Memorandum 43
Submission from the British Wind Energy
Association
EXECUTIVE SUMMARY
While progress is being made in the deployment
of wind power in the UK, key barriers to progress in the planning
system and access to the grid remain. Solutions to these issues
are available, but they are not being implemented swiftly. The
recent reform proposals for the Renewables Obligation should ensure
stability in the market, but further reform will be necessary
if 2020 targets are to be met. Wave and tidal stream technologies
require concerted and coherent support if the industrial potential
they represent is to be secured for UK business: at present, the
path beyond the Marine Renewables Deployment Fund is not clear.
1. The British Wind Energy Association (BWEA)
is the leading UK trade association in the field of renewable
energy, with over 320 corporate members representing 98.9% of
the wind energy business in this country. Wind energy is the fastest-growing
renewable technology in this country, and will make an increasingly
significant contribution to UK electricity supplies over the next
decade and beyond. BWEA also represents the interests of the emerging
wave and tidal stream energy sector, building on its experience
in the development of offshore wind.
2. Currently there are 148 wind farms operating
in the UK, five of which are offshore. These have a total capacity
of 2,176MW, made up of 1,872MW of onshore and 304MW of offshore
wind. In addition, 841MW of onshore wind capacity and 474MW of
offshore capacity are currently under construction, while a further
1,604MW of onshore and 2,260MW of offshore projects have consent
and await construction.[146]
3. Despite the good progress in building
wind generation capacity—in February this year the UK became
only the eighth country in the world to break the 2,000MW barrier—there
is considerably more potential in the UK and BWEA members are
keen to exploit this. Onshore, developers have submitted a further
8,330MW of projects to planning authorities, which if all built
would generate approximately 6% of UK power demand. If only one
quarter of this capacity was consented by the end of 2007, then
it is still possible for the current target of 10% of the UK's
power to be gained from renewable sources by 2010 to be achieved.
4. However, the planning system is a major
barrier to achieving build-out of onshore wind in the UK. There
are projects that have been held up in the system for up to four
to five years, and in general the planning arrangements in the
UK do not deliver timely decisions for wind projects: only 5%
of all onshore wind applications are decided within the supposed
statutory limit of 16 weeks, while for other large projects of
all kinds (those requiring Environmental Impact Assessments),
verdicts are reached on 70% within their limit of 13 weeks, according
to an analysis of all such decisions in 2006.[147]
5. While BWEA welcomes the attempt by Government
to improve this situation through its proposals in the Planning
White Paper, these will have only a limited impact on the consenting
of onshore wind. The new Infrastructure Planning Commission (IPC)
will only decide on projects of greater than 50MW (the current
Section 36 limit) in England and Wales. The number of such projects
that will be coming through the system after the IPC comes into
existence will be very limited, since such sites are rare in England
and Wales, and most of these will have been developed before the
IFC comes into operation.
6. For projects under 50MW that are currently
within the system in England, Planning Policy Statement 22 (PPS22)
is supposed to guide local authorities in making their decisions.
However, BWEA members are finding that their projects are rejected
for reasons which are in contravention of this guidance. Central
Government, while it should be lauded for putting in place strong
policy, has failed to ensure that it is followed on the ground.
7. As outlined in paragraph 3 above, the
2010 target is still achievable. However, because of the time
taken from consent to operation, the horizon for consenting wind
farms which can contribute to the target is fast approaching.
Given current trends in procuring wind turbines, gaining a grid
connection and discharging planning conditions, BWEA considers
that only projects consented before mid-2008 can contribute to
the 2010 target. This places a significant emphasis on timely
delivery of positive decisions in the intervening months. BWEA
would therefore suggest that DTI intervenes directly by sending
the "Renewables Statement of Need",[148]
contained in the 2006 Energy Report "The Energy Challenge"
and reiterated in the Energy White Paper, to all planning authorities
in the UK. A similar intervention occurred in April 2007 when
the Head of the Planning Division of the Welsh Assembly Government
wrote to Welsh planning authorities explaining what is expected
of those bodies in delivering Welsh renewable energy targets.
8. It will only be possible to unblock the
planning logjam by implementing measures like that outlined in
paragraph 7, and to that end a balanced system of incentives to
determine applications appropriately within set time limits, together
with penalties for not doing so, should be put in place. Planning
fees have been increased recently, so local authorities should
have the resources they need to secure the expert advice required
to accelerate the decision making process. BWEA has also been
concerned about the propensity of planning inspectors to make
decisions on appealed projects that are also inconsistent with
PPS22. However, after recent proactive engagement on the part
of BWEA with DCLG and the Planning Inspectorate, we are hopeful
that this situation can be remedied.
