DECC Presentation - Regensw
Renewables: the Government Perspective Tim Lord: Head of Renewable Industry and Investment, DECC
UK strategy for decarbonisation
Renewable energy deployment is central to our strategy to 2020 – and beyond 5% of energy renewable now Must increase to 15% by 2020 Which means ~ 30% UK electricity renewable by 2020
nuc
gas
coal
oil
~ 2/3 of UK energy is for heating & transport’
3
Regen-SW
Huge progress to date (1/4) Renewable generation up 56% to record 15.5% - in just 12 months
4
Regen-SW
Huge progress to date (2/4) Renewable Electricity Technology Onshore wind
2013 Q2 TWh
Percentage change on a year earlier 3.76 +69.9
Offshore wind
2.47
+50.9
Hydro Solar PV, wave and tidal Bioenergy (inc. co-firing) All renewables
0.97 0.42
+29.0 +22.4
5.20
+58.3
12.83
+55.8
Strong public support: Three-quarters of people (76%) continue to support the use of renewable energy sources to generate the UK’s electricity, fuel and heat 5
Regen-SW
Huge progress to date (3/4)
4MW (2x 2MW)
2000
630MW (175x 3.6MW)
2013
6
Regen-SW
Huge progress to date (4/4)
Since 2010 DECC has recorded investments in large scale renewable energy
totalling over £29 billion, with the potential to support around 30,000 jobs.
7
Regen-SW
Job figures based on ORED analysis of developer announcements
Clear framework for investment
Strong Government commitment • Long-term framework for decarbonisation – 80% reduction in emissions by 2050, carbon budgets to get us there • Energy Bill (Electricity Market Reform) introduced to Parliament November 2012 – due to reach Royal Assent by the end of the year • Secure funding framework to 2020 •
£7.6bn in 2020
•
3x budget in real terms … the current review is not about changing investment incentives for renewables, such as the Renewables Obligation, Contracts for Difference or the Feed in Tariffs scheme.
The level of support will remain, as planned and as published.
9
Regen-SW
I am determined to see the UK retain its global lead in this sector and we have set out the framework to achieve that.
Our market faces huge challenges
Fifth of plant closing by 2020
Long run electricity demand could double
Weak signals in the market for low carbon generation
Current market suits gas, but harder to build low carbon plant
10
Regen-SW
A clear framework for investment Feed-in Tariffs Renewables Obligation
Contracts for Difference
11
Regen-SW
CfD is designed to provide certainty for investors CfD Removes Long-term Price Risk from Investors
Earlier allocation of CfDs, reducing risk to developers
Lowering the cost of investing in low-carbon Generation
Clear set of roles and responsibility between Government, Delivery Body and
Developer 12
Regen-SW
Support payments backed by a contract, and a robust payment scheme
Contracts for difference – how it works Current ‘Renewables Obligation’ Renewable generators have their income topped up by a (fairly) constant amount per MWh, by way of a purchaser obligation. Different technologies get different levels of top-up. Typical duration 20 years. Generators take the risk of forward price exposure.
This will close to new projects in 2017 – but scheme will continue for already-built projects.
For new low-carbon projects Everyone still sells power in the open market. Income for new Low Carbon generation topped-up from reference market price to a fixed strike price – removing price exposure.
This top-up lasts 15 years for renewables. Net costs are paid by consumers via their electricity suppliers (as with current system) – but energy intensive users may be exempt. 13
Regen-SW
Making it happen
Cost reduction • Strong progress – but need to go further and faster – aiming for grid parity
Community benefits and engagement • Sustainable deployment • Communities seeing the benefits of energy projects in their areas
Opening up supply chains • Access to market for SMEs 15
Regen-SW
Your industry is critical to the growth agenda of this government - the green growth agenda our country needs, short and long. Your success is showing just what is possible. Ed Davey – November 2013
16
Regen-SW
UK strategy for decarbonisation
Renewable energy deployment is central to our strategy to 2020 – and beyond 5% of energy renewable now Must increase to 15% by 2020 Which means ~ 30% UK electricity renewable by 2020
nuc
gas
coal
oil
~ 2/3 of UK energy is for heating & transport’
3
Regen-SW
Huge progress to date (1/4) Renewable generation up 56% to record 15.5% - in just 12 months
4
Regen-SW
Huge progress to date (2/4) Renewable Electricity Technology Onshore wind
2013 Q2 TWh
Percentage change on a year earlier 3.76 +69.9
Offshore wind
2.47
+50.9
Hydro Solar PV, wave and tidal Bioenergy (inc. co-firing) All renewables
0.97 0.42
+29.0 +22.4
5.20
+58.3
12.83
+55.8
Strong public support: Three-quarters of people (76%) continue to support the use of renewable energy sources to generate the UK’s electricity, fuel and heat 5
Regen-SW
Huge progress to date (3/4)
4MW (2x 2MW)
2000
630MW (175x 3.6MW)
2013
6
Regen-SW
Huge progress to date (4/4)
Since 2010 DECC has recorded investments in large scale renewable energy
totalling over £29 billion, with the potential to support around 30,000 jobs.
7
Regen-SW
Job figures based on ORED analysis of developer announcements
Clear framework for investment
Strong Government commitment • Long-term framework for decarbonisation – 80% reduction in emissions by 2050, carbon budgets to get us there • Energy Bill (Electricity Market Reform) introduced to Parliament November 2012 – due to reach Royal Assent by the end of the year • Secure funding framework to 2020 •
£7.6bn in 2020
•
3x budget in real terms … the current review is not about changing investment incentives for renewables, such as the Renewables Obligation, Contracts for Difference or the Feed in Tariffs scheme.
The level of support will remain, as planned and as published.
9
Regen-SW
I am determined to see the UK retain its global lead in this sector and we have set out the framework to achieve that.
Our market faces huge challenges
Fifth of plant closing by 2020
Long run electricity demand could double
Weak signals in the market for low carbon generation
Current market suits gas, but harder to build low carbon plant
10
Regen-SW
A clear framework for investment Feed-in Tariffs Renewables Obligation
Contracts for Difference
11
Regen-SW
CfD is designed to provide certainty for investors CfD Removes Long-term Price Risk from Investors
Earlier allocation of CfDs, reducing risk to developers
Lowering the cost of investing in low-carbon Generation
Clear set of roles and responsibility between Government, Delivery Body and
Developer 12
Regen-SW
Support payments backed by a contract, and a robust payment scheme
Contracts for difference – how it works Current ‘Renewables Obligation’ Renewable generators have their income topped up by a (fairly) constant amount per MWh, by way of a purchaser obligation. Different technologies get different levels of top-up. Typical duration 20 years. Generators take the risk of forward price exposure.
This will close to new projects in 2017 – but scheme will continue for already-built projects.
For new low-carbon projects Everyone still sells power in the open market. Income for new Low Carbon generation topped-up from reference market price to a fixed strike price – removing price exposure.
This top-up lasts 15 years for renewables. Net costs are paid by consumers via their electricity suppliers (as with current system) – but energy intensive users may be exempt. 13
Regen-SW
Making it happen
Cost reduction • Strong progress – but need to go further and faster – aiming for grid parity
Community benefits and engagement • Sustainable deployment • Communities seeing the benefits of energy projects in their areas
Opening up supply chains • Access to market for SMEs 15
Regen-SW
Your industry is critical to the growth agenda of this government - the green growth agenda our country needs, short and long. Your success is showing just what is possible. Ed Davey – November 2013
16
Regen-SW
