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Department of Energy and Climate Change
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Offshore renewables financial boost kicks in
Sea-based renewable technologies will receive added financial support from this week following an overhaul of the UK's system for supporting renewable energy.
Energy and Climate Change Minister Mike O'Brien will today also announce that up to £10 million is to be made available to develop the next generation of offshore wind technology.
Speaking at an event on Monday which, for the first time, brings together renewable industry leaders and the ports industry, Mr O'Brien will say that the UK government is determined to do all it can to meet its challenging renewable energy targets of securing 15% of all energy from renewable sources by 2020, despite the current economic situation.
Mr O'Brien will say:
"Renewable energy is a weapon in our armoury to secure future energy supplies, reduce our reliance on foreign imports, and help tackle climate change.
"That's why we're taking the right long term decisions to encourage the massive investment in renewables that we need to see. This includes changing the planning laws, increased financial support, and ensuring sufficient access to the grid.
"This week's ramping up of financial backing in favour of technologies such as offshore wind is evidence of our determination to create the right investment environment for renewables. And the funding being made available in the next few months will put the UK ahead of the game for the next generation of offshore technologies.
"I know that right around the world, companies, including energy firms, are facing difficult times. We are therefore actively examining how we can help make sure there is sufficient finance and other support available for viable projects which are short of the investment they need.
"Taken together, these measures should leave investors in no doubt of the UK's commitment to renewable energy."
Maria McCaffery, Chief Executive of British Wind Energy Association, said:
"This is an important signal from Government on the continuing commitment to offshore wind and emerging offshore technologies. With the right policy framework and levels of support we can reach our 2020 targets."
From 1 April, a new regime will come into place which will give offshore wind 50% extra financial support, through the Government's Renewable Obligation (RO) scheme. This is as a result of 'banding' the RO, which means rather than a flat rate of support across all renewable technology, emerging technologies that are further from commercial deployment will receive greater levels of support to encourage their development.
Since its introduction in 2002, the amount of renewable electricity generated has nearly trebling from 1.8% in 2002 to 4.9% in 2007. Banding will deliver further incentive to developers to deliver more eligible renewables generation such as offshore wind.
The Low Carbon Energy Demonstration Fund, part of the Environmental Transformation Fund, is aimed at accelerating the technology needed to see more large-scale multi-mega watt turbines in offshore wind farms. Applications will open next month for up to £10 million of funding, which will be allocated to businesses in June.
Notes To Editors:
1. Mr O'Brien is speaking at a Department of Energy and Climate Change organised seminar on Monday that will look at the important role that Britain's ports will play in the push for more renewables.
2. The Renewables Obligation is the Government's main mechanism for supporting renewable electricity generation in the UK. It places an obligation on all licensed electricity suppliers to source a specific and annually increasing amount of their sales from eligible renewable sources.
3. To give added confidence to industry, the Government last year announced that the Obligation would be extended until at least 2037. The RO was worth £873m to the renewables sector in 2007-2008 and will be worth about £1 billion a year by 2010.
4. The proposals will reduce the level of support given to new developments in the more established technologies such as landfill gas and the co-firing of biomass in coal-fired power stations (to 0.25 and 0.5 ROCs/MWh respectively) while increasing the support available to both the next wave of technologies such as off-shore wind farms and dedicated biomass plants (to 1.5 ROCs/MWh) and those further from the market such as wave and tidal stream (to 2 ROCs/MWh). Onshore wind, which is the fastest growing technology at present will continue to receive 1 ROC per MWh.
5. This week's important changes to the financial incentives for renewables, comes on top of the other reforms put in place by the Government. These include:
Financial
* In addition to the changes to the Renewable Obligation, recent Energy Act changes allow Government to introduce a financial incentive mechanism for renewable heat that will incentivise the generation of heat from technologies such as biomass heat and heat pumps.
* The Act also enables Government to introduce a system of feed-in tariffs for small-scale renewable electricity generation (up to 5 MW), which will reduce costs and encourage the uptake of renewables by schools, homeowners, hospitals and communities.
Planning
* The recent Planning Act puts in place a faster system for dealing with planning decisions on nationally significant infrastructure projects for energy - including large scale onshore renewables of over 50 MW, and 100MW offshore - via an independent Infrastructure Planning Commission (IPC).
Grid access:
* Government announced last week that tenders for a new offshore energy grid regime will be launched this summer. The regime will ensure offshore cable connections are delivered on time and at reasonable cost to maintain an effective and secure grid.
* National Grid and Ofgem have recently announced an accelerated timetable for the connection of an extra 450MW of wind power into the grid. Ofgem are now proposing arrangements that will allow any project ready and able to connect to take advantage of an early connection date.
* A recent report by the Electricity Networks Strategy Group set out a vision to connect vast amounts of future offshore wind energy to the national grid. The new innovative regime could help connect enough wind-generated electricity to power the equivalent of more than 10 million homes by 2020.
* The Transmission Access Review, published in June 2008, sets out a package of measures that will remove or significantly reduce grid related access barriers. These include speeding up connections of projects that are ready to go; delivery of enduring grid access reforms, and steps to set out a vision for the network to 2020 and beyond and put in place the right incentives to ensure early delivery of new infrastructure.
Facts and Figures on renewables
* The UK is currently No. 1 in the world for operating offshore wind farms, with 598MW capacity. We overtook Denmark in October 2008. 7 offshore wind farms are fully operational, along with 2 demonstration sites.
* 5 offshore wind farms are currently under construction, adding another 444MW. The UK has plans for up to 8GW of offshore wind, in English, Welsh and Scottish waters.
* By end of 2009, the UK will have 1042MW of offshore wind operating: almost doubling capacity in just 12 months.
* Another 8 projects, totalling over 3GW of generating capacity, have been consented and are in pre-construction.
* Our existing offshore wind farms generate enough energy to power over 340,000 homes, saving between 170 and 380.5 million tonnes of CO2 in 2007, compared with scenarios in which the electricity had been generated from gas and coal respectively.
* The Carbon Trust estimated that the offshore wind sector could create up to 70,000 jobs in the UK and up to £8bn in annual revenues by 2020, based on the EU 2020 targets being achieved. On average, 10 full-time jobs are sustained per MW installed.
Department of Energy and Climate Change
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Whitehall Place, London, SW1A 2HD
Public enquiries +44 (0)300
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