new renewable energy strategy uk - adam brown
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Renewable Energy in the UK
Strategy and Opportunities
Adam BrownSector Champion – Renewable EnergyUK Trade and Investment
Florida
20 November 2008
2
UK Renewable Energy Inward Investment Propositions
Rapidly growing marketWorld leading research
capabilitySupportive collaborative research environment.
Long term vision
Supportive policy framework
Financial and Fiscal Support
Companies with developed
technology, expertise or
operating experience
Companies developing new
technology.
Topics
Some Recent Developments The RO Off-Shore Wind The UK Renewable Energy Strategy
– Targets and Technology Mixes– Policy Measures Needed
Inward Investment Opportunities
Recent Developments
DECC– BERR Energy Team + DEFRA CC Team
Office for Renewable Energy Deployment– Manufacturing Strategy– Focus for “green jobs”– Builds on RETPS
The Climate Change Bill
– Target 80% CO2 reduction by 20504
Growth in UK Renewable Energy Generation
5X increase in New RE in 10 years
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Obligation on electricity suppliers for a growing % of their electricity from renewable energy sources
Level to rise to up to 20% by 2020 and Obligation runs to 2026-27
Accredited Renewables Generators earn Renewable Obligation Certificates for each MWh generated, which can be traded
Suppliers must have the necessary number of certificates at the year end, or else pay a buy out fee (~£35.76/MWh)
Buy out fees are recycled to suppliers who have met their obligation, so increasing ROC value
Generators can secure medium term contracts for supply of power, ROC’s and other benefits
Renewables Obligation….
ROC Values
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Year 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09Obligation % 3.00 4.30 4.80 5.50 6.70 7.90 9.10Buy Out Price (£/MWh) 30.00 30.51 31.39 32.33 33.24 34.30 35.76Recycle Value (£/MWh) 15.94 22.92 13.66 10.21 16.04 18.59 ?Total ROC Value(£/MWh) 45.94 53.43 45.05 42.54 49.28 52.89 ?
Total income = power value +ROC + other benefits
= >£100/MWh
= >15cents/kWh
Evolution of RO
Current technology neutral regime very successful at stimulating low cost technologies (on-shore wind, landfill gas, …..)
ROC Banding to bring forward broader range of technologies
Multiple ROC’s from April 2009
Band Technologies
ROC’s
Technology ROC’s/MWh
Landfill gas 0.25
Sewage gas, Biomass cofiring
0.50
Onshore wind, hydro, Cofiring energy crops, EfW with CHP
1.0
Off shore wind, biomass 1.5
Wave, tidal, Advanced biomass conversion (anaerobic digestion, pyrolysis, gasification),energy crops, biomass chp, PV, geothermal, microgeneration
2.0
Income up to £150/MWh
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On–shore wind
2348 MW installed 300 MW in 2007,
350MW so far in 2008 Extensive Pipeline of
projects– 1060 MW under
construction– 3159 MW consented– 6890 MW in
planning system Delays in planning
system and grid capacity being addressed
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Offshore Wind - UK
UK Potential >UK electricity demand!
Projects “awarded” by Crown Estates in bidding rounds
First Two Rounds
1118 sites, 2600 MW 15 sites, 7169 MW
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Off Shore Wind - Capacity
Project Pipeline– 7 projects, 404 MW in
operation– 936 MW under
construction (8 projects)– 3113 MW consented
UK world capacity leader
Kentish Flats Project
30 3MW Turbines, commissioned 2005
Offshore – Round 3
25GW 11 zones in areas
where SEA completed
Allocation in 2009 Operational by 2015 Crown Estates
prepared to cofund development (up to 50% of development costs) 13
£50Bn Investment Opportunity
Zone Development Process
Single Partner company with exclusive development rights for each Zone (individual or consortia)
The Crown Estate to provide a facilitating role
Partner companies to provide full development capability and resources
Relationship between The Crown Estate and development partners will be through contract
R3 - Key Milestones
June 2008: Market announcement and publication of PIN in EU Official Journal
July 2008: Industry workshops Beginning of August 2008: Invitation to submit
Expressions of Interest (OJEU contract notice) End of August 2008: Closing date for Expressions of
Interest – (96 EOI’s) Late September 2008: Release of Invitation to
Negotiate (ITN) and key contracts Q1 2009: Responses to ITN Q2 2009: Shortlist of Partners and SEA completion Q4 2009: Completion of awards to zone partners
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European Spring Council (2007) agreed to:
• Independent binding target to reduce EU’s greenhouse gas emission by 20% below 1990 levels by 2020….
• ….and to increase this commitment to a 30% reduction as part of an international agreement
• Increase the use of renewable energy to 20% of EU energy (electricity, heat and transport) consumption by 2020
• Ensure that a minimum of 10% of EU petrol and diesel consumption comes from bio fuels by 2020
• Promote energy efficiency by reducing overall EU energy consumption by 20% by 2020
EU Targets
UK Renewable Energy Strategy
UK Share of EU Target -15% of energy by 2020
Current renewables level – 1.5% of energy
Challenging! Consultation to discuss how to meet the
target and what policies would be needed – June 2008
Full strategy Spring 2009.17
The Challenge!
RE % UK Energy 2006
18
1.4% of UK Energy
The Challenge!
RE % UK ENERGY 2020
19
RE % UK Energy 2006
15% of UK Energy
Possible Technology Mix
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Policy Measures Under Consideration
Energy efficiency Review RO by increasing level and
extending end date Regional deployment targets Grid access improvement Incentive mechanism for heat and
distributed generation technologies Innovation and supply chain
development21
Feed-In Tariff Development
Powers taken in Energy Bill Projects up to 3MW can opt for FIT
rather than RO Emphasis on group/community
schemes? Technology specific support levels to be
agreed “Not worse than RO” Proposals during 2009, finalised during
201022
Short Term Priorities?
Deployment Off shore wind√ Biomass √ Wastes √ Building √
Integrated RE and Heat (once FIT details developed)
R&D,D Wave and Tidal √ PV√ Fuel Cells/H2√ Biofuels√
For further Information please contact
Adam Brown @ pera .com
+44 7723 315441