The Govt must use the 2006 Energy Review to capitalise on the UK’s unrivalled renewable energy potential

The UK Government is in the midst of the 2006 Energy Review and it must use this opportunity to unlock the potential that renewable energy offers if it is to meet the UK’s target of 10 per cent renewable electricity by 2010.

We know that the UK is ideally suited to the development of both onshore and offshore wind farms – it is the windiest country in Europe and has a long, ice-free coastline – but it is not capitalising on this advantageous position. For instance, the UK recently slid down the Ernst & Young attractiveness index from first to fourth position.
2005 was a record year for UK wind power installation, but it still falls short of the annual growth rate needed to meet the 10 per cent target. In short, there is a need to speed up planning procedures, unlock the grid and develop a major new policy impetus for the proposed giant offshore projects to proceed.

Like any other project, a number of planning and environmental consents are needed. Wind farms certainly bring out mixed emotions from the public. But love them or hate them, the planning process is too lengthy: decision times in Wales and Northern Ireland can be more than two years, and the process for large-scale projects under the Electricity Act can take even longer. The process needs to be quicker and the backlog cleared.

Offshore, the Marine Bill is currently going through consultation and the Government must grasp the opportunity to produce a clear and simple planning framework for marine projects.

The UK already has an issue with grid capacity, with electricity being generated in the North and consumed in the South. This is exacerbated by wind power – the best onshore wind farm sites tend to be in remote areas without great grid connections. Offshore sites are restricted to three strategic areas and these do not have adequate grid capacity. Upgrades take several years to complete – longer than it takes to develop the wind farm itself.

A strategic approach to grid upgrades is needed, which allows for the changing profile of energy generation in the UK. Clearly, certain geographic areas need priority. While central planning is not called for (developers should decide where to put their projects), a clear programme of where and when grid improvements will take place would inform those decisions.

Harnessing the UK’s offshore wind resource is the next big challenge. It is early days, but to date there has been a lot of hype and few projects in operation (some 214MW are up and running, but 954MW consented are still to be built, with a further round of projects of up to 7.2GW waiting in the wings).

Any activity at sea is always more difficult than on land and the projects completed to date have had the usual teething issues associated with working in the harsh marine environment. There are also technology issues, as offshore wind turbines are essentially onshore machines that have been modified and moved offshore.

Ultimately, the cost of developing offshore has proved to be greater than anticipated. If offshore development is to come of age, then government action is needed.

The great debate is whether the Government should change the existing Renewables Obligation. This is likely to cause more problems than it would solve. Changing the regulatory framework now would dent investor confidence and could result in development momentum being lost. If anything, the Government should expand the existing regime and increase the target to 20 per cent by 2020.

What is needed is direct support for offshore wind farms in addition to the existing regime. Direct financial support for projects is often seen as controversial, but it can be justified if it is seen for what it is. If government policy is to put wind farms offshore, then they will need some further support to get there.