Presentation on theme: "UK Renewable Energy Policy"— Presentation transcript:
1 UK Renewable Energy Policy Ted HaydenStrategy & Policy Advisor, Office For Renewable Energy Deployment6 June 2013
2 Agenda Department of Energy & Climate Change Our carbon and renewables targetsUK Renewable Energy PolicyOffice for Renewable Energy Deployment (ORED)Priority activitiesSupport measuresProgress & BenefitsEmerging 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 securityAction on climate changeRenewable energyAffordabilityProtect the most vulnerable and fuel poor householdsEnsure competitiveness for energy intensive industriesSupporting 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% byThe EU Renewable Energy Directive requires the UK to meet 15% of energy demand from renewable sources by 2020 (from 3.8% in 2011)AccountabilityPublish policies and proposals on how we will meet our carbon budgets and report annually on progressSet up the independent Committee on Climate Change (CCC)
5 Making it happen Green Deal / ECO Industrial policies e.g. CRC Using less energyRenewable Heat IncentiveGreener and more efficient heatingRenewables ObligationElectricity Market ReformLow carbon large-scale electricity generationFeed-in Tariffs SchemeDecentralised electricity generationRenewable Transport Fuels ObligationElectric vehiclesGreener transport
6 The Public are Supportive UK Renewable EnergyThe 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 Supportive8 in 10 people support the use of renewable energy to generate electricitySolar 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 TargetsIn 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 futureIncreasing deployment of renewable energy to 2020Ensuring public understanding and acceptance of renewable energy deploymentEnsuring renewable energy is embedded as part of the Government's energy strategy up to 2050Driving down the cost of renewable energy and ensuring value for money for consumersDelivering 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 2020The 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 20201. Offshore Wind In 2020: 33–58TWh/yrHeat from wood, waste, sewage etc. mainly for industrial and commercial use.2. Biomass Heat In 2020: 36–50TWh/yrContributes around 40% of total renewable electricity3. Biomass Electricity In 2020: 32–50TWh/yrCan be widely deployed, but issues with their placement and public desirability4. Onshore Wind In 2020: 24–32TWh/yrUses electricity to pull heat from air or ground (‘reverse refrigerator’).5. Heatpumps In 2020: TWh/yrClassic panels on roofs to generate electricity from sunlight. Small to industrial scale6. Solar PV In 2020: 6–18TWh/yrSmall contribution to 2020, but potential to provide much more in future.7. Marine Energy In 2020: 1TWh/yrMuch theoretical potential but must ensure sustainability.8. Renewable Transport In 2020: < 44TWh/yrMarine energy. UK a leader – we support its innovationSources: 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 deploymentThree policies are paid for by energy suppliers, who pass costs onto consumers.Renewables Obligation (RO)Contracts for Difference (CfDs)Feed-in tariffs (FITs) schemeRenewable 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 deploymentNew bands from 1 April 2014Closes to new generation in 2017Contracts for Difference will take over as our main source of support for large scale electricity generation projectsBetween 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 2012Greater certainty for industry and generators and reduced impact on consumer billsOver 400,000 PV tariff reductions maximum quarterly, depending on take-upDetails on
14 Electricity Market Reform Contract for Difference (CfD)Greater visibility, long term stable cashflows, indexed to inflationFor renewables, 15 year fixed revenue contracts paid for energy producedCCS and nuclear projects also eligibleCapacity MarketNew long-term contracts for capacity, minded to let first contracts from 2014Gas generation eligibleCarbon Price FloorLong-term certainty of the cost of carbon in the UKStarts April 2013So let’s look at the shape of Electricity Market Reform itselfEMR 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 DeliveryNot just for new nuclearTransitional CfDs for some renewable and CCS projectsFor 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 2020Of the three sectors making up our 2020 goal:Renewable electricity has made a good start.Heat and transport are have challengesRenewable 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 Crewe7th March: London Array officially became world’s largest operational offshore wind farm. Final completion due later this spring30th Jan: new 35-turbine ‘Westermost Rough’ windfarm off river Humber, worth ~ £860m. Enough for annual power of > 200,000 homesSample of recent major announcements(MW)Under ConstructionAwaiting ConstructionPre-ConsentBiomass2542970831Offshore Wind153820177292Onshore Wind229444566774Waste3391003175Source: 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 costWe have a very positive story to tell already, with jobs created UK-wideSince 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
20 The next few months and years present both challenges and opportunities Energy SecurityNuclear and Unconventional GasGreen Deal rolloutOnshore windJoint Projects?Transition to EMRDeal support and investor confidenceStrategic clarifications and additionsCost reductionHeat and transportBioenergy sustainability
21 Department for Energy and Climate Change 6 June 2013 Website: https://www.gov.uk/government/organisations/department-of-energy-climate-change Contact:Department for Energy and Climate Change6 June 2013