The Electricity Market Reform White Paper sets out measures to attract investment, reduce the impact on consumer bills, and create a mix of electricity sources including gas, new nuclear, renewable energy and carbon capture and storage.

The Renewables Roadmap published alongside this outlines a plan of action to accelerate renewable energy deployment to meet the target of 15% of all energy by 2020.

Secretary of State for Energy and Climate Change Chris Huhne said:

“We have a Herculean task ahead of us. The scale of investment needed in our electricity system in order to keep the lights on is more than twice the rate of the last decade. The fact is that the current electricity market is not able to meet that challenge. Without action, there is a risk of uncomfortably low capacity margins from around the end of the decade and a far higher chance of costly blackouts.

“This package will keep the lights on and bills down. It will insure us against shocks from volatile parts of the world like Libya, and end the dithering about our need for new plant.

“We have consulted widely and we believe our reforms represent the best deal for Britain. They will get us off the hook of relying so heavily on imported fossil fuels by creating a greener, cleaner and potentially cheaper mix of electricity sources right here in the UK.

“A new generation of power sources including renewables, new nuclear, and carbon capture and storage, along with new gas plants to provide flexibility and back-up capacity, will secure our electricity supply as well as bring new jobs and new expertise to the UK economy.”

The reform includes putting in place a price on carbon, an emissions performance standard (EPS) of 450g CO2 / kWh and a ‘contract for difference’ feed in tariff for all forms of low carbon electricity generation.

The Renewables Roadmap sets out ambitions for a four fold increase in renewable energy consumption by the end of 2020. According to Chris Huhne this is why the Government is announcing up to £30m to support innovation in the production of components over the next four years.

Huhne has also asked a new task force to reduce the costs of offshore wind to £100/MWh by 2020. He believes this would allow its ambition of 18GW offshore wind energy capacity by 2020 to be met.

The full documents can be viewed on the Department for Energy and Climate Change website.

The new UK electricity reform ‘Feed in Tariff with Contract for Difference’ (FIT CFD) announced last week is set to replace the Renewables Obligation (RO) for renewable energy projects built after 2017. More costly renewable energy technologies such as offshore wind energy are expected to receive a premium rate.

The government is also proposing fast- tracking the next adjustment to the RO to apply from Spring 2013. The announcements have caused unease in the UK renewables sector, although the market reform changes will not necessarily apply to Scotland and Northern Ireland.

Trade association RenewableUK previously lobbied the government to retain the RO. The association is now warning that changing parts of the existing model which are working could hit investor confidence.

Dr. Gordon Edge, RenewableUK Director of Policy, said:

“Major investment is required in the UK’s electricity sector, both to replace generating capacity that is reaching the end of its life and to meet our targets for renewables and carbon emission reductions. In the long term, the cost of doing nothing to the country and to consumers will be much greater than the cost of low carbon measures.

“However, we must also bear in mind that the Renewables Obligation has turned the UK into an offshore wind powerhouse, and brought forward 20,000 megawatts of applications onshore. We shouldn’t be looking to solve a problem that doesn’t exist, or take a leap in the dark which might undermine investment.”

Many in the sector say the move potentially undermines the ability of the government to deliver the 60% cuts in carbon emissions the Climate Change Committee advised should be achieved by 2030 last week.

A White Paper is to be published in Spring 2011.

Secretary of the Interior Ken Salazar announced a new initiative dubbed ‘Smart from the Start’ with the purpose of selecting the best sites for offshore wind farms. The initiative is based on regulatory change designed to speed up the permitting and leasing of offshore wind sites leading to speedier wind farm delivery.

Green jobs and a stake in the offshore wind economy appear to be the main motivators. Salazar said:
“If we are wise with our planning, we can help build a robust and environmentally responsible offshore renewable energy program that creates jobs here at home.”

American Wind Energy Association CEO Denise Bode said:
“AWEA applauds Secretary Salazar for his leadership in offshore wind. Efforts to rationalize the multi-step permitting process for offshore wind projects are essential for Eastern states to be able to take advantage of this excellent resource. As the pipeline of projects begin to move forward more rapidly, the environmental and economic benefits of offshore wind, including manufacturing facilities and associated jobs, can be realized.”

Transmission links to 2.8 Gigawatts of offshore wind farms are to be put out to competitive tender with the winning bidders to be announced in summer next year.

