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UK Renewable Energy Policy

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Presentation on theme: "UK Renewable Energy Policy"— Presentation transcript:

1 UK Renewable Energy Policy
Ted Hayden Strategy & Policy Advisor, Office For Renewable Energy Deployment 6 June 2013

2 Agenda Department of Energy & Climate Change
Our carbon and renewables targets UK Renewable Energy Policy Office for Renewable Energy Deployment (ORED) Priority activities Support measures Progress & Benefits Emerging issues and opportunities

3 DECC Responsibilities
The Department of Energy & Climate Change (DECC) works to make sure the UK has secure, clean, affordable energy supplies and promote international action to mitigate climate change. Energy security Action on climate change Renewable energy Affordability Protect the most vulnerable and fuel poor households Ensure competitiveness for energy intensive industries Supporting growth

4 The legal framework Ambitious binding targets
The Climate Change Act set a target to reduce emissions by at least 80% by 2050 relative to 1990 levels and by at least 34% by The EU Renewable Energy Directive requires the UK to meet 15% of energy demand from renewable sources by 2020 (from 3.8% in 2011) Accountability Publish policies and proposals on how we will meet our carbon budgets and report annually on progress Set up the independent Committee on Climate Change (CCC)

5 Making it happen Green Deal / ECO Industrial policies e.g. CRC
Using less energy Renewable Heat Incentive Greener and more efficient heating Renewables Obligation Electricity Market Reform Low carbon large-scale electricity generation Feed-in Tariffs Scheme Decentralised electricity generation Renewable Transport Fuels Obligation Electric vehicles Greener transport

6 The Public are Supportive
UK Renewable Energy The UK has some of the best wind, wave and tidal resources in Europe . All major renewable energy technologies are supported and are seen as a key component of the future low-carbon mix. The Public are Supportive 8 in 10 people support the use of renewable energy to generate electricity Solar power had the highest backing (82%), followed by offshore wind (72%) and wave and tidal (71%). Onshore wind was opposed by 13% of respondents. 8 in 10 people support the use of renewable energy to generate electricity:- (DECC’s latest attitudes tracker). Recent interviews showed only 4% of the population did not support utilising renewable energy. Among specific sources, solar power was found to have the highest level of backing (82%), followed by offshore wind (72%) and wave and tidal (71%). Onshore wind was opposed by 13% of respondents.

7 Office for Renewable Energy Deployment (ORED)
Renewable Energy Targets In 2009 The Government published its Renewable Energy Strategy and set up the Office for Renewable Energy Deployment (ORED) to drive forward renewable energy in the UK. ORED addresses deployment issues by working alongside central Government Departments, local and regional authorities, stakeholders and other NGOs. Every year the government publishes the UK Renewable Energy Roadmap. We took advice from the Committee on Climate Change (CCC) and worked with the renewables industry to assess how much renewable energy can be generated for electricity, heat and transport up to 2020 and identify potential barriers.

8 Office for Renewable Energy Deployment
Enabling cost effective delivery of renewable energy as a core part of the UK’s low carbon energy future Increasing deployment of renewable energy to 2020 Ensuring public understanding and acceptance of renewable energy deployment Ensuring renewable energy is embedded as part of the Government's energy strategy up to 2050 Driving down the cost of renewable energy and ensuring value for money for consumers Delivering jobs and investment within the UK from renewable energy projects

9 We have a 15% renewable energy target as set by the European Union.
Scale of the challenge: The UK must secure a factor of ten increase in renewable energy up to 2020, compared with an average factor of two increase across Europe – all while increasing demand. Sources: ORED (2013)

10 There are many renewable technologies, with very different costs and potential. Only a subset are ‘critical’ for meeting a target of 15% renewable energy by 2020 The EU defines ‘renewables’ widely, as “energy from renewable non-fossil sources. We can use any of these to meet a target of 15% of energy use in 2020, equal to 220 – 230 TWh of generation. But the following eight technologies will be most important. Very large deployment potential - but deeper / further out sites are expensive. Working to reduce cost by 2020 1. Offshore Wind In 2020: 33–58TWh/yr Heat from wood, waste, sewage etc. mainly for industrial and commercial use. 2. Biomass Heat In 2020: 36–50TWh/yr Contributes around 40% of total renewable electricity 3. Biomass Electricity In 2020: 32–50TWh/yr Can be widely deployed, but issues with their placement and public desirability 4. Onshore Wind In 2020: 24–32TWh/yr Uses electricity to pull heat from air or ground (‘reverse refrigerator’). 5. Heatpumps In 2020: TWh/yr Classic panels on roofs to generate electricity from sunlight. Small to industrial scale 6. Solar PV In 2020: 6–18TWh/yr Small contribution to 2020, but potential to provide much more in future. 7. Marine Energy In 2020: 1TWh/yr Much theoretical potential but must ensure sustainability. 8. Renewable Transport In 2020: < 44TWh/yr Marine energy. UK a leader – we support its innovation Sources: Definition from EU, Directive 2009/28/EC; TWh figures from DECC(2011 and 2012), Renewables Roadmap