9. It is also highly important that central
Government acts to enforce current policy guidance, otherwise
in the new situation envisaged under the proposed planning reforms,
where local authorities are supposed to be guided by new National
Planning Statements, onshore wind projects will still be rejected
by local authorities. This will only add to the expense and time
needed to determine an application, not only for the developer
but also for the local authority, particularly if the former is
awarded costs from any appeal procedure.
10. In the offshore sector, consents have
been awarded for the first Round Two projects, and in general
the system is comprehensible and working reasonably well. We have
some concerns, however, regarding the interaction between the
licencing proposals in the Marine Bill White Paper and those in
the Planning White Paper. The latter proposes that the IPC has
the final say for offshore generating projects of 100MW or more,
while smaller projects are decided by the proposed Marine Management
Organisation. While BWEA is still considering its position on
this split responsibility, there is the distinct possibility of
confusion, inefficiency and inconsistent decision-making if this
new structure goes ahead.
11. The other key non-economic constraint
to the deployment of wind power is access to electrical networks,
both transmission and distribution. The main issue for our industry
is that access to and management of the transmission network is
still approached on the basis that large, dispatchable central
generators are assumed to be the norm. Smaller, dispersed generators
which generate when their resource is available are difficult
to accommodate within this model. Changing the ground rules to
expedite connection and allow more variable generation onto systems
is taking a long time; BWEA's perception is that this process
can be accelerated, but to do so would require a change to Ofgem's
remit so that sustainable development (and in particular carbon
emission reduction) is promoted to have equal status with the
priority of reducing cost to the consumer. This would free up
National Grid to be more creative in solving these problems. Ofgem
has been more proactive recently in promoting the sustainable
development agenda, which BWEA welcomes, but in our view it is
still too tightly focused on consumer protection, which interferes
with the UK's ability to move swiftly to a low-carbon economy.
12. In addition, planning and delivering
the enhanced grid infrastructure required to transmit power from
where the wind blows strongest (and waves and tides are best exploited)
will be challenging. This is where the planning reforms that Government
is proposing are likely to have the most beneficial effect in
ensuring the growth of renewable generation.
13. The third key issue affecting deployment
of wind power is the economics, and here there has been welcome
progress in bringing stability to the market. The detailed proposals
regarding the reform of the Renewables Obligation (RO) contained
in the Energy White Paper showed clear evidence of Government
taking on board the response of the renewables industry to the
preliminary consultation of late 2006. BWEA believes that the
current reform package is a suitable platform for growth in the
short to medium term, so long as the planning and grid issues
are resolved.
14. Welcome as this outcome is, it is becoming
very clear that there will need to be further change if growth
is to be sustained into the long term, and growth is required
to meet new commitments. The sudden end of the RO in 2027/28 will
begin to deter investment in new renewable generating capacity
from about 2012 onwards, starting with the more expensive technologies,
particularly offshore wind. This is because the period under the
RO that investors will be able to recoup their outlay will get
progressively shorter: there will come a point where the income
available under the RO will not sustain the investment, and new
build will stop. Government's own analysis[149]
clearly shows this effect, with new capacity build peaking in
about 2012-13 and dropping away to nothing in about 2020. Even
with a strong carbon price signal, the abrupt end of the RO will
inevitably disrupt investment.
15. While a solution to the 2027 issue is
required to meet the current "aspiration" to have 20%
of UK power from renewables in 2020, further change will be needed
if the UK is to meet the likely commitments required under the
EU 20% by 2020 renewable target. This target is for all energy
use, and given the resources and relative development of technologies
in the power, transport and heating/cooling sectors, the renewable
electricity contribution to this figure will have to be much more
than 20%. European Commission analysis indicates this contribution
would have to be 34% for the EU as a whole, compared to the 19%
likely to be delivered by 2010. While the UK is far behind in
terms of renewables' contribution to current energy supply (now
about 2%), this country has considerable renewable resources,
and thus might be expected to deliver around the EU average. The
Government's current `aspiration' to have 20% of our power from
renewables in 2020 will thus be inadequate. The RO, even when
reformed in line with the current reform proposals, will not deliver
this. Either it will have to be extended further, or an additional
system put in place to deliver the extra power. What such a system
might look like would be dictated by the resources favoured to
provide that power. BWEA believes that offshore wind has a significant
role to play here.