The Ofgem tender is the second tender round for offshore wind farm high voltage transmission links worth an estimated £1.9 billion (over US$ 3 billion). The tender is aimed at cost effectively incentivising the building of the necessary grid infrastructure to connect 6 UK offshore wind farms to the onshore grid network.

Companies will be bidding to own and operate the electricity cable links to the offshore wind farms. Ofgem say there was keen interest shown in the first round which saw £1.1. billion (US$ 1.75 bn) investement in offshore grid transmission links.

Minister of State for Energy and Climate Change Charles Hendrey said: “We have 40% of Europe’s wind and we have 11,000 km of coastline. We ought to be using those resources for our future energy security, but to do this we need to get the investment in the infrastructure that will make this happen.

I hope the second round of tendering for owning and operating the links to offshore wind farms will be as successful as the first, where investment interest was four times the necessary level. This competition also means savings for generators and consumers which I very much welcome.”

Ofgem’s CE Alistair Buchanan said “Britain needs to attract £200 billion of investement in its energy industry over the next 10 years – £20 billion will be for offshore tramsmission links. Therefore it is very encouraging that we have seen such strong competition for the first round of transmission links“.

The first offshore wind farms expected to be facilitated by this (second) grid network competition are Gwynt-y-Mor off the north Wales coast, Lincs and London Array off the east coast. These will be followed by Humber Gateway and Race Bank in the Wash and West of Duddon Sands, off the Lancashire coast.

David Cameron said “We need thousands of offshore turbines in the next decade and beyond… To help secure private sector investment in this technology, we’re providing up to £60 million to meet the needs of offshore wind infrastructure at our ports. And to help move things forward, the Crown Estate will also work with interested ports and manufacturers to realise the potential of their sites. It’s a triple win. It will help secure our energy supplies, protect our planet and the Carbon Trust says it could create 70,000 jobs.”

A spokesperson for RenewableUK said “We are delighted with the Prime Minister’s announcement today on the decision to retain the ports infrastructure fund, even more so as we are seeing an immediate positive reaction from turbine manufacturers detailing their investment plans.

RenewableUK has over the last few months built a compelling case on the need to retain this funding. We have also conducted an extensive campaign to raise awareness of the opportunity to build a world beating supply chain on the back of the UK’s current lead in the offshore sector.

This is a great day for the UK’s wind industry. We are set to realise the full potential of offshore wind both in terms of energy and job creation, and are happy that the Government has shown vision and drive over this particular issue.”

The tour involved visiting the facility that has carried out work on offshore wind energy. There were alse demonstrations of technologies used in the oil and gas sector, power stations and other industries.

Brown praised the work of Siemens in the UK and pointed to its crucial role in the future of UK wind energy and renewables.

Brown said that the Government had been working with Siemens on offshore wind energy which led to the company’s recent announcement of the hunt for a £80m new wind turbine manufacturing facility off the east / north east coast of England.

The desire to build a wind turbine factory, along with a number of other wind turbine manufacturers follows a statement by the Chancellor of the Exchequer last month to allocate funding of £60m to a competition for land development. Wind turbine manufacturers want to be well placed to cope with future demand expected to arise from the 3rd Round of UK offshore wind farms.

Shadow Prime Minister David Cameron says the Conservative policy paper “Rebuilding Security” sets out the party’s would-be programme for a reform of British energy policy.  They say their policy would facilitate action to combat the looming collapse in energy supply from 2013-2017 and 12 action points are outlined.

To encourage renewable energy, the Conservatives say:

‘We will put in place an offshore grid to reduce the uncertainty over grid connections that impacts on investment in offshore wind and marine renewables’

‘Marine Park facilities will be developed alongside the offshore grid to accelerate the development and demonstration of wave and tidal power systems’

‘We will help take the poison out of many of the planning battles surrounding onshore wind by promoting community ownership of appropriately sited wind farms, allowing host communities to retain the additional business rates and providing electricity to local residents at discounted tariffs.’

A feed in tariff for the third round of offshore wind farms is proposed, however there is no mention as to what this would mean for the current renewables obligation certificate money currently given to renewable energy generators.

Dr Neil Bentley, the CBI’s Director of Business Environment said

“Plans to accelerate the roll out of carbon capture and storage demonstration and smart meters are much-needed, but we are concerned about proposals to replace the Renewables Obligation with feed-in tariffs. This could end up increasing energy costs for businesses and consumers without increasing investment.”

