Memorandum submitted by The Crown Estate
SUMMARY
— The Crown Estate is committed to working
with Government, developers and all stakeholders to help ensure
that the aspirations of the UK for offshore renewable energy are
met.
— There is excellent potential within UK
waters for wind and marine renewable energy deployment with an
industry keen to exploit this potential.
— Significant investment in Britain's electricity
network is required if the Government's targets for renewable
generation are to be met.
— Offshore wind is best placed to deliver
renewable energy targets at scale and in the necessary timeline.
— The offshore transmission regime must
be allowed to consider the provision for more than one offshore
energy installation at one time. The Crown Estate advocates a
strategic approach to the planning and design of the offshore
grid.
1.0 The Croate
The diverse portfolio of The Crown Estate comprises
marine, rural and urban properties across the whole of the United
Kingdom valued in total at over £7 billion (2006-07 figures).
Under the 1961 Crown Estate Act, The Crown Estate is charged
with maintaining and enhancing both the value of the property
and the revenue from it consistent with the requirements of good
management. We are a commercial organisation guided by our core
values of commercialism, integrity and stewardship.
The Crown Estate's entire revenue surplus is
paid directly to HM Treasury for the benefit of all UK taxpayers;
in 2006-07 this amounted to £200.1 million.
1.1 The Marine Estate
Our Marine Estate comprises virtually the entire
UK seabed out to the 12 nautical mile territorial limit,
in addition to the sovereign rights to explore and make use of
the natural resources of the UK continental shelf, with the exception
of oil, coal and gas. We own approximately 55% of the foreshore
and around half the beds of estuaries and tidal rivers in the
United Kingdom. A wide variety of businesses and organisations
conduct economic and conservation activities across our Marine
Estate, with an estimated total value of some £46 billion
providing almost 890,000 jobs. Over 20% of our coastal estate
is leased out to conservation bodies.
The Crown Estate manages its marine assets on
a commercial basis, guided by the principles of sustainable development
and social responsibility. We take a consistent approach to the
management of our activities around the UK, whilst retaining flexibility
to take local factors into account whenever necessary.
The Crown Estate can bring to bear an unparalleled
level of knowledge and expertise on issues relating to management
of the foreshore, the territorial seabed and continental shelf.
This knowledge includes marine resource management (eg marine
aggregate extraction, marine renewable energy installations, seabed
infrastructure, aquaculture and new activities such as gas storage
and carbon capture and storage) and its interplay with other marine
activities such as defence, energy, navigation and marine safety.
We have a strong understanding of the needs of a broad range of
sea users, as commercial partners, customers and stakeholders.
2.0 Introduction
This response to the Committee's call for evidence
is informed by The Crown Estate's extensive experience of managing
activities within the marine environment and, within its core
remit, of balancing economic activity with stewardship of natural
resources for future generations to use and enjoy.
In June 2008, The Crown Estate announced the
third leasing round for offshore wind energy. This is intended
to deliver up to 25 GW of new offshore wind generation by
2020. In addition during 2008, a leasing application process for
offshore wind in Scottish Territorial Waters was also held with
6.4GW of exclusivity agreements being granted in January 2009 pending
the outcome the Scottish Government's SEA. Finally, The Crown
Estate are currently holding a tender for marine renewable energy
installations in Pentland Firth. It is anticipated that up to
700MW of marine renewable energy will be achieved by 2020, but
there is the potential for considerably more to be delivered from
the Pentland Firth and also from other areas around the UK coast.
2.1 Our view
THE OPPORTUNITIES
AND CONSTRAINTS
The generation of around 33GW of offshore wind
could equate to 80,000 jobs. Supplier and Industry want stable
policy environments and confidence for many years ahead. There
is excellent potential within UK waters for wind and marine renewable
energy deployment with an industry keen to exploit this potential.
One of the biggest challenges facing UK renewable
targets centres around innovation and how the UK can foster it.
The UK needs to consider what mechanisms exist for getting the
innovators with ideas and concepts to a stage where they can demonstrate
their technologies sufficiently for developers or investors to
fund. The UK has some successful and well run schemes but we need
to consider if these are enough.
Offshore wind is best placed to deliver renewable
energy targets at scale and in the necessary timeline.
A consistent Government policy framework (targets,
regulations, grid, economics, supply chain) is essential. Investment
will move to the countries with the best framework. Carbon pricing
impacts electricity price but undervalues renewable energy which
has additional values of zero water footprint, diversity of supply,
stable cost of generation, new jobs.
UK has a window of opportunity to build an offshore
wind industry which will secure UK renewable targets and create
income for UK plc through exports of equipment and potentially
the export of power. Industry will not develop supply chain and
new technologies if they can see certain existing technologies
are uneconomic.
The supply chain (for offshore wind in particular)
is currently heavily constrained, with a very limited number of
suppliers available, in particular for offshore wind turbines.
