Renewable Energy Association
Press Release
IMMEDIATE RELEASE
9th August 2012

 

Unions, associations, investors, NGOs and British businesses call on Cameron and Clegg to join-up departments and accelerate UK’s renewables programme

REA [1] sends letter to Number 10 urging clarity on renewables growth and support

Over 200 diverse organisations have signed a letter to PM David Cameron and DPM Nick Clegg asking them to ensure their Government provides clear and consistent leadership on renewable energy [2].

The letter follows growing concerns about the slow pace and complexity of DECC’s policy framework and a series of interventions by the Treasury, creating confusion about Government objectives and leaving key renewable power technologies without the clarity they need. The recently published Renewables Obligation (RO) Banding document was meant to define support levels for renewable power technologies until 2017 [3]. However, onshore wind, solar power and anaerobic digestion now have a year or less of forward visibility.

Martin Wright, Chair of the REA said:

“The decisions for renewable power were late and raised more questions than they answered. Renewables must not be treated like a political football, kicked between DECC and Treasury. Government shouldn’t squander this once in a generation opportunity to transform our energy system into one fit for the future, with all the jobs and inward investment this will bring.

“It’s a measure of our frustration with the pace of policy making and its lack of direction, that we are writing this open letter to the Prime Minister and Deputy PM. The UK is lagging behind virtually all other countries on renewable energy. This Government needs to start living up to its Coalition Agreement, and its promise to be the greenest ever.”

Illustrating the strength and breadth of support for the renewable energy agenda, the letter has been signed by signatories as diverse as investors Novusmodus and Climate Change Capital, the TUC’s Frances O’Grady, the University and College Union, the NFU, environmentalist Tony Juniper and major companies npower renewables and Fred Olsen.

The letter has also been signed by several associations, from the REA and Solar Trade Association to the UK Sustainable Investment and Finance Association and the Country Land and Business Association.

REA Chief Executive Gaynor Hartnell said:

“The reasons for doing renewables have evolved over the decades. Right now we are on the cusp of pure economics being the main driver. Even the least developed renewable technologies are on a par with carbon capture and storage and nuclear power, and in fact most renewables are significantly cheaper. Our leaders must see the sense in this, and ensure the UK is not left behind.”

The REA’s assertion that the Government is failing to understand the economic benefits of renewables investment is supported by analysis from Lord Stern and his colleagues at the Grantham Institute. Writing in REA News [4] Lord Stern and his colleagues stated: “costs are not saved and investment is not promoted by procrastination”, and that the transition to a low-carbon economy, with good policy, could be “intensely creative and full of opportunity.”

Recent Ofgem figures show energy bills have risen £200 in the past two years [5]. Recent energy bill increases have been largely driven by fossil fuel price rises [6] while support for renewable power added just £22 to household energy bills last year [7]. However, the Chancellor equated renewable energy with expense in his 2012 budget and has sought to constrain investment in renewables [8].

Paul Monaghan, Head of Social Goals and Sustainability at the Co-operative Group, who signed the letter, said:

“In many ways, the current situation is the worst of all worlds. Investors continue to have no clarity as to whether the Government has any real appetite for renewables – and are left to interpret the various leaks and letters that pass across the back-benches. There is a tremendous willingness in the private sector to take forward the low carbon economy, but we need the Government to act in a fair and consistent manner.”

Earlier this year, the REA report ‘Renewable Energy: Made in Britain’ [9] revealed that there are currently 110,000 people employed across the UK renewable energy sector, with the potential for a total of 400,000 if we meet our 2020 renewable energy targets. However, the report also made clear that a dedicated green skills strategy is necessary to transform the current skills shortage into a tremendous employment creation opportunity.

ENDS

For further information or to request an interview, please contact:

REA Press Office: +44 (0)2079 810 856, or:

Name: Leonie Greene
Title: Head of External Affairs, REA
Tel: +44 (0)7932 720 091

Notes to Editors

1. The Renewable Energy Association represents renewable energy producers and promotes the use of all forms of renewable energy in the UK across power, heat, transport and renewable gas. It is the largest renewable trade association in the UK, with over 900 members, ranging from major multinationals to sole traders. For more information, see: www.r-e-a.net

2. The full text of the letter with all signatories, sent to the PM and DPM by email last night and by post this morning, can be viewed on the REA website: www.r-e-a.net/news/letter-to-pm-and-dpm-urging-clarity-on-renewables-growth-and-support

3. The RO Banding decisions have provided certainty to 2017 only for offshore wind, energy-from-waste CHP, wave and tidal, sewage gas, and advanced conversion technologies. Onshore wind faces a new review, with just one year’s extra certainty provided. Solar support levels were not even announced and there will be a further review for the new bands in April 2013.

