Lord Truscott speech - All- Energy - 24th May
I would like to thank Dick Winchester, our chair this morning for the introduction. I very much welcome the opportunity to talk to you today following the publication yesterday of the Energy White Paper albeit I can’t be there in person.
The global economy has doubled in the last 13 years. Developed economies such as ours face huge challenges as they try and adapt to this new world. If we do not respond to these challenges, the combination of economic growth around the world and the increased energy consumption that growth demands will increase CO2 emissions and accelerate the effects of climate change.
The Energy White Paper is about tackling the two challenges which pose a fundamental threat to the global economy and our way of life. Tackling climate change by reducing carbon dioxide emissions and ensuring we have secure, clean and affordable energy as we become increasingly dependent on imported fuel.
Neither of these challenges has a single solution, they cannot be addressed at the expense of the other nor can they be solved by the
The White Paper covers a wide range of issues which I cannot cover in the time I have so I am going to concentrate on those which are particularly aimed at addressing the challenges to the deployment of renewables. I would like to start by commenting in some detail on the Renewable Obligation as I am guessing this will be of great interest to many of you.
Banding
Overall the measures in the Energy White Paper will more than triple the supplies of electricity we get from renewables by 2015. The R O in its current technology-neutral state has brought forward the most economic technologies like landfill gas and onshore wind but the more emergent technologies such as offshore wind have not been deployed as quickly as we would like.
One of our objectives when considering proposals to band the RO was to increase the deployment of renewables, while maintaining costs to consumers within a broadly similar overall cost envelope. The Government has therefore decided to retain the link between the buy-out price and Retail Price Index from 2015 as part of confirming new proposals to band the RO. This will provide a greater stimulus for the deployment of renewables over the lifetime of the RO. A banded RO retaining the Retail Price Index is predicted to deploy over 40% more renewables between 2010 and 2015 than the current regime would have over the same period.
The proposals for banding the RO also need to strike the balance between encouraging new and more expensive technologies and the continued support for the more mature technologies. We listened to industry and that is why it is proposed that onshore wind will remain at 1 ROC per MWh.
The proposed banding for landfill gas and co-firing of most biomass is 0.25. For onshore wind, hydro, co-firing of energy crops and energy from waste with combined heat and power we propose to leave the banding as it is at 1 ROC. For offshore wind and dedicated regular biomass we propose to increase the banding to 1.5 ROCs. For wave, tidal stream, some types of dedicated biomass, and solar photovoltaics we propose to increase the banding to 2 ROCs.
We recognise the impact that changes to the RO could have had on investor confidence. We therefore aim to reflect this in the treatment of existing projects. Our proposal is that following the introduction of ‘banding’ (currently planned for 1 April 2009), all projects that would otherwise be eligible for less than one ROC per MWh and which have either:
- commenced operation by that date; or
- have received planning permission and pre-accreditation from Ofgem by that date and subsequently commence operation within two years;
will remain eligible for one ROC per MWh.
Those projects that became operational after 11 July 2006 (when our banding proposals were first raised) and which, following the introduction of banding, fall within a higher band, will be moved up to the higher band and will receive the new (higher) number of ROCs from the moment that banding comes into force.
While banding will provide a longer-term market pull for emerging technologies, we believe capital grant schemes and tailored policy initiatives are the appropriate and more cost effective mechanisms for reducing commercial risks to technology developers. The new Energy Technologies Institute and Environmental Transformation Fund are the means of providing support. These will complement funding through the banded RO
Grid
The next major issue is grid accessability .To reach our aspiration of 20% of electricity supplied from renewable generation by 2020, approximately 20GW of renewable capacity would need to be connected to the transmission system. Our aim is to connect new renewable capacity to the electricity network as quickly and as cost-effectively as possible both onshore and offshore .
We will improve grid access by working intensively with National Grid, OFGEM and industry to implement changes that will help bring forward connection opportunities for the most viable renewable projects.
National Grid and industry already have a programme of work in hand to develop a number of important proposals to improve access opportunities in the short term, but it is right to also take a longer term view. We have therefore announced a review, to be led by DTI and Ofgem, of the framework for connecting renewable generation to the grid. This will set out proposals for medium and long term changes to the framework in order to support delivery of our aspirations up until 2020.
The review will consider whether changes to the current framework are appropriate and provide an opportunity to consider more radical solutions, such as the concept of conventional and renewable generation “sharing” grid capacity. We will publish the terms of reference for the review shortly.
We are also committed to establishing an offshore transmission regime that enables offshore generators to connect to the onshore grid in an economic, efficient and timely manner. This regime includes interim arrangements enabling projects to proceed before new offshore Transmission Owners are licensed to operate offshore.
Planning
The third major element is planning. Of course we need to speed this up. Across the country over 10 GW of energy, enough to power over 6 million homes is now in planning. The White Paper, Planning for a Sustainable Future, published on Monday, sets out proposals for reform of the planning system for nationally significant infrastructure, including energy. This will help reduce costs, delays, and uncertainties incurred by the industry while providing more effective opportunities for public engagement. Responsibility for deciding major energy projects will pass to a new Infrastructure Planning Commission (IPC) in
The IPC will have a clear remit that will require it to take decisions on energy consents within the policy framework set by Ministers. It will work to statutory time limits and the White Paper proposes that applications should be decided within a maximum of 9 months other than in exceptional circumstances. The following energy projects will automatically be referred to the Commission for a consent decision: Power stations generating more than 50MW onshore and more than 100MW offshore together with nationally significant electricity transmission and distribution projects.
For smaller renewables the system will be improved too, the White Paper sets out a number of measures covered by the Town and Country Planning Act system so that regional and local development plans have regard to national policy on renewables infrastructure.
Further Offshore Development
We believe the announcements in the Energy White Paper relating to the banding of the Renewables Obligation, the planned introduction of an Infrastructure Planning Commission and a new offshore transmission regulatory regime will give the offshore wind industry and their investors the confidence and certainty on which to begin to plan further developments.
It is important to provide a long-term market for offshore renewables .This will enable industry to plan investment in the supply chain in time to meet future demand. We will publish proposals by the end of the year that will outline our thoughts on the possibilities for future rounds of offshore development.
Concluding remarks
Very briefly, in other areas there are further decisions to be made. We are consulting on new nuclear power and will announce our decision in the autumn. There are also important decisions to be taken internationally: on the post
Overall, our measures will take 200,000 people out of fuel poverty by 2010 and our consumption of electricity will be 15% lower and gas 13% lower than it would otherwise have been in 2020. And developing cleaner sources of energy diversifies the domestic energy sources at our disposal. Both of these factors are key to ensuring secure energy supplies.
Having outlined the key areas of the white paper that impact on the renewable sector, I would like to finish by emphasising that renewable energy will play an increasing vital role in tackling the energy challenges ahead, and that we have the opportunity, both as Government and as an industry, to shape the future of the global low carbon economy and provide a positive legacy for future generations.
