1. Renewable Energy - Step Change in Theory and Practise Dr. Catherine Mitchell Warwick Business School 31 March 2003

2. Introduction What step change contribution to the energy system could be made by renewable energy? How much would this cost? What are the necessary changes to achieve this? What still needs to be researched and understood?

3. Step Change - the definition ‘Step change is here used to mean a radical increase in the rate of decarbonisation such that UK carbon emissions may be projected to fall some 60% by 2050’ taken from RCEP and accepted by White Paper

4. Renewables in 2010, 2020 and 2050 2010 - can envisage 10% renewables with very little difference to energy system 2020 - if renewables provides 20% then can imagine a different network - step change in rate of deployment and in operation –integrated into networks –design, operation and markets different –proportion RE to conventional very different –? Heat and liquids (biofuels?)

5. Renewables in 2050 May be very different from what we think now more renewable electricity, heat and liquids sophisticated control technologies different relationship with other networks (gas, hydrogen, other) and transport fuels (*hydrogen and transport covered by other programmes)

6. Questions on Timing Is step change linear - unlikely? What are the primary requirements for step change and by when? Immediately? by 2020? Incremental or Simultaneous? What is least total cost?

7. Renewable Policy in E&W The RO - obligation for 10% by 2010 Aspiration of 20% by 2020 Capital grants - £350 total for 2002/3- 2005/6 (including R&D) –eg £76 million for offshore wind (£10m max or 40% of eligible costs) R&D

8. Where have we got to? Renewables has been supported since 1990 –1990-1998 The Non-Fossil Fuel Obligation –2002+ the Renewables Obligation 1% additional electricity supply occurred between 1990 and 2003 10% = 5-10K MW 637 MW received planning permission in 2002, 550 MW since 1990

9. Wind Energy Deployment (MW)

10. Barriers Need to agree them: –Economic –Institutional –Network Issues –Market-Rule Issues –Social –Financing A first step towards step change?

11. Costs of Meeting A Step Change Delivery Mechanism Capital Grants R&D Infrastructure Balancing Tax breaks or other

12. Cost of Delivery Mechanism Costs depend on what the objective is and time period of calculation WP says RO for 10% will cost a maximum of £1bn in the year obligation is met PIU said 20% in 2020 would cost an additional 5- 6% to household electricity prices PIU analysis showed that 30% in 2020 would cost an additional 6-8% to household electricity price FES for DTI showed in WP that cost of 60% cuts by 2050 would be a reduction of 0.01-0.02%

13. Infrastructure and Back-Up Costs Power UK paper reports 0.3p/kWh per unit consumed additional costs if 20% of electricity requirements were produced from wind power - just under 5% of domestic price. Dependant on: –regulation of networks –how diverse RETs are –market incentives

14. Theory of System Transformation Jacobsson’s Group in Sweden Formative Period –market formation and nursery markets –entry of firms –positive external externalities eg between firms –institutional change –advocacy coalitions Market Expansion –cumulative causation - self-sustaining momentum

15. Jacobsson’s Challenges how to co-ordinate policy how to begin and complete process of institutional alignment how to induce a variety of actors to experiment with different solutions how to implement pricing policies which are powerful, predictable and persistent how to establish cumulative causation

16. Key Questions for Agenda What changes need to be achieved, and by when, in order to achieve a self-sustaining energy system by 2050? Agreement on costs Clarity on what barriers are and the extent to which their removal is fundamental first step to step change ?’s around powerful, predictable and persistent delivery mechanism

17. Key Questions for Agenda (2) long term R, D&D and innovation policy the relationship between Government and Economic Regulation the importance of co-commitment and personal responsibility (+ within LAs) planning policy and societal change large technical systems and momentum

18. Conclusions Is step change about getting going and doing what we know has to be done? Are there new areas? –Personal responsibility –planning and social change –large technical systems –Tax –R&D