Renewable Energy Strategy
29-06-08
Out to public consultation until September 26, 2008, the Renewable Energy Strategy sets out the government's long-term plans for developing renewable electricity, heat and transport fuels in the UK to 2020 and beyond.
The focus of the strategy is how the UK will meet its European Renewable Energy Directive target to source 15% of all energy from renewable sources by 2020.
The strategy also provides one part of the government's overall plan to cut the UK's carbon emissions by 60% before 2020, and is seen as important in improving the UK's energy security by reducing dependency on gas imports and increasingly expensive oil.
The UK generated 1.5% of its total energy from renewable sources in 2006 - compared to 8.5% on average in Europe (2005).
Even through policy changes currently moving through Parliament in the Energy Bill, the Climate Change Bill and the Planning Bill, the Department for Business, Enterprise and Regulatory Reform (BERR) now acknowledges that the UK will only hit a 5% renewable energy level by 2020.
The Renewable Energy Strategy was released in draft form for a 12-week public consultation in June 2008, and is expected to be published in final form in early 2009, depending on the final shape of Europe's Renewable Energy Directive.
Main proposals
The government describes the UK's renewable energy target as "very challenging", predicting that it will cost £5-6 billion each year by 2020 to achieve.
While there are already measures to increase the nation's green power supplies under the 2007 Energy White Paper and subsequent bills this year, the new strategy recognises that "we will need to go much further".
As a result, the draft Renewable Energy Strategy proposes:
- Extending the operation of the Renewables Obligation through to 2040, and setting the obligation requirement at around 30-35% renewable electricity in 2020.
- Developing a new incentive scheme to foster a "very large" increase in renewable heat.
- Expanding small-scale renewable energy technologies in homes and businesses.
- Improving the planning system with a new "deployment strategy" targeted at a regional level
- Breaking down the barriers to grid access for renewable energy projects through a new "connect and manage" system.
- Setting "strict" sustainability criteria for biofuels to prevent unwanted impacts on the environment or global food supply, while helping to reach an EU target to include 10% renewable fuels within transport fuel by 2020
- Promotion of further research and development in renewable energy technologies
- Addressing the skills shortage in renewable energy.
Centralised Electricity
Around half of the UK's renewable energy target in 2020 will be delivered by the electricity sector, because progress here should be quicker and easier than in heat or transport fuel.
The strategy predicts 35 to 40 GW of new renewable generating capacity by the target year - around 30-35% of total electricity generation, compared to just 4.5% seen in 2006.
This increase should be delivered through a combination of a better planning system, support for the renewables industry supply chain, improved grid access for renewables projects and an extension of the incentive system, the Renewables Obligation.
Planning - Along with changes already within the Planning Bill, the government proposes new requirements for renewable energy targets to be added to local and regional planning strategies. With targets based on each region's potential for renewable energy, local planners would have better guidance on what is needed.
A national Renewables Advisory Service could also be set up to local authorities develop renewables in their areas, and systems are to be strengthened to get local communities on side by making sure they benefit from local projects. Action is also being taken to help renewable energy projects avoid conflicts with aviation, shipping and national defence.
Grid access - With a huge queue of consented renewable energy projects waiting to connect to the grid (10GW in Scotland alone), regulator Ofgem is consulting on a new "connect and manage" system to clear the backlog. This will firstly change the "first come, first served" approach to installations applying for connection - where consented projects have to wait their turn behind projects still awaiting planning permission or investment green lights - to prioritise consented projects that are ready to go.
Secondly, it will see National Grid required to connect projects as soon as connection can physically be made, without even waiting for wider transmission system reinforcements to be made. National Grid would then manage the UK electricity system through new sharing arrangements with existing users. Further resources are also proposed to expand the national high-voltage networks, and establish an offshore grid.
Incentive system - Through the Energy Bill, the government is already changing its green power incentive scheme, the Renewables Obligation, so that newer and underdeveloped technologies gain more support than established, commercially-viable technologies. In the new strategy, BERR states its intent to extend the scheme's life from the current 2027 to "2035 and beyond", although outside the strategy the government has been discussing a 2040 date.
The other major change for the RO within the new strategy is to increase or remove the current cap on the obligation - essentially, raising the 20% by 2020 renewable energy target that electricity suppliers have to meet towards the 30-35% level that will now be needed to meet the UK's renewable energy target in that year. A consultation on the Renewables Obligation Order 2009 was released alongside the new strategy.
Heat
Looking at the use of energy for heating purposes and the need to "decarbonise" that heat energy, the government proposes some form of incentive to promote renewable heat. It also suggests making it easier for homes and businesses to install renewable heat technologies, such as biomass heating devices, heat pumps, solar thermal technology and geothermal systems.
Incentives could take the form of a feed-in tarrif known as a Renewable Heat Incentive, with energy suppliers paying an incentive to renewable heat generators depending on the quantity of renewable heat generated. Or, it could take the form of a Renewable Heat Obligation, which would see a requirement of a certain percentage of heat in the UK being sourced from renewable power or fuels. Similar to the Renewables Obligation (RO) in the electricity sector, the strategy notes that the large number of fuel suppliers in the UK - many of whom are SMEs - would make for a much more difficult system to operate than the RO.
Local authorities are identified as "crucial" to helping foster renewable heat systems in local areas, through the planning system and building control regulations. The government suggests more combined heat and power - where waste heat from combustion processes is put to industrial or community use - should be deployed where possible.
Decentralised energy
Locally generated, small-scale heat and electricity generation is predicted to provide a significant amount of renewable energy under the new strategy. Microgeneration of heat is likely to be "much more significant" towards the 2020 target than microgeneration of electricity, the government states.
The new strategy considers how to incentivise microgeneration and make it easier for people to get involved in generating their own power.
Pledging more awareness among homes and businesses of the potential of decentralised generation, the government points out that as more people get involved, the average cost of equipment will reduce. Nevertheless, the government perceives that a major barrier to take-up of microgeneration equipment will continue to be start-up costs.
Even moving from the current support systems where government grants are offered to part-fund equipment towards pay-as-you-generate "feed-in tarriff" schemes - or an adaptation of the existing Renewables Obligation system - the strategy suggests there will be a need to "front-load" systems to provide more support earlier on in a generation scheme's life.
Other possible measures within the strategy to promote decentralised energy include more use of planning controls for new buildings, and some development of the Home Information Packs required for the sale of new and existing housing stock.
Transport
Reaching Europe's target of 10% renewable energy within transport fuels by 2020 will largely involve the use of biofuels within petrol and diesel, according to the Renewable Energy Strategy. The European target is measured by energy content, so to achieve it would mean a UK target of 11-15% biofuel content by volume within transport fuels.
Incentive to reach the target will come through the Renewable Transport Fuel Obligation (RTFO), but the strategy identifies a range of different alterations to the obligation to help meet the EU goal - to change the RTFO target to an energy-content target, rather measuring it by volume, or to greenhouse gas savings or a combination of both.
Pushing for more biofuels will need a change in European fuel quality rules, which allow no more than 5% biofuels within petrol and diesel. This is being done through the Fuel Quality Directive. New compatibility standards to ensure vehicles can run effectively on higher biofuel contents could also be required in the approach to 2020.
Using more biofuels will also require "strict" sustainability criteria to be in place if the whole concept is to free itself from the controversy currently haunting it regarding its impact on the environment and global food supplies. This could take a form similar to the Forestry Stewardship Council (FSC) certification system in use for wood.
Away from biofuels, the government is also looking into the possibilities of electric cars, and other alternative power sources like hydrogen fuel cells. However, this work appears to be at a relatively early stage.
