The Renewable Energy Roadmap

The coalition Government released the Renewable Energy Roadmap on the 12 July 2011 alongside its White Paper on Electricity Market Reform.  The Roadmap essentially maps out the Governments strategy for meeting 15% of the UK's energy demand from renewable sources by 2020, with over 90% of this target being met through the Government's preferred technologies: onshore and offshore wind; marine energy, biomass electricity and heat; ground and air source heat pumps; and renewable transport.

One of the biggest issues facing the renewable energy market in the UK is the development of the supply chain.  As most of the technologies are new or developing, the successful deployment of each technology, particularly at the rate required to achieve the ambitious targets for 2020, is largely reliant on fostering a vibrant supply chain.

This article explores the supply chain support and Government's next steps from the Roadmap.
Onshore wind

Onshore wind is one of the maturest renewable technologies and therefore requires the least support to improve capacity by the proposed 13% annual increase.  The reform of the planning system, transmission grid investment and connection improvements are all noted as support areas in the Roadmap.  The supply chain, as an established market, is to be further encouraged through the measures contained in the White Paper on Electricity Market Reform (see previous E-Bulletin), which along with the Government's continued commitment to this technology should ensure further investment and growth.  The Roadmap highlighted Mabey Bridge in Wales as a positive example of the growing domestic supply chain that hopefully will be further encouraged.
Offshore wind

Offshore wind is at the heart of the renewables strategy and is one of the fastest growing requiring a 30% annual capacity increase to catch up and overtake onshore wind by 2020.  The Government is focused on improving the local supply chain and the DECC has promised £60 million by 2015 to support manufacturing sites at strategic port locations in the UK.  The Scottish Government has previously announced a £70 million fund to support site owners developing port and near-port offshore wind manufacturing facilities.  The development of a UK based supply chain is seen as being vital to reduce the deployment costs of offshore wind to a sustainable level.  The strategy follows the key recommendation from the Committee on Climate Change (CCC) Review, which concluded that the UK should take a leading role in developing technology, such as offshore wind, where the UK deployment plans will have a significant impact on the market and technology development.  Whether this assistance programme will be sufficient to make investing in manufacturing sites in the UK economically attractive remains to be seen.
The offshore wind industry continues to push for stronger commitments, with no moderating of the capacity ambition of 20GW (a possibility mentioned in the CCC Review).  Weak market confidence may still prove to be a barrier to supply chain commitment and therefore improving supply side market confidence is a key challenge facing the offshore wind industry.
Marine energy

For marine energy, there is likely to be only a minimal contribution of additional capacity over the next decade as the Government focuses on deployment of capacity beyond 2020 when the technology has matured.  The Government is committing £20 million to support two demonstration project arrays, which are vital to make the jump from unproven prototypes to full-scale testing and deployment economically viable for developers.  DECC is also proposing to develop a number of Marine Energy Parks later in the decade which would create favourable business environments for marine energy with clustered manufacturing and related activities. 
Biomass heat

It is recognised that the supply chain for renewable heat is particularly weak and the Government has introduced the Renewable Heat Incentive (RHI) scheme for non-domestic properties and the Renewable Heat Premium Payment (RHPP) scheme for domestic properties to improve initial take up and stimulate the supply chain.
The RHI is designed to tempt non-domestic customers to consider alternative heat sources and operates by compensating non-domestic users of renewable heat for their up-front investment through a 20-year tariff payment.  The RHPP offers up-front grants to domestic users to reduce their initial investment of renewable technology.  Both schemes will increase demand, stimulate the supply chain and improve the market scale of this technology.

The biomass industry also suffers from a negative perception surrounding the sustainability of biomass supply, especially given the range of sources available, from virgin wood to waste materials.  In response the DECC has committed to introducing sustainability standards for all solid, liquid and gaseous bio fuels used in UK biomass boilers by 2013.  This is good news for the biomass fuel supply chain as it should bring a level playing field and remove obstacles to supply, promoting a consistent, sustainable supply chain marketplace in biomass fuels. 

Direct support for the renewables supply chain is still limited.  The indirect support provided by tariff-based market stimulation measures such as the electricity market reforms or the RHI will provide a more certain environment for supply chain development, but may not go far enough to achieve the CCC Review's ambition of market leading technology development in the UK.  Ultimately, to develop supply chains, what the market place really needs is confidence - in the technology itself but more importantly confidence in the Government's continuing commitment to renewables.

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