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 report recommends that “if a set of alternative options can be found to meet the EU renewable energy target, then offshore wind ambition in 2020 could be moderated.”

RenewableUK’s Chief Executive, said: “The report is welcome in as much as it recommends increasing the share of renewable energy to 40% by 2030. However, we are not going to get there if we do not stand four-square behind offshore wind in the run up to 2020. An unambitious target could scare off investors just when they have pledged so much commitment in establishing UK factories. This in turn could stymie delivery of targets and prevent the creation of up to 50,000 jobs in offshore wind over the next decade.”

The industry trade body believes that offshore wind energy costs are likely to come down whilst assumptions by the committee about the costs of nuclear are optimistic.

Another recent report by Price Waterhouse Cooper says that wind industry representatives believe offshore wind energy will not require subsidies within 15 years.

The original draft statements were released for consultation by the Labour government late last year but have now been revisited and changed by the current government.  The 6 changed energy documents are now being consulted on with the deadline for comments 24th January 2011.

Subject to the consultation and Parliamentary scrutiny, the Government intends to approve the energy national policy statements in Spring 2011.  These statements would then be used by the Infrastructure Planning Commission when it makes decisions on applications for nationally significant energy infrastructure proposals.

The new statements are generally supportive of a diversified energy base.  Support for the consideration of specific nuclear sites is set out in the nuclear document in the anticipation that these will be brought on line before 2025.  The nuclear statement also sets out the Government’s conclusion that it is satisfied that effective arrangements will exist to manage and dispose of the waste that will be produced by new nuclear power stations in the UK and “that there are Imperative Reasons of Overriding Public Importance for why it should proceed despite it not being possible at this stage to rule out any adverse effects on European Sites“.

Non site-specific support remains for renewable energy and guidance will apply to offshore wind farms of over 100 MW and onshore wind farms and biomass plants of over 50 Megawatts.

Government departments are for the first time facing 25% budget reductions and this is expected to have significant consequences for the country.

One area of public spending at risk is ‘The Ports fund’. The fund was announced by the Labour government before the election and was said by many of the world leading wind turbine manufacturers such as Siemens to be one of the key factors in their decision to look for a UK manufacturing base. The fund was expected to be used to improve port facilities around the UK. Good port facilities are considered key to the rapid expansion of the offshore wind energy industry in the UK.

Charles Hendrey – the minister now in charge of the renewables division at the Department of Energy and Climate Change said “every commitment made by the last Government on renewables is under review“. The announcement came after the official launch of the 172 megawatt Gunfleet Sands wind farm off the east coast at Clacton on Sea.

Hendrey’s review, together with other major planning and renewable energy reviews are expected to potentially have a big impact on investor confidence. The big wind turbine manufacturers have not yet confirmed they would not come to the UK if the Ports fund does not materialise however a GE representative has said that it has added to the uncertainty beginning to surround the UK renewable energy industry.

According to industry sources, the company has been looking for a finance partner to share the £2bn offshore wind investment required for well over a year. Wind turbine manufacturer Siemens has also bought a 10% stake in the project.

The wind farm known as GYM will comprise 160 wind turbines with a huge 576 Megawatts installed capacity. Over 1000 construction jobs are expected to be created in 2011 with hundreds more jobs created when the wind farm starts generating green electricity in 2013.

A RWE spokesperson said “Construction will begin in 2011 and will be completed in 2014 but there will be power output in 2013.

There will be on going requirement for ever more jobs and it’s in our interests to use local labour and workers as its more efficient.”

Dr. Kurt Mühlhäuser, Chairman of the SWM Board said “The SWM have an ambitious goal: By 2015 we want to generate green electricity in its own plants so much that 800,000 households in Munich could be supplied.“. The green electricity supply motives for the SWM purchase are interesting – particularly given there is no electricity grid link up between North Wales and Munich…

GE plans to build an offshore wind turbine manufacturing base in the UK and will also create application and service engineering centres around the country.  GE say the investment will follow the successful outcome of the UK governments grid infrastructure competition which is intended to make the roll out of Round 3 UK offshore wind a reality.  The company wants to develop a 4 Megawatt capacity wind turbine.

President and CEO of GE International Ferdinando Beccalli-Falco said; “Offshore wind will play a vital role in meeting the growing global demand for cleaner, renewable energy and has a bright future here in Europe…These investments will position us to help develop Europe’s vast, untapped offshore wind resources, while also creating new jobs for both GE and our suppliers.”

