of the great future I am convinced our industry will enjoy regardless of the result of the vote in 2 days’ time. To remind you of what we offer.
Since starting as your CEO just under 3 months ago, I have been making the case that renewables are now part of a new energy mainstream here in Britain and around the world; securing investment that is delivering transformative and revolutionary change and driving a revitalisation of our energy infrastructure.
As I am sure we will hear from Michael Leibreich when he speaks tomorrow, more than half of global energy investment last year was in renewables, a third of that investment in China - especially relevant for us today as we warmly welcome the largest ever Chinese offshore wind delegation to Britain and to this conference and exhibition. For the first time last year, we witnessed more renewable than non-renewable capacity deployed across the globe; and for our offshore wind industry a market worth a record $23bn, from its origins here in Britain, then in Denmark and Germany and Europe to a truly global industry. China with a quarter of global investment, in the United States, with auctions planned for 9 commercial leases across the country, and in seas around the world. This growth is remarkable both in its speed and its reach.
Here in Britain, renewables delivered a quarter of our electricity in 2015 - more than coal and more than nuclear. Wind alone providing 12%. The members of our Association, those who choose to be members of RenewableUK - and if you are not a member please join while you are here and become part of what we are all achieving together - employ over a quarter of a million people across Britain and Northern Ireland.
My point is this: whatever stage you are at, however you are contributing, large global company, small start-up or anything in-between, you are part of something big and important. Together, your companies are investing billions of pounds. Offshore wind is bringing well over £20 billion investment to Britain alone this decade. DONG alone £6bn to the Humber between 2013 and 2019, an area with some of the highest levels of unemployment in the country. Alongside this investment, we are seeing cost reduction and scale innovation which you might associate more readily with consumer electronics, with TVs and telephones, than with multibillion pound infrastructure projects. Whichever way you cut it, the figures are large, the delivery impressive. This is no start up industry.
All of which begs the question: why do so few people appear to know the scale of what is being achieved and what are we - everyone in this room - going to do about it?
I am not a conspiracy theorist. I don't believe that people are deliberately hiding or downplaying what we are delivering. I just do not think that we have been telling our story loud or often enough.
We need to show what we offer. We need to tell the story of our business success. We need to create a picture of the future we are building. That is why both in private and in public I have been stressing the need for us to move away from asks, from saying what we need, and to move instead to a different conversation with Government and with the public, showing and explaining clearly what we offer, what we offer Britain and what we will increasingly offer around the world.
It is appropriate that we are in Manchester to set out this offer. We are in a city at the heart of the industrial revolution, a city which played such a key role in infrastructure development, from the Bridgewater Canal and the waterways which connected this part of the world to Liverpool and the open seas 240 years ago to the world's first inter-city passenger railway just over 50 years later.
Our work, your delivery, deserves this context. Almost 1 pound in every 5 being spent on infrastructure in Britain is in renewables, with offshore wind leading the way. You are driving down cost, innovating and investing in our country on a massive scale – the over £20 billion you are investing here is more than Britain is spending on flood defences, on airports, on our IT and Broadband combined over the rest of the decade. Is there a more compelling story of infrastructure transformation and change in Britain in this decade? Of what has been achieved by two Conservative-led Governments? I can't think of one.
And we know we have more to offer. Alongside new gas and new nuclear plant, interconnection, demand side response and all of the other technologies which can deliver a balanced future energy mix, we offer a pipeline of projects ready to be deployed and financed, and which can help Britain meet its electricity needs in the future as the majority of our nuclear plant and all of our coal plant is retired over the next decade
But while the numbers are impressive and while it is important that everyone knows we have projects which are ready to be built now, I think it is the personal stories, the stories of your businesses which resonate and show what we offer best of all.
A few weeks ago I spent an evening in Bridlington meeting 100 or so companies working in offshore wind; companies installing winch systems and other specialist equipment, supplying boats and jack-up vessels; companies training people to work at sea; companies that analyse the sea bed; professional services firms providing legal and financial advice; companies that work in the digital economy, software providers; firms providing economic modelling; even a former Asda store manager whose father had invested in his business filming the building at the Siemens site and who now has a successful digital media business.
These, of course, sit alongside the anchoring investments like those in Hull, where in a few months a 1000 workers will start producing the largest single mould component in the world at the Siemens / ABP site, the revitalised MHI/Vestas site on the Isle of Wight now employing 260 people and supplying not only the UK market but for export too with 11 UK supply heroes, the recent investment in Campbeltown by CS wind; the contract awarded to BiFab, the role we are playing in revitalising and securing new investment in ports along our coasts - these are all investments that have the power to transform the lives of those who benefit from them, who secure work because of them, that can help to regenerate communities and provide possibilities which might otherwise have been lost.
