| Recommendations |
Strategy and policy direction
REDUCING THE COST OF WAVE AND TIDAL ENERGY
1. The Low Carbon Innovation Group is right to focus on reducing the cost of energy, but it should be more specific about the progress it would like to see. Without setting out its expectations clearly, it will be difficult to assess the efficacy of policies and to make decisions on the future funding for the marine energy sector. We recommend that DECC and the LCIG adopt a formal cost of energy target of 14p/kWh by 2020. This will give a clear indication of Government expectations to the industry. (Paragraph 35)
2. We recognise the Department's concerns about introducing a deployment target too soon in the development of the technology. However, we also recognise the value that targets can have in demonstrating political commitment to the sector. A more visionary approach from Government could help to boost confidence and to drive the pace of development of the sector. The Government should not rule out setting an ambitious deployment target for marine renewables in the future and should consider introducing such a target if cost reductions to 2020 remain on track (see paragraph 36).(Paragraph 41)
CO-ORDINATION BETWEEN STRATEGIC FUNDING BODIES
3. At a time when resources are limited, it is essential that money is spent wisely and efficiently. The complicated funding landscape for marine renewables creates a risk of overlaps and inefficiencies in the way the programmes are funded. We are pleased that the Minister acknowledged that the funding landscape is too complex and recommend that DECC take steps (beyond the creation of the Low Carbon Innovation Group) to address this problem.(Paragraph 50)
4. The£20 funding provided by DECC to underpin a world-leadingindustry is not large, even when combined with the additionalfunding provided by the Scottish Government. DECC must ensuremaximum value for money and must avoid duplication and overlapsbetween the schemes. The Department should identify how it willachieve this. We urge DECC to try to keep the industry in mindwhen discussing options with the Scottish Government and recommendthat DECC minimises bureaucracy for applicants, for example throughrunning a joint pre-qualification process. (Paragraph 62)
5. Wewelcome the initial support from the Department for accessingother sources of funding such as European NER 300 and Green InvestmentBank. As the UK is a leader in the development of wave and tidalenergy, DECC should actively promote the potential benefits ofmarine energy at the European level and maximise the opportunitiesfor UK-based marine renewable projects to benefit from Europeanfunding schemes. (Paragraph 67)
6. Theindustry needs clarity about the level of revenue support it canexpect to receive beyond 2017 as soon as possible. We welcomethe Minister's commitment to provide absolute certainty on thisissue by 2013-14. We will monitor whether DECC keeps to this timetableand urge the Department to deliver its decision in 2013 ratherthan 2014. (Paragraph 75)
7. Revenuesupport should be reduced over time as technologies mature andcosts fall. The Government needs to consider carefully how itwill implement any changes to the level of revenue support infuture, including the rate at which reductions are made and thecriteria that are used to determine when reductions are introduced.Government must communicate its intentions on both these pointsclearly to industry at the same time as it announces the levelof support that will be provided beyond 2017. Above all, the Governmentmust avoid a repeat of the situation with solar PV Feed-in Tariffs,where drastic reductions were made at very short notice. (Paragraph77)
8. TheGovernment has proposed increasing the level of support to waveand tidal energy devices that are deployed before 2017. Sincevery little deployment is expected before this date, the overallcost to the consumer will be insignificant. However, looking beyond2017, the Government will need to balance the interests of consumersagainst the needs of the industry. The Government should considercapping the total volume of capacity that can benefit from revenuesupport in any future support regime, perhaps at the level ofany deployment target.
Other barriers to the development of marine renewables
9. Theavailability of grid connections will be a critical factor indetermining the future of wave and tidal power in the UK. We welcomeDECC's acknowledgement of this and urge the Department to ensurethat investment in new grid connections keeps pace with developmentof the industry. (Paragraph 82)
10. Requirementson the industry to underwrite the cost of new grid connectionsplace an excessive burden on individual developers. DECC shoulduse the Marine Energy Programme Board to explore opportunitiesfor establishing consortia that could collectively underwritenew links. If this approach is unsuccessful, DECC may need toconsider the case for Government taking on this liability. (Paragraph87)
ENVIRONMENTAL MONITORING REQUIREMENTS
11. The development of wave and tidal energy must not happen at theexpense of marine biodiversity. Because of the lack of data aboutmarine wildlife in UK waters, developers may only discover thatan area is environmentally sensitive late in the development process,leading to costly changes in plans. Identifying potentially sensitiveareas in advance of leasing rounds would avoid this risk and reassureconservation organisations that the deployment of marine renewableswill not threaten marine flora and fauna. We recommend that DECCcooperates with the industry and other interested stakeholdersto deliver a baseline survey of areas of strategic interest, inadvance of any further leasing rounds. The Marine Energy ProgrammeBoard would provide a good forum for this discussion. In addition,an agreement is needed on the criteria that would be used to determinewhether a particular area was too environmentally sensitive toallow development. This could be drawn up by an independent bodyof expert marine scientists, like the Science Advisory Panel forthe Marine Conservation Zones, supported by relevant statutorybodies, such as the Joint Nature Conservation Committee, NaturalEngland and the Marine Management Organisation. This body couldalso have the power to review whether criteria have been appropriatelyapplied when disputes emerge.
12. Weare concerned about the shortage of skilled scientists and engineersin the workforce. The Government must encourage more studentsinto these disciplines now so that they are able to take advantageof the new jobs that could be created through a UK-based waveand tidal industry. We note that students may be more likely toselect science and engineering subjects if they felt confidentthat there would be suitable jobs available once they qualified.The level of confidence that DECC can provide about the futureof the wave and tidal industry in the UK may therefore have animpact on education and training choices. (Paragraph 95)
13. Werecommend that DECC establishes a new working group under theMarine Energy Programme to consider public engagement. Its remitshould include identifying best practice and suggesting methodsfor effective public engagement ahead of any new marine energyprojects. It could also collate a list of common concerns expressedby members of the public so that they can be addressed up frontin the development of any new project. Public understanding andacceptance of new technologies is important in its own right,but it may also contribute to a smoother, more consensual andtherefore quicker planning and consenting process.