Dr. Gordon Edge, RenewableUK Director of Economics and Markets, said:

“Towards the end of 2009 we have started seeing the first signs of a manufacturing rebirth around the UK’s offshore wind energy sector. Now that all Round 3 sites have been taken up and the potential scale of offshore developments stands at over 40 gigawatts, there is a palpable sense of opportunity.

Renewable UK has long maintained that strong and co-ordinated Government support for the UK to become the leading global centre of expertise for offshore wind energy can result in thriving manufacturing clusters and 57,000 jobs by 2020.

The fact that some of the world’s best known companies such as Mitsubishi and General Electric have now decided to invest in the UK and base their offshore operations here  shows that such support pays dividends .”

Offshore wind energy projects operational before 2014 will recieve 2 renewable obligation certificates (ROCs) rather than the 1 ROC onshore wind energy recieves.

The British Wind Energy Association (BWEA) welcomed Chancellor Alistair Darling’s Pre-Budget Report commitment to maintain support for offshore wind energy at 2 ROCs per megawatt hour (MWh) to 2014. The UK is the world leader in offshore wind with more projects installed, in planning and in construction than any other country in the world. The BWEA anticipate that by 2020 at least 20,000MW of offshore wind will be installed and operating in UK waters.

Maria McCaffery MBE, BWEA Chief Executive said: “Keeping the 2 ROCs funding for offshore wind will help the UK retain its world lead and kickstart billions of pounds of investment ahead of the next major phase of offshore developments.”

Financial support for offshore wind was increased from 1.5 to 2 ROCs in the 2009 Budget in April for proposals which had commenced construction. The announcement this week will extend 2 ROCs for all projects operational by 2014. The BWEA say that the wind energy sector could deliver 60 000 jobs and 30% of our electricity by 2020.

“There are up to 3000MW worth of projects which should now benefit from this new support – in the current economic climate this will make a vital contribution to inward investment and employment, as well as delivering on the 2020 targets.” said McCaffery.

The statement is one of a series of NPS (National Planning Statements) documents intended to guide the new Infrastructure Planning Committee (IPC) in coming to decisions on large scale infrastructure projects. The statements will set out criteria on national need, benefits and impacts. With the exception of the NPS for airports and nuclear power stations, sites are not identified for specific proposals.

The Renewable Energy NPS applies specifically to biomass and onshore wind energy projects comprising 50 Megawatts + and to offshore wind energy projects, including the substations and new overhead power lines.

The renewable energy supportive NPS will also be a material consideration to be taken into account when authorities decide on projects under 50 Megwatts – (i.e smaller wind farms and biomass plants). The document will overide local planning policy if there is any conflict, for example with regard to new structures in locally protected landscapes.

The statement may concern planning authorities in Wales who have attempted to “refine” wind farm strategic search areas introduced by the Welsh Assembly. The NPS says that in order to give the refined boundaries weight, the IPC should be satisfied this is in accordance with Welsh Assembly guidance.

National landscape and ecological designations continue to be protected with a requirement that the objectives of these designations are not compromised and adverse effects are outweighed by environmental and social benefits.

Offshore wind energy developers will be expected to explain how they have drawn on the Governments strategic environmental assessment of UK waters in making their site selection. According to the NPS, strategic environmental assessment work carried out by the Government will be rolling and a research programme and data collection facility will inform future assessments. Offshore wind developers will need to identify onshore grid connection routes or “corridors” and in some cases the new grid infrastructure may be defined as a nationally significant infrastructure project in its own right.

For onshore wind farms the NPS notes that the technology is likely to continue to be an important contributor towards the UK’s energy needs. The NPS says that the time-limited and non-permanent nature of wind farms should be a relevant consideration when assessing the indirect effects of wind farms on the historic environment, for example the effects of wind farms on the setting of listed buildings or conservation areas. This is particularly helpful given that wind farms are only normally planned for 25 years, whereas historic buildings may have been around for hundreds if not thousands of years, with a continued long life ahead. Wind farms would probably be around for only the blink of the eye of some historic buildings.

According to the list of 11 energy projects in pre-planning compiled by the IPC four are onshore wind farms and one an offshore wind farm.
The progress of these projects will be watched closely by the energy industry.