REA Welcomes DECC's significantly extended grants for household renewable heat installations

DECC has today announced that the Renewable Heat Premium Payment (RHPP) for domestic installations of biomass and other green heating sources will be significantly increased, in most cases being doubled¹. The measure will support renewable heat installations prior to the introduction of the domestic Renewable Heat Incentive (RHI). Vouchers are claimed and then redeemed after the technology has been installed. RHPP supports solar thermal, ground and air source heat pumps and biomass boilers.

REA Chief Executive Gaynor Hartnell said:

“It’s welcome that these grants are being continued and the levels increased. They need to stay in place until the proper heat payment scheme for householders commences. This has been delayed on a number of occasions and we hope this will be the last time this stop-gap measure is needed.”

The REA was a joint signatory together with other renewable heat trade associations on a letter to Greg Barker calling for the RHPP payments to be doubled. This is a stop-gap measure before full introduction of the RHI (similar to the Feed-in Tariffs but for heat) anticipated for spring 2014.

There is no guarantee that those receiving RHPP payments will be eligible for RHI support, as the RHI eligibility criteria have yet to be published, however if those receiving the RHPP do join the RHI, the payment will be deducted from RHI income.

Payments can only be made to properties with loft and cavity wall insulation (where applicable), who have had a Green Deal assessment, and for installations fitted by MCS-certified installers.

While welcoming today’s announcement, the industry has been waiting for almost 5 years since the RHI was originally announced² for the programme to be introduced and is in need of further policy certainty.

ENDS

For more information or to request an interview, please contact the REA:

The REA policy team
+44 (0)20 7925 3581
fgordon@r-e-a.net

Notes for Editors

1. DECC: 20th May 2013. Available at: https://www.gov.uk/government/news/more-money-for-renewable-heating-kit

2. DECC: ’Increasing the use of low-carbon technologies: The Renewable Heat Incentive’, https://www.gov.uk/government/policies/increasing-the-use-of-low-carbon-technologies/supporting-pages/renewable-heat-incentive-rhi

About the RHPP:

• The Renewable Heat Premium Payment (RHPP) is effectively a modest grant scheme introduced in 2011 to tide domestic properties over in the absence of proper Renewable Heat Incentive Tariffs being in place for householders.

• RHI payments for householders were originally going to be introduced in 2011, but have been delayed. The latest position is that the domestic RHI will begin in spring 2014, subject to confirmation.

• Receiving RHPP support does not guarantee eligibility for the domestic RHI as the