11 Renewables Obligation (RO)
Achieving these aims relies on five main policies for driving renewable deployment Three policies are paid for by energy suppliers, who pass costs onto consumers. Renewables Obligation (RO) Contracts for Difference (CfDs) Feed-in tariffs (FITs) scheme Renewable Heat Incentive (RHI) Supports heat generation from things like biomass boilers or heat pumps via a tariff paid proportionate to generation. Renewable Transport Fuel Obligation (RTFO) DfT regulation requiring fuel suppliers to include biofuel in transport fuel. All figures are p.a. Source: DECC(2013), DECC policy and economists * figure refers to real 2012 prices. RO figures consistent with govt. response to RO Banding Review consultation, July 2012

12 Renewables Obligation
Currently main policy for supporting large scale renewable electricity deployment New bands from 1 April 2014 Closes to new generation in 2017 Contracts for Difference will take over as our main source of support for large scale electricity generation projects Between 2014 and 2017, new renewable energy projects will be able to make a one-off choice between the two mechanisms

13 Feed-in tariffs Over 400,000 installations by January 2013
Comprehensive review completed during 2012 Greater certainty for industry and generators and reduced impact on consumer bills Over 400,000 PV tariff reductions maximum quarterly, depending on take-up Details on

14 Electricity Market Reform
Contract for Difference (CfD) Greater visibility, long term stable cashflows, indexed to inflation For renewables, 15 year fixed revenue contracts paid for energy produced CCS and nuclear projects also eligible Capacity Market New long-term contracts for capacity, minded to let first contracts from 2014 Gas generation eligible Carbon Price Floor Long-term certainty of the cost of carbon in the UK Starts April 2013 So let’s look at the shape of Electricity Market Reform itself EMR has three equally significant objectives maintaining security of supply, reducing carbon emissions and keeping energy bills affordable for consumers. The infrastructure challenge is significant with around a fifth of the UKs power stations are due to close this decade. Given the pressures on incumbent investors and the investment challenge, EMR has been designed to broaden the appeal of the UK low carbon sector to a new class of investors. EMR will provide a framework to encourage new sources of capital to enter the market. Our long-term vision is for a competitive market where low-carbon technologies participate on a level playing field. But until technology matures to that point, the Government will ensure that different technologies can attract investment through Contracts for Difference. Early Delivery Not just for new nuclear Transitional CfDs for some renewable and CCS projects For projects seeking to achieve financial close or make major supply chain commitments this year

15 Because of the low starting point, deployment needs to be steep.
Renewable Energy in the UK: Historic and Projected, Indicative contribution: demand needed from renewables in 2020 Of the three sectors making up our 2020 goal: Renewable electricity has made a good start. Heat and transport are have challenges Renewable electricity generation increased from 9.4% in 2011 to 12.5% by the end of 2012. Sources: DECC(2012), Renewables Roadmap; indicative contribution based on possible sharing of burden as set out in HMG(2009), Renewable Energy Strategy

16 A 250% growth in capacity since 2007
N.B. for the purpose of comparison, 10MW is roughly equal to five onshore wind turbines, or two offshore turbines

17 A strong forward pipeline
April: Britain’s largest rooftop solar installation (>20,000 panels) fitted onto Bentley factory in Crewe 7th March: London Array officially became world’s largest operational offshore wind farm. Final completion due later this spring 30th Jan: new 35-turbine ‘Westermost Rough’ windfarm off river Humber, worth ~ £860m. Enough for annual power of > 200,000 homes Sample of recent major announcements (MW) Under Construction Awaiting Construction Pre-Consent Biomass 254 2970 831 Offshore Wind 1538 2017 7292 Onshore Wind 2294 4456 6774 Waste 339 1003 175 Source: Pipeline data from REPD (January 2013). Investment figures from developer announcements.

18 The growth in renewables is bringing other advantages
The growth in renewables is bringing other advantages. Government has two main further goals of maximising economic benefit while minimising cost We have a very positive story to tell already, with jobs created UK-wide Since 2010 DECC has recorded investments in large scale renewable energy totalling over £29 billion, with the potential to support around 30,000 jobs. Job figures based on ORED analysis of developer announcements

19 Impact on energy prices and bills

20 The next few months and years present both challenges and opportunities
Energy Security Nuclear and Unconventional Gas Green Deal rollout Onshore wind Joint Projects? Transition to EMR Deal support and investor confidence Strategic clarifications and additions Cost reduction Heat and transport Bioenergy sustainability

21 Department for Energy and Climate Change 6 June 2013
Website: Contact: Department for Energy and Climate Change 6 June 2013

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