Gordon Edge: This energy bill will fire up the renewables industry29/11/2012
The importance of the energy bill, which will frame the investment climate for the next several decades, cannot be exaggerated.
Although we are still digesting all the detail in the bill, the provisionsannounced last week do appear to provide the industry with the kind of assurance we've been calling for, with the government sending a message that the money will be available to ensure that 30% of our electricity will come from renewable sources by 2020. As Maria McCaffery, chief executive of Renewable UK, said: "The lion's share will come from wind energy, where we now know for certain that we will have at least 31 gigawatts installed onshore and offshore by the end of the decade." All this is vital to persuading both British and foreign companies to make decades-long commitments to this country by, for example, setting up turbine assembly plants or port facilities designed to ship turbines to offshore locations in the North Sea and Irish Sea.
You don't have to be a whizz at maths to see that the targets will require a steep growth rate in renewables. It would be a remarkable trajectory, taking wind from a 1% share of the nation's electricity to around 25% in under 15 years, overtaking nuclear power in the process. But can this actually happen?
Yes it really can, provided the industry (both in the UK and abroad) continues to make the strides it has been making over the past few years. At around 9.30pm on a cold day in mid-September last year, something extremely exciting happened in the UK (albeit completely unnoticeable to all but a few operators in the National Grid's control centre): wind power set a new all-time generation record of 3.98GW. "System demand" at the time was 34.9GW which meant that, for the first time in the UK's history, the wind was meeting more than 10% of our total electricity demand, nearly 12% actually.
This probably doesn't strike you as a particularly high figure, but bear in mind that it wasn't until 2007 that wind power actually registered in the government's energy statistics at all, coming in at a rather paltry 0.9%. Nevertheless, that was also the year in which the largest windfarms were given the status of "major power producers" by the then Department for Business, Enterprise and Regulatory Reform. Installed capacity (the maximum amount of electricity that can be generated by a technology) is 10 times greater today than eight years ago, in 2004, and that kind of growth isn't too bad over a period in which, for the greater part, the country has been mired in economic difficulties.
Last year (2011-12) the industry had a great year; investment in offshore wind grew by 60% to £1.5bn and the rate of approvals for onshore windfarms rose by nearly 50% in terms of capacity. Excitingly, Samsung Heavy Industries was given permission to demonstrate a 7MW turbine off the Fife coast after announcing in January that it would base its first European offshore wind project there, and we will see Siemens' 6MW machines installed at the Gunfleet Sands project early next year.
These turbines, the largest in the world, represent the cutting edge of the offshore deep water sector. Of course there will be major industrial challenges to assembling, installing and maintaining them as they are rolled out in their hundreds; for example, Britain needs to upgrade its port facilities, but this would generate thousands of jobs.
It's true that Britain does lack a major turbine manufacturer at the moment but certainty on future energy policy greatly enhances the likelihood of a number of manufacturers coming here. Already British companies are manufacturing components domestically – like Mabey Bridge's onshore turbine towers – and becoming significant exporters of components – for example gearbox components from Huddersfield's David Brown.
And what do we stand to gain? Well, I think the argument was best put by the prime minister, David Cameron, recently – very simply: "Growth of the renewable energy sector isn't just good for our environment, it's good for our economy too." Bring on 2020.