There are also constraints and long delays in the supply of offshore
cables and transformers together with a lack of installation vessels
for construction. This is having a marked effect on the time taken
for developers to construct offshore wind farms following award
of the requisite consents. It is evident that if the supply chain
could be presented with a steady long-term market, then it would
be more likely to commit to the significant investment required
in order to gear up to the needs of the UK, presented by the 2020 targets.
Certainty and confidence in the market could be provided by greater
coordination in the site development process and improvements
to the planning system and a more efficient delivery of consents.
There is a need for investment in key ports
to meet the needs of the new offshore renewables industries. We
are keen to work with regional Enterprise organisations and industry
to inform them of the supply chain development potential and the
regional benefit that is associated with port use in offshore
wind and marine renewables. Opportunities could move to continental
ports if requirements of the offshore wind industry cannot be
met. This will add cost to offshore wind projects and may limit
the rate of installation in competition with other countries looking
to meet their 2020 renewable energy targets.
Skilled personnel are an important part of the
supply chain. The Government could encourage educational and professional
institutions to increase and promote their levels of training
and support in the areas of engineering and science. This could
include a greater emphasis on the teaching of science and engineering
in schools and Universities together with schemes such as apprenticeships
in engineering or renewables technology.
DEMAND AND
INVESTMENT IN
LOW CARBON
TECHNOLOGIES
We are seeing the impacts of a downturn on demand
and investment in low carbon technologies. The previous finance
model has collapsed reducing build out of projects, reduced supply
chain investments and halting Research and Developments. Market
confidence will return follow with Government confidence. Obstacles
to investment include risk factors; developers want to see ideas
de-risked through prototype demonstration and evidence in the
ability to deliver.
RESEARCH AND
DEMONSTRATION PROJECTS
The UK government should consider setting up
a National laboratory for Renewable energy research like RISO
(http://www.risoe.dk/Research/sustainable_energy.aspx) in Denmark
and NREL (http://www.nrel.gov/) in the US. The Spanish have CENER
(http://www.cener.com/en/index.asp ) and the Germans have DEWI
(part government funded part commercial) http://www.dewi.de/dewi/index.php
We have NaREC (http://www.narec.co.uk/) in the
UK and it does excellent work but it needs to be massively expanded.
The ETI and Carbon trust are contributing to the acceleration
of technology. Both these organisation have programmes that are
aiming to accelerate new wind technology for offshore wind and
they should be further encouraged. A successful wind industry
needs a suitable and sizable research establishment.
There are a number of emerging UK wind turbine
companies with great concepts for cost effective large scale offshore
turbines that will take the Offshore wind industry to the next
level and these companies need support. The Crown Estate has had
great interest in demonstration centres and all major offshore
turbine manufacturers are keen to demonstrate their technology
in the UK. But all are unsure of where the required funding for
these will be found. If they don't have access to funding their
interest will remain just that and they will test and manufacture
their new turbines in other countries, such as Germany or Denmark.
ACCESS TO
THE GRID
It is essential that improved access to the
National Grid system is implemented within a reasonably tight
timeframe for offshore wind, wave and tidal developers. Failure
to deliver improved access will inevitably result in developers
taking their technology to other locations, possibly abroad. The
Crown Estate has been instrumental in seeking to improve grid
access for all offshore renewable energies and will, in conjunction
with others, continue to seek early resolution to this problem.
Developing offshore transmission links will allow energy projects,
including those in remote areas, to improve access to the wider
UK and European markets.
INVESTMENT AND
STRATEGIC PLANNING
Significant investment in Britain's electricity
network is required if the Government's targets for renewable
generation are to be met. In December 2008, The Crown Estate published
a connection study in support of Round 3. This work considered
a scenario for connecting 25GW of offshore wind. The study identified
that approximately £10 billion of network reinforcements
would be needed. Of this, approximately 7% related to onshore
works.
In order that the most efficient and economic
solution for network investment is delivered, it is essential
that a strategic plan is developed and implemented. The Crown
Estate commend the work undertaken by the Electricity Networks
Strategy Group (ENSG), established under the auspices of DECC,
in identifying necessary reinforcements for the onshore transmission
network.
The offshore transmission regime should not
be looked at in isolation from the onshore system. The most cost
effective solutions can be found through considering the best
overall solution to optimise the building and operation of the
onshore and offshore network. In doing so, innovation and integration
with the use of High Voltage Direct Current (HVDC) technology
can be accounted for. Additionally, in order for the delivery
of offshore renewables to be made in the required timescales it
is essential that a long term view of network requirements are
taken and that relevant onshore planning and consenting is carried
out expeditiously.
The offshore transmission regime must be allowed
to consider the provision for more than one offshore energy installation
at one time. The Crown Estate advocates a strategic approach to
the planning and design of the offshore grid. This should be reflected
in a coordinated approach to the licensing of potential offshore
transmission assets.
3. Closure
We would be very willing to provide the Committee
with further information on any of the points we have raised above.
All of this response may be put into the public domain and there
is no part of it that should be treated as confidential.
May 2009
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