1. Apex Paris - October 2007 1 UK and European Renewable Energy trends and implications for energy markets Philip Wolfe Renewable Energy Association www.r-e-a.net Philip Wolfe Renewable Energy Association www.r-e-a.net

2. Apex Paris - October 2007 2 Renewable Energy Association More than 500 members >multinationals to ‘one-man bands’ Renewable heat, power, fuel & CHP All technologies: >Biomass >Bioenergy >Solar >Wind >Marine >Hydro >Heat pumps

3. Apex Paris - October 2007 3 This presentation EU energy targets Possible scenarios for 2020 Policy implications Trading and market implications

4. Apex Paris - October 2007 4 A lot of 20%’s The EU commitments for 2020 Emissions reductions Binding >20% unilateral, or >30% if multilateral Energy conservation Non-binding >20% below current projections Renewables Binding >20% of total energy >10% of transport fuels Emissions reductions Binding >20% unilateral, or >30% if multilateral Energy conservation Non-binding >20% below current projections Renewables Binding >20% of total energy >10% of transport fuels total energy

5. Apex Paris - October 2007 5 Renewable trends in Europe

6. Apex Paris - October 2007 6 UK Energy White Paper “The 20% renewables target is an ambitious goal … by 2020, on the basis of existing policies, renewables would contribute around 5% of the UK’s consumption … we will bring forward the appropriate measures, beyond those set out in this White Paper, to make our contribution to meeting these targets.” “The 20% renewables target is an ambitious goal … by 2020, on the basis of existing policies, renewables would contribute around 5% of the UK’s consumption … we will bring forward the appropriate measures, beyond those set out in this White Paper, to make our contribution to meeting these targets.”

7. Apex Paris - October 2007 7 20% Renewables – EU vision

8. Apex Paris - October 2007 8 First: Cut energy consumption Energy conservation measures More efficient energy usage >Regulate against inefficient products >Regulate against parasitic loads More efficient energy generation >Limit generating stations’ waste energy UK consumption in 2020 same as now as a rough working assumption

9. Apex Paris - October 2007 9 Routemap to 2020 New measures needed

10. Apex Paris - October 2007 10 Enhanced policy proposals Merchant power Increased RO 1 objective ~22% in 2020 >Set 25% quota and increase headroom >Retain buyout link to retail price index >Offshore super-grid? Tidal lagoons, barrages and new large hydro? Incentives for large scale CHP 2 >Large thermal generators must use heat >Renewable Heat (or Gas?) Obligation Measures to deliver biomass strategy 3 1.Renewable (electricity) Obligation 2Combined heat and power 3Published by UK Government in May

11. Apex Paris - October 2007 11 Enhanced policy proposals Other energy sectors Renewable transport fuels >Higher RTFO 4 quotas – 10% in 2020 >High blend & second generation bio-fuels Domestic buildings >Building regulations for new homes >Smart metering roll-out programme >Retrofit programme for existing houses Non-residential buildings >A new Code for Sustainable Buildings >Heat networks in new developments >Renewables in agriculture 4 Renewable Transport Fuels Obligation

12. Apex Paris - October 2007 12 Routemap to 2020 Enhanced energy policy

13. Apex Paris - October 2007 13 20% Renewables – in EU

14. Apex Paris - October 2007 14 20% Renewables – in UK Where it is

15. Apex Paris - October 2007 15 20% Renewables – in UK What it is

16. Apex Paris - October 2007 16 So what’s new ? More focus on heat and fuels >Not simply electricity Increasing penetration of renewables >Exceeding nuclear, coal and oil Competition between energy markets >Power, heat & transport competing for: >Biomass >Gas

17. Apex Paris - October 2007 17 What’s new for power ? Trend towards decentralised generation Offshore renewables: >International grids? Renewables delivery profile >Base-load / intermittent; predictability Advanced metering – new facilities: >Load management >Real-time price signals

18. Apex Paris - October 2007 18 Implications for markets More and smaller energy producers Increased cross-border trading Regional (distribution level) potential? Real-time pricing More flexible demand Increasing role for balancing services New trading opportunities for heat?

19. Apex Paris - October 2007 19 UK and European Renewable Energy trends and implications for energy markets Philip Wolfe Renewable Energy Association www.r-e-a.net Philip Wolfe Renewable Energy Association www.r-e-a.net