What strikes me more and more in this role, and as I think about these stories, your stories, is the reach - both geographic and economic - in what we are achieving. We are not a sector - well not in any narrow sense of that word. We touch on almost all areas of economic activity, and we increasingly reach all parts of this country. Offshore wind is already a massive British success story.
This success is being built on international co-operation. On the relationships that are built at events like these. On the conversations you have with the delegation of senior leaders from China I welcomed this morning. On the partnerships and investment we have been able to welcome from Europe, and from around the world and as we have built this industry in recent years.
Let me return to my evening in Bridlington. Less than a decade ago I met a young British company setting up in offshore wind before any of the deployment that has marked our success in recent years. Its founders saw the potential of boat services and marine operations in that market. Last month in Bridlington, I had the pleasure of meeting up with them again, no longer a start-up but part of a global marine company worth over £100m, a leading light in the offshore wind industry and now one of the fastest growing companies anywhere in Britain.
You will all have stories like these; stories of success that deserve to be told, and to be heard. Stories of how British leadership and international co-operation and investment is delivering economic opportunity and jobs at the most local levels; of a market born in British waters expanding across the world with all of the opportunity this expansion brings - not narrow conversations about our gigawatts or the amount of British content in our projects but British based companies working with and alongside international companies delivering successfully all over the world. As in the 1800s, our future success will not be achieved in isolation but in partnership with international companies who recognise British skills and strengths and complement them with their own, who recognise, as William Siemens did over 170 years ago, that Britain "is the place if anything is to be done".
So whatever the British people decide on Thursday my message to you is our future is bright; the global opportunity immense. Of course, as your CEO it is my job and my team's job to engage with Governments, with public servants, with anyone who can help provide an environment for you to invest. And we will do so. But now is not a time for asks. Now more than anything it is my job, your job, our job to tell the stories of our success; to speak locally, to speak nationally, to speak globally of what we are achieving and what we offer, of the possibilities that are now opening up because of British leadership as our market becomes increasingly global. To tell the stories that reach back to a historic past but open up a truly global future for us all. A new infrastructure revolution is being led by you. Now is the time to show what that means and what it offers.
Thank you very much – I am v much looking forward to meeting with many of you over the next two days and hearing more of what you are achieving and delivering, and as your Chief Executive working with you to keep building this exciting and vital industry.
Posted By Maf Smith,
22 April 2016
Updated: 02 June 2016
We’re proud to be the world leader in offshore wind – a technology which we started installing in British waters in the early 2000s. Sharing space out at sea is the UK’s world leading oil and gas sector which has been an important part of the UK economy since the 1960s. We are two industries both delivering economic success for the country.
However, right now the UK’s oil & gas industry is facing one of the greatest crises in its history, and low international oil prices are impacting on investment and employment. Many in the industry are thinking long and hard about the industry’s long-term prospects. Hardest hit have been cities like Aberdeen but the impact has been felt in coastal communities from Shetland to Lowestoft.
There is some hope, however, for the many experienced oil industry employees who may be worried about the future. That hope comes from offshore wind.
In January, the Government announced work on a “UK Oil & Gas Workforce Plan” to examine, among other things, how it can support workers who have lost their jobs, or may be in danger of doing so. RenewableUK has taken an active role in this process, helping Government identify the scale of the opportunity presented by offshore wind for former employees in oil & gas.
Offshore wind already contributes 5% of the UK’s electricity and supports around 15,000 people in employment. By the end of this decade the UK’s offshore wind sector will double in size, and there are opportunities in construction and operation of a growing number of sites. New offshore projects in development are exponentially larger than existing wind farms in terms of size and scale. These power plants will need huge numbers of highly skilled individuals to be built. Offshore wind farms have long development programmes, a construction phase of two to three years, and an operating lifetime of 20 to 25 years. For example, ScottishPower Renewables is currently developing its East Anglia One offshore wind farm; a £2.5 billion investment requiring an estimated 3,000 skilled employees.
This is where oil & gas comes in. The UK is perfectly placed to take advantage of its 40 years of offshore expertise by easing the transition for workers from fossil fuels into renewables. We have already seen traditional developers, such as Statoil and Repsol, diversify into offshore wind as early movers in the sector, while underneath we have a large supply chain of offshore contractors with a track record of winning work in offshore wind and oil and gas.
As the industry grows so it is learning from oil and gas about how to operate safely at sea. A great example is the use of helicopters by our industry for construction and maintenance work, with helicopter firms now active in the wind market.