In terms of wider energy policy Conservatives would:

• Operate a streamlined planning process for large infrastructure investments

• Facilitate nuclear power

• Task Ministers with determining energy policy – not advisory bodies or quangos (which should be axed) and reform the energy regulator Ofgem (also leading to more quango axing)

• Secure new contracts with LNG and pipeline gas producers across the EU and globally

• “Deepen” trading relationships with Norway and press for the liberalisation of gas and other energy markets in the EU and Europe

• Reform the Climate Change Levy to provide a floor price for carbon

• Accelerate and demonstrate carbon capture and storage (despite unanswered questions regarding reduction of power station efficiency)

• Revolutionise supply and demand by building an energy internet (i.e. smart grid)

• Reduce demand by offering every household a green deal on energy efficiency

• Electrify transport

• Create a Green Investment Bank

The State Grid is set to build a pilot integrated renewable energy power storage system this year utilising battery technology. The demonstration project is to be built in Zhangjiakou, Hebei and speculators predict the build costs will be circa 20 billion yuan ($2.9 billion).

Renewable energy would be utilised to a far greater degree if storage technology can be cracked and made economically feasible. The energy from renewables could be stored in reserve for times when the wind does not blow or sun does not shine. It could also help grid network companies manage and control the amount of renewable electricity coming onto the grid without renewable generators losing out financially.

The US Government allocated over US $180m to battery storage companies earlier this year. There are also compressed air and large scale pumped hydro storage projects the country.

In Europe French nuclear company EDF and ABB carried out research last year on an energy storage system to help the grid handle new power generation from a UK offshore wind energy project known as ‘Flexible AC Transmission’ using lithium-ion batteries and superconductor power transistors to manage loads on the grid network and avoid voltage problems.

The largest zones at Doggerbank (9000 Megawatts) and Norfolk (7200 MW) go to consortia giants Forewind and East Anglia Offshore Wind.  Forewind is made up of RWE renewables, Scottish and Southern Energy, Statoil and Statkraft.  East Anglia Offshore Wind is Scottish Power Renewables and Vattenfall Vindkraft.

Eddie O’Connor’s Mainstream Renewables and Siemans bagged the 4000 MW Hornsea zone, whilst SeaGreen Wind Energy Ltd equally owned by SSE Renewables and Fluor, won the Firth of Forth Zone.

Eon and Dutch utility Eneco were left with the smaller south of England coast sites off Brighton and the Isle of Wight.

Prime Minister, Gordon Brown MP said: “Our policies in support of offshore wind energy have already put us ahead of every other country in the world. This new round of licences provides a substantial new platform for investing in UK industrial capacity. The offshore wind industry is at the heart of the UK economy’s shift to low carbon and could be worth £75 billion and support up to 70,000 jobs by 2020.”

The Secretary of State for Energy and Climate Change, Ed Miliband said: “Our island has one of the best wind energy resources in Europe and today’s news shows we’re creating the right conditions for the energy industry to invest in harnessing it. This is one of the strongest signals yet that the UK is locked irreversibly into a low carbon, energy secure prosperous future.”

The 3rd round of offshore wind development takes engineering and financing challenges to a new level.  Doggerbank is between 125 and 195 kilometres offshore with its outer limit aligned to UK continental shelf limit as defined by the UK Hydrographic Office.  The area involved is equivalent in size to North Yorkshire.

British Wind Energy Association CEO Maria McCaffery said: “Today’s announcement is a major leap forward in realising the potential for clean, green energy production through wind power: it sets the UK apart as the leading offshore wind energy producer not only in Europe but worldwide both in terms of total potential power generation from offshore, and the scale of new green collar employment opportunity”.

“We need to ensure the UK also benefits through a boost in manufacturing, engineering and skills: but this will only happen if additional action is taken by the Government through working actively to create coastal manufacturing hubs.  This will encourage wind energy manufacturing companies to locate in the UK and enable British businesses to take full advantage of the supply chain opportunities for the benefit of jobs and the UK economy as well as Britain’s energy security”.

The announcement confirmed earlier leaked information about which companies had secured the key sites.

The Hywind, a 2.3 megawatt (MW) floating wind turbine made by Siemens, combines technologies from both the wind farm industry and the oil and gas sectors, and was installed in June of this year. It is being tested off the coast of Norway for two years. Since the installation of the turbine new products are starting to emerge which would be dedicated to the technology.

The video below shows a specialist barge which could be used to transport and put into place floating wind turbines. This is but a small indicator of the potentially huge benefits of offshore wind energy when it comes to new business and green collar jobs.