16. While the exact target that the UK will
have to aim for under the EU 20% objective is not yet clear, BWEA
believes that 20-25,000MW of offshore wind is both necessary for
the prospective share, and possible by 2020. In order to get there,
however, some key actions must be taken soon. First and foremost
is that urgent steps must be taken to roll out a site award process.
Given that delivery of first power from a project follows some
seven years after site award, all the capacity that can possibly
contribute in 2020 will have to have signed agreements to lease
by about 2013. Under certain assumptions about project attrition
rates, this means `rounds' of awards every year for the five year
period 2009-13 of perhaps 5,000MW each. This is comparable to
Round Two, which was for a maximum of 7,200MW. This is clearly
challenging, but the industry, Government and Crown Estate are
all taking steps to make it happen: BWEA is encouraged by commitments
in the Energy White Paper to further site award, though we believe
it has to happen faster than the timetable outlined there, both
to ensure delivery by 2020 and to avoid a dip in delivery between
Round Two and future projects, which will impact supply chain
investment.
17. The prospects for the other technologies
that BWEA champions, wave and tidal stream, are less clear. However,
the magnitude of the available resource means that the UK could
potentially supply 15-20% of its generation needs from this sector
alone.[150]
Currently only a handful of devices are approaching first commercial
deployment, and these have been slower to come through than had
been hoped. This has meant that the project support available
under the Marine Renewables Deployment Fund has not yet been called
upon. Further, the Emerging Technologies band under the reformed
RO gives 2ROC/MWh, which will not provide enough revenue for post-MRDF
projects to achieve commercial viability—which Government
itself acknowledges. The wave and tidal sectors are consequently
in a very uncertain position: it is clear that funding beyond
the MRDF will be required within the period covered by the current
Comprehensive Spending Review, yet Government will not commit
more money while the MRDF remains unspent. This unfortunate position
is further complicated by the very confusing proliferation of
funding streams for new energy technologies, as discussed below.
However, the Government has invested relatively heavily in wave
and tidal already, creating an unrivalled infrastructure, both
physical and intellectual. Were it to waver now, failing to put
in place a clear path from the MRDF to the RO at 2ROC/MWh, that
investment would be wasted as other countries overtake us. That
is a real possibility, as evidenced by the recent vote in the
US Congress to devote $200m of federal funds to wave power research.
18. Considering the wider landscape for
renewable technology research, development and demonstration,
Government will have to act quickly to resolve the current confusion
and ensure that the maximum benefit to the UK economy is delivered.
What is appropriate varies by technology: onshore wind is a mature
technology, and future R&D will be primarily driven by manufacturers,
from their own budgets, though some complementary innovation may
result from European and national co-funding; for offshore wind
there is more scope for Government to support UK companies in
developing key technologies and techniques; in the wave and tidal
sector, a sustained commitment to pull these emerging technologies
into the market will bring significant industrial rewards, with
UK firms becoming world leaders. Consequently, Government should
be providing a coherent set of funding streams, each tailored
to the needs of technologies at different stages of development.
19. What we have in this field is an extremely
opaque set of mechanisms, with no clarity on how they interrelate,
and at this stage no certainty about how much money will be available
to fund which technologies. A number of different schemes are
being brought forward, the most important of which appear to be
the Energy Technologies Institute and the Environmental Transformation
Fund. However, these are being developed with very poor engagement
with some of the industries they are apparently being set up to
support. BWEA fears that priorities that are set without appropriate
engagement will not be suitable, opportunities will be missed,
and money spent inefficiently. We believe Government must act
quickly to clear up the confusion and provide transparency to
these processes.
July 2007
146 Up to date statistics on the progress of wind
power in the UK can be found on the BWEA website, at www.bwea.com/ukwed/index.asp Back
147
DCLG statistics: www.communities.gov.uk/pub/50/DistrictCouncilsLondonBoroughsUnitaryAuthoritiesandNationalPark
Authorities-id1505050.pdf Back
148
http://www.dti.gov.uk/files/file32017.pdf Back
149
Reform of the Renewables Obligation: What is the likely impact
of changes? Report by Oxera for DTI, May 2007. URN 07/949. Back
150
Future Marine Energy. Results of the Marine Energy Challenge:
Cost competitiveness and growth of wave and tidal stream energy,
Carbon Trust, January 2006. CTC601. Back
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