There is a great opportunity for establishing a clearer path to retrain workers for a life in clean energy. This means providing resources for people who may not be aware of the opportunities to make the transition. Their experience working in other parts of the offshore energy sector is highly sought after, with the aptitude, professionalism and transferable skills all valued highly in offshore wind.
The practical work of our industry to support workers in transition comes in many forms. UK companies take their supply chain responsibilities seriously and are active in supporting UK firms win contracts. As an industry we run regular supply chain events to help companies and future employees understand about how to go about winning work. We have an annual skills fare putting companies and potential employees together while also providing advice and background to those wanting to move into our industry. And we work across training providers to make sure that there is good training available which is accredited to a suitable standard. A good place for individuals to start is the careers section of our webpage which provides information on apprenticeships, qualifications needed and has a jobs board of available work.
There is a lot that individuals can do for themselves to win work in this exciting industry. The Government’s work however is a vital part of coordinating efforts to support oil & gas industry employees, and it is equally important for offshore wind. Our sector is proud to be part of the solution for hardworking energy sector workers and their families.
This blog first appeared in BusinessGreen.
Posted By Gordon Edge,
15 March 2016
Updated: 24 March 2016
In all the frenzy about Brexit, one can be forgiven for forgetting that there is a rather important political/economic date imminent – the Budget. Given the apparent takeover of energy policy by the Treasury, the Budget this year is taking on even more significance, with some crucial announcements potentially on the cards.
The key issue to look out for is budget available under the Levy Control Framework (LCF), both in the immediate future and the longer term. This is a complicated area. Government’s recent policy changes have been primarily driven by a perceived need to rein in spending to within the current LCF envelope, which grows to £7.6bn in 2020 (in 2011 money). Early in the term of the current Government, figures were released indicating that they projected an overspend of £1.5bn above that figure. A number of factors were pointed at, including higher than expected demand for support through the Renewables Obligation and Feed-in Tariff, higher than expected load factors for offshore wind, and lower than expected electricity prices – this last driving greater draw on the LCF from the new Contracts for Difference (CfDs). However, Government has been less than fully transparent about how it has modelled the budget use, making assessment of whether there is any money left in the pot difficult.
We have been trying to model future LCF use within RenewableUK. With a number of the policy changes behind us, and the RO level set for 2016-17, the possible range of outcomes is narrower than it was in the middle of last year, but there are still uncertainties. However, best modelling efforts appear to indicate that budget use still overshoots the trajectory every year out to 2020. It’s worth noting that if the wholesale price projections that Government published when the LCF was set in 2012 (which are higher by about £20/MWh) were to be used instead, the story would be very different. There is a further problem, though: current and forward power prices are about 50% lower than those being used by DECC for the next two years. The risk is of further downward revision in DECC’s power price forecast and a worsening of the ‘overspend’.
So it appears unlikely that Treasury would sanction any budget for further CfD allocation ahead of 2020, unless there was an over-riding reason to do so, outside of meeting environmental or renewable energy targets. Security of supply could be one such reason, though a more pertinent one is likely to be to protect supply chains and project pipelines that will be needed post-2020, when new budget is available and tough decarbonisation targets need to be met. The things to look out for on Budget day are the latest OBR figures for the LCF, and any word on budget for the promised CfD allocation round later this year.
If Government determines that there is no more money before 2020, then budgets for future allocation rounds will have to come exclusively from the settlement that is made for the LCF post-2020 – and only projects delivering in the 2020s will have access. So far, that post-2020 budget has not been set out, and Budget would appear to be an obvious point at which to do so. While having clarity on that budget would be helpful, there is a worry with an imminent announcement: Government has made no attempt to consult with the industry about anything to do with the future level of budget, and nor has there been any indication of a change to the accounting for the CfD. The risk is that the structural problems of the current LCF are just continued, leading to a similar problem of uncertainty over the ‘buying power’ of the LCF as the volatile wholesale price leads to budget use depending on exogenous factors that are likely uncontrollable. The win-win opportunity of making the LCF a more dependable investment signal, reducing risk and therefore cost of capital and strike prices, would be lost. So look out for any statement on the LCF, but be careful to interrogate the meaning of a large budget number.
In all, there may be important news on Wednesday. It just may not be quite as good as it sounds.
Article originally posted on Business Green 14/03/2016
Posted By Maf Smith,
11 March 2016
Updated: 15 March 2016
Last month, 860 people from across the globe gathered in Edinburgh to debate and push forwards the development of wave and tidal energy. Guests from 27 countries (including the UK) were brought together as part of the International Conference on Ocean Energy (ICOE 16). Companies, Governments and Academics attended from recognised ocean energy leaders such as the UK, France and Canada, but also countries such as China, Chile, Korea, Japan, Malaysia, New Zealand and many more. The event was addressed by a European Commissioner and Ministers from Scotland and Nova Scotia and senior officials from many Governments around the world.