Sub-5MW AD, onshore wind, hydro and solar schemes face the prospect of being excluded from the RO, which would unfairly distort the market. The UK’s first deep geothermal power station is now unlikely to raise finance after the RO Banding decisions despite the Prime Minister explicitly promising to support the technology before the election. There is uncertainty about whether the support level is sufficient for new hydro to come forward, and open landfill gas sites will receive no support .

Biomass power generators face further consultations on a supplier cap and on sustainability. Furthermore support for CHP has not been extended, with the result that some members have been switching to gas rather than renewable CHP.

The RO Banding decision document announces six new forthcoming consultations, one call for evidence, and one outstanding consultation:

a. Introduction of a supplier cap for dedicated biomass;
b. Level of support for standard biomass co-firing in 2013/14 and 2014/15;
c. Introduction of cost control mechanism for co-firing and biomass conversions;
d. Level of support for solar PV;
e. Removal of the energy crops uplift for standard biomass co-firing;
f. Exclusion from the RO of new solar, AD, hydro and onshore wind installations at or below 5MW that are currently eligible for RO or Feed-in Tariffs (FITs) from April 2013;
g. Details of improved sustainability criteria;
h. A call for evidence looking at onshore wind costs.

4. Nicholas Stern, Mattia Romani and Dimitri Zenghelis: ‘Grantham Research Institute warns over low-carbon economics’, REA News Summer 2012, p. 15. Available at: http://issuu.com/newnorth/docs/rea_news_summer_2012/15?mode=window

5. According to Ofgem figures, the typical annual dual fuel bill has risen by over £200 in the last two years, from £1,105 in July 2010 to £1,310 in July 2012. See Ofgem: ‘Electricity and Gas Supply Market Indicators – 01 August 2012’, 8th August 2012, p. 3. Available at: www.ofgem.gov.uk/Markets/RetMkts/rmr/smr/Pages/indicators.aspx

6. See Ofgem: ‘Why are energy prices rising?’, 14th October 2011, p. 1. Available at: www.ofgem.gov.uk/Media/FactSheets/Documents1/Why%20are%20energy%20prices%20rising_factsheet_108.pdf

Ofgem said:

“Higher gas prices have been the main driver of increasing energy bills over the last eight years”.

7. See Ofgem: ‘Updated household energy bills explained’, 31st May 2012, p. 3. Available at: www.ofgem.gov.uk/Media/FactSheets/Documents1/household-bills.pdf

Ofgem said:

“The Renewables Obligation: Ofgem’s estimate is that the cost of this scheme this year is £21 out of your electricity bill (there is no impact on your gas bill for this programme).”

“Feed-in-Tariffs: Ofgem’s estimate is that the cost of this programme is less than £1 out of your electricity bill (there is no impact on your gas bill for this programme).”

8. The Levy Control Framework has severely limited the budget for Feed-in Tariffs (FITs). See also The Guardian: ‘George Osborne letter to Ed Davey on gas and wind power’, 9th July 2012 (published 23rd July 2012). Available at: www.guardian.co.uk/environment/2012/jul/23/george-osborne-letter-ed-davey-gas-wind

In this letter, the Chancellor seeks assurances that there will be no targets for renewable energy for 2030, yet research by the European Commission shows investment in renewable energy will slow near 2020 without further targets. The Chancellor also asked for powers under the Energy Bill to terminate the FITs scheme. However, the FITs scheme has delivered dramatic cost reductions for renewable energy. Furthermore, the FITs scheme provides a return on investment for everyday investors, lower than returns demanded by utilities.
9. REA/Innovas: ‘Renewable Energy: Made in Britain’. Executive summary available at: www.r-e-a.net/resources/pdf/61/Renewable_Energy_-_Made_in_Britain_Executive_Summary.pdf

See also REA press release: ‘Report on employment and skills in the UK renewable energy sector to be launched with Greg Barker’, 23rd April 2012. Available at: www.r-e-a.net/news/report-on-employment-and-skills-in-the-uk-renewable-energy-sector-to-be-launched-with-greg-barker

Full report available to journalists upon request: jbeard@r-e-a.net