By Rebecca Williams, Policy Manager, RenewableUK
Last week was a big week for the renewable energy sector. On Wednesday the UK Government recommitted £557 million for offshore wind and other renewables, and confirmed that the next Contracts for Difference (CfD) auction round would take place in 2019. On Thursday, the Government launched its eagerly-awaited Clean Growth Strategy (formerly known both as the Emissions Reduction Plan and the Clean Growth Plan). And on Friday the National Infrastructure Commission published its interim assessment on UK infrastructure. Now we’ve all had chance to grab a cuppa and digest these documents, we thought it was time to reflect on what the plan means for our industry.
1. The Government is starting to own the progress it has made on decarbonising the UK economy
Firstly, as several of the energy commentariat have noted, it’s hard to remember a UK Government being so forthright about its record on the low carbon economy. Claire Perry’s speech at the launch of the strategy was clear; focussing on clean growth as a win-win situation which will enable the UK to drive economic growth, create highly skilled jobs around the country, and cut the cost of energy. The Prime Ministerial forward to the document states that there is no conflict between creating an economy that works for everyone and seizing the opportunities brought about by the global low carbon transition. This public endorsement represents a huge and very welcome step forward in the UK Government’s position.
2. £557 million on offer for less-established technologies
Back in 2015 the UK Government committed £730 million for less-established technologies to be spread over three CfD auctions this Parliament, and stated an ambition to build up to 10GW of offshore wind by 2020 as long as the technology became cost competitive. Fast forward two years and the industry has slashed its strike prices by a record 50%, as well as meeting the Government’s levelised cost of energy reduction target four years early. Hard graft combined with innovation on technology throughout the supply chain has got us to this point. Turbines today are twenty times more powerful and are far more efficient than they were when the first one was installed. Foundations can be constructed in a wider range of sites at a lower cost than ever before – for example, suction bucket foundations are enabling projects to save costs and time. More effective operations and maintenance, combined with local supply chains create further efficiencies. Wednesday’s announcement reaffirming the budget for less-established technologies, detailing the timing of the next auction round, and committing to work on the development of a sector deal for offshore wind, will allow industry to deliver the UK Government’s ambition and then some. Not only will it mean cheap, clean, homegrown energy for the UK, but it will also means continued growth right across the country. This means real, high-value jobs for workers in what were previously some of the UK’s most economically deprived communities. It was great to see island wind included too, as this will allow much-needed projects to go ahead in places where they have strong community support.
3. The Government sees a role for wave and tidal if the sector can get its costs down
Since the CfD minima was removed for wave and tidal it’s been difficult to get a sense of where the Government is in relation to the marine energy sector. Last week we saw a welcome recognition of the potential role for wave and tidal energy ‘in the long-term decarbonisation of the UK’ if these technologies can “demonstrate how they can compete with other forms of generation’. In her speech at the launch of the strategy, Claire Perry also set out a three-stage “innovation test” which technologies must be able to prove they meet if they are to be considered for public support:
Demonstrating how we meet these criteria will be the key challenge for the sector. RenewableUK and our members have already been focusing on the cost reduction pathway and competitive advantage angles, and we will ensure that we emphasise our emissions reduction potential in response to the strategy.
4. There is more work to do to make the case for onshore wind
It was disappointing that there was no further news on onshore wind against the otherwise very positive backdrop of the week. We’ve been hearing warmer words from the Government on this issue, especially at the Conservative conference, and it is clear that the mood music on this issue is changing. But it would appear not quite quickly enough for inclusion in the strategy. As we look towards the publication of the Helm Review, the cost of generating technologies will continue to be the topic du jour. When the Government announced the review, it said that its ambition is for the UK to have the lowest energy costs in Europe. If you want the very cheapest power, look no further than onshore wind - something the National Infrastructure Commission was keen to remind us of in its report on Friday. RenewableUK will continue to build on this narrative, and there will be ongoing opportunities for us to stress how cheap, low-carbon, onshore wind can benefit UK consumers. Our case is clear - onshore wind has been excluded from competitive auctions for more than two and a half years. It should be allowed the freedom to compete against other technologies on a level playing field, and demonstrate how much further its costs have fallen. Restricting competition is not a policy most Conservatives would want to be associated with. Ideologically, the idea of a free and fair auction which drives down costs for bill payers is one which would naturally appeal to the majority of Conservative MPs and voters.
Although it’s too early as yet to herald the return of onshore wind, there are signs of a thaw, and on top of all the positive announcements we’ve had over the past few weeks, the decisive shift in the way Ministers are talking publicly about the vital importance of renewables, we can be optimistic that a door that once looked firmly closed is starting to look slightly ajar, so we have everything to play for in the months ahead.