The UK Government on 15 July published its Renewable Energy Strategy (RES), as part of its UK Low Carbon Transition Plan to help tackle climate change.
Publication of the RES follows major consultation last year, and the document sets out how the Government plans to deliver the UK's renewable energy target by 2020. The UK is legally bound to ensure that 15% of our energy comes from renewable sources by 2020, a figure that will require a seven-fold increase from today's statistics.
In order to achieve and deliver the targets, the RES identifies various plans that the Government intends to implement. It is a lengthy read – we've highlighted just a few areas below we thought may be of interest to our clients and contacts.
Transmission Access Reform
One of the most interesting aspects of the RES relates to the decision of the Government to take control of the process of grid access reform.
Transmission access has long been identified as a key barrier to renewables deployment, and necessary reforms of the current access regime are being discussed. However, the measures proposed to date by the Transmission Access Review and developed by the industry have not found favour with Ofgem, and the Government has indicated in the RES that it has decided to use powers in the Energy Act 2008 to introduce reforms to grid access arrangements (as recommended by Ofgem recently).
The RES identifies that the Government has considered the reform proposals to date and Ofgem's advice, in light of what it sees as the 'key considerations' of adding certainty for developers, speeding up connections and ensuring efficient operation of existing plant.
As a result, the Government will use the Energy Act powers to implement new, more appropriate rules as soon as possible. The scope of the changes the Government intends to propose will be focussed mainly on access rights for new entrants.
There will be a consultation on the principles of a model for grid access this summer, with the target of making changes to the relevant codes and licences that reflect this model by June 2010.
Greater Financial Support via Incentive Schemes
The RES outlines plans to introduce 'clean energy cash-back' incentive schemes, in an effort to support and promote non-centralised renewable energy generation.
The Energy Act 2008 provided powers for a Renewable Heat Incentive (RHI), and the RES states that the Government will consult on the design of the RHI in late 2009, with a view to implementation by April 2011. The proposed RHI will have a wide application to all domestic and non-domestic premises, across the whole of Great Britain (not Northern Ireland), and is expected to apply to a broad range of technologies.
In addition to the RHI, there will be the introduction of guaranteed payments through Feed-In Tariffs (FITs) to support micro and small-scale renewable electricity projects. The proposals for FITs are being consulted on this summer, along with the proposed changes to the Renewables Obligation (RO). The target is to have FITs in place by April 2010.
In the interim period, the Government identifies that it is continuing to fund existing grant schemes. Further, eligible renewable installations completed in the period between the RES publication and the incentive schemes becoming operational will be allowed to benefit form the schemes as if the installations had been completed at the relevant dates.
The offshore wind industry is identified as a key area in which investment and progress will help towards meeting the UK's targets. To that end, the Government has earmarked £120m (of the £405m allocated to low-carbon investment in the 2009 Budget) to support a step change in investment in the offshore wind industry in the UK.
In addition to other recent developments offshore, an interesting area of focus in the RES relates to developing a stronger supply chain, in particular for offshore wind. The RES further identifies plans to seek investment to allow improvement in offshore wind technologies, offshore wind testing facilities and offshore wind manufacturing.
As part of the RO consultation this summer, there is also to be discussion of proposed changes to the RO banding of offshore wind projects meeting specified completion criteria, so that these receive more ROCs.
Office for Renewable Energy Deployment
In order to help facilitate the necessary investment and development, the Government is setting up the Office for Renewable Energy Deployment (ORED), as part of Department of Energy and Climate Change. One of the key priorities of ORED is to support investment in large-scale manufacturing areas such as offshore wind technology in the UK.
ORED's remit is essentially to promote active engagement and dialogue with the finance and investment community, in order to raise awareness of Government policy, increase investor confidence and encourage them to take advantage of UK investment opportunities. Additionally, the body will be responsible for building up the capability of the UK's supply chain, and proactively supporting investment in manufacturing.
Other matters highlighted in the Strategy include; proposals to expand and extend the RO, on which a separate consultation is taking place (as noted above); improvement and development of the planning system and process; a commitment to invest up to £60m in UK marine energy infrastructure and technology; and the £4billion capital investment programme from the EIB announced in the April Budget for renewable and other energy projects.
The RES was published alongside The Low Carbon Industrial Strategy and The Low Carbon Transport Plan, and can be accessed in full via www.decc.gov.uk.