Select Committee on European Union Twenty-Seventh Report

Chapter 6: Summary of Conclusions and Recommendations

Why 20% by 2020?

172.  We do not agree with witnesses who state that the target was reached purely on political grounds. We believe that as the target date has now been accepted in principle by the European Council the 2020 deadline should not be extended. (paragraph 27)

173.  We recommend that the Government increase their support for research into renewable technologies and ensure that the work of Government-funded research organisations is properly co-ordinated. (paragraph 28)

174.  We recommend that as part of its regular assessment of Member States' progress towards the target the Commission should consider whether emerging technologies such as wave and tidal power are likely to be disadvantaged by the strategy and if so whether further intervention or research support is necessary. (paragraph 29)

Guarantees of Origin

175.  Guarantees of Origin trading will very likely have to be relied on to fulfil some part of the UK's commitments. We believe, however, that a significant proportion of the 15% target should be met domestically to ensure that Guarantees of Origin trading does not undermine efforts to increase the UK's renewable generation capacity. (paragraph 38)

176.  We recommend that the Government specify soon the maximum proportion of the UK's target to be met using Guarantees of Origin trading so that the extent of their reliance on them to meet the target is known. (paragraph 39)

Energy efficiency and energy saving

177.  We believe that energy efficiency measures must form the starting point for the Government's drive to meet the 2020 target. The scale of the challenge facing the UK means that action is necessary on all fronts. (paragraph 55)

178.  We are disappointed that the Government are not consulting in depth on energy efficiency as part of their Renewable Energy Strategy work as this suggests that demand reduction will not be a central part of the strategy to meet the target. We believe the UK should commit to an energy reduction target, such as 20% by 2020, by the spring of 2009 with a fully worked-out strategy specifying the steps needed to achieve this. (paragraph 57)

Renewable heat and micro-generation

179.  We recommend the Government treat micro-generation and renewable heat technologies as being as important as large-scale electricity generation. To this end, we believe that the existing micro-generation grants should be increased and a system of grants specifically for renewable heat should be introduced. (paragraph 69)

180.  To reach the level of renewable heat the Government estimate could be achieved by 2020 we urge the Government to commit more fully to renewable heat than our evidence indicates is currently the case. (paragraph 70)

Potential technology mix

181.  In order to minimise the risk of the UK becoming reliant on wind power the Government must ensure that other technologies receive, where practical, the policy support needed to bring them to commercial viability as quickly as possible. (paragraph 76)

182.  It is necessary to await the economic, technological and environmental assessments for the Severn Barrage project before decisions can be made about whether it can be included as a deliverable resource. The Government should not rely on inclusion of the estimated generating capacity of the Barrage to reach the 2020 renewables target. (paragraph 78)

Security of supply

183.  We consider intermittency to be a manageable problem but one that will increase costs to consumers. However, the development of storage technologies and other options such as demand-side management could help reduce costs and, by reducing the need for reserve capacity, improve the economic and environmental performance of renewable energy. (paragraph 87)

Grid access

184.  We believe that "connect and manage" offers a more efficient use of grid and should be adopted. (paragraph 96)

185.  We believe that transmission operators will need to build in advance of firm commitments from developers if sufficient grid is to be built in time for 2020. We welcome the move away from "finance and connect" proposed in the Transmission Access Review. Ofgem will need to monitor this work closely to minimise the risk of asset stranding. Parliament should be informed annually of grid investments planned under this system and Government should report to Parliament on the use of such grid. (paragraph 104)

186.  We strongly support the Government's proposal to use "connect and manage" to reduce the grid queue and believe that this system should be adopted immediately and permanently. (paragraph 106)

187.  We call on Ofgem and the Government to keep the issue of locational pricing under review. (paragraph 110)

Planning

188.  We are concerned that consulting on how to improve planning measures still before Parliament does not create the stable and predictable planning environment needed to encourage investment in renewable energy. The policies resulting from the UK Renewable Energy Strategy consultation must be as comprehensive and definitive as possible. (paragraph 126)

189.  We believe that strong measures are needed to improve the energy planning system. We support the proposals described in the UK Renewable Energy Strategy consultation document but believe that further measures will be needed. The Government should apply the provisions of the Electricity Act 1989 to all renewable generation capacity above 20MW. (paragraph 127)

Supply chain bottlenecks

190.  We agree that with a sufficiently strong commitment to renewables some investment will be stimulated. However, the current condition of the supply chain means that there is simply not the industrial capacity to increase the UK's renewable generation fast enough, regardless of the wishes of energy suppliers. Given the short timeframe involved, we urge the Government to use the analysis already carried out and build on their general manufacturing strategy and to come forward with proposals specific to overcoming the problems of the supply chain in the renewables industry. We look forward to reviewing such proposals. (paragraph 135)

191.  We recommend that the Government share details of plans for renewable energy proposals widely so that market information is available to all parts of the supply chain. (paragraph 136)

Regulation

192.  Ofgem must encourage renewables development whilst also protecting consumers' interests. (paragraph 141)

Renewables Obligation and feed-in tariffs

193.  We recommend that a system of feed-in tariffs be created to work alongside the RO. (paragraph 155)

194.  We are concerned that the provisions of the Energy Bill before Parliament appear already to have been superseded by the UK Renewable Energy Strategy consultation. This does not constitute clear and stable policy signals. We recommend the Government amend the Energy Bill now and increase the RO target from 20% to 40% by 2020. (paragraph 156)

195.  We urge the Government to act quickly following their consultation so that energy companies have a clear policy environment in which to make investment decisions. (paragraph 157)

Cost to the consumer

196.  We believe that although an increased use of renewables will cushion consumers from fluctuations in gas and oil prices, meeting the UK's 15% target will result in consumers paying more for their energy. This underlines the need for a commitment to an effective energy efficiency strategy. (paragraph 163)

Is the target achievable?

197.  We believe that the EU's 20% by 2020 target, and the UK's 15% national target, should be regarded as a stepping-stone, not as a goal in itself. Without political momentum, the UK will continue to under-perform on renewable generation and will be in an increasingly poor position to move away from a reliance on fossil fuels. We are content, therefore, for the Government to agree to the proposed Directive but in our judgement the target can only be met if at least the conclusions and recommendations of this report are followed. (paragraph 170)

198.  In order to provide an incentive for technologies and investments not fully deployed by 2020, but which will require commitment and resources before then, the Government and the EU should consider also adopting a target for 2030 so as to both sustain the overall momentum for renewables and provide an incentive for still emerging technologies, such as wave and tidal power. (paragraph 171)

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