What all these countries have in common is a desire to accelerate the shift to a low carbon future, and an interest in capturing the substantial wave and tidal resource which sits, just in reach off all our coastlines.
In the last decade the world has seen a massive rise in renewables, with solar and wind now common and often major players in most electricity markets. Most countries underestimated the growth of these technologies, with consumer pressure and cost reductions leading to faster adoption than most energy experts anticipated. Last year Bloomberg New Energy Finance reported how renewables accounted for over 50% of investment in new energy capacity, a significant shift underlining the level of confidence and the mainstream nature of these technologies.
In the UK and increasingly abroad we have seen rapid growth of offshore wind, with innovation and deployment pulling costs down aggressively. Our future is going to see a significant role for solar and wind. What is not clear though is the scale and pace of development of other technologies, such as wave and tidal.
Right now wave and tidal sits at a critical point. Early technological optimism has set back the industry because rash over ambitious promises could not be fulfilled. But this ambition has driven a lot of learning, from successes and failures.
Just along from the Edinburgh Conference Centre, the National Museum of Scotland is building a permanent science and technology display to mark Scottish scientific achievements. Here will sit things like Sir Ian Wilmot’s Dolly the Sheep and information on the work of Sir Peter Higgs, who famously proposed the Higgs Boson, which was later confirmed in the Large Hadron Collider after many years of international scientific effort at CERN.
Alongside this will sit Salter’s Duck, the original wave machine which first demonstrated that electricity could be effectively generated by our seas. Stephen Salter proved his device at the University of Edinburgh which today is home to the world’s most advanced wave tank, Flo-wave, which can test devices in different sea states. Visitors can visit the tank and see technicians combine different sea characteristics to produce standing waves, perfect storms and one in 100 year events.
The day before ICOE16, Scottish Development International and Highlands & Islands Enterprise flew almost 100 of our international guests to Orkney, to visit what is probably the ocean energy equivalent of CERN – the European Marine Energy Centre. Active for over 10 years, EMEC has been home at one point or other to most of the globe’s wave and tidal prototypes, and through this has advanced our knowledge of how to capture wave and tidal energy.
While there have been many breakthroughs in wave and tidal, what has yet to happen is demonstrable cost reduction, and many of the conversations at ICOE16 were about how to deliver this. These pioneering technology companies are painfully aware that rapid progress is expected, and the need for rapid decarbonisation means that they will not have the luxury of time afforded to their technology forebears. The first commercial tidal stream project – Meygen - will begin construction next year off the north Scottish coastline. A lot is riding on the experience of this project, though other tidal companies are waiting in the wings also confident about their own devices.
To prove the existence of the Higgs Boson governments funded the international science community over to the tune of $13 billion. The discovery is important in opening up our understanding of particle physics. This applied research is critical to how we advance as an innovative economy.
In contrast the successors to Stephen Salter have proved the viability of wave and tidal on much smaller budgets, and with significantly more private sector investment. Every £1 of public money has levered in a further £6 of private investment, and brought us to the point of first commercial deployment.
The case for wave and tidal is still to be proven, but for me the pairing of Higgs and Salter in the National Museum is significant. To advance we need to take risks, and we need to follow up high level research with applied learning. From Cornwall to Kirkwall there are many internationally recognised companies hard at work to prove their ideas and make wave and tidal a reality. The international visitors to Scotland came to learn about this experience, and the exchange of information shows how we can all benefit from international cooperation. Talking to international delegates I was struck by how Scotland was judged as leading the field. Over coffee after a morning of discussion one Canadian delegate said, “well you guys are really going for it aren’t you.”
However, while we receive plaudits from abroad for our advanced research, the case for support here at home is less clear. Our industry needs to acknowledge that it has more steps to take, and has much research it needs to conduct. However, we should not shy away from pride in our record of learning and achievement.
While ICOE16 was addressed by many governments, notable was the absence of any UK Minister or UK official. The UK can be proud of what is has helped deliver – a world leading industry still confident of delivering a commercial breakthrough. On the back of national research from governments in the UK, Portugal and France, we are now seeing ambitious European funding support being assembled which our UK companies are well placed to capitalise on. Today, our Government is actively promoting innovation and further research funding for emerging energy technologies. It would be right to question the time taken for wave and tidal to deliver, but it would be wrong to conclude that it do not have a future. This is true when we consider how other technologies are allowed significant amounts development time, and benefit from long term support programmes aimed at helping them deliver. And it is particularly true when we are held in such high international regard for our world class research and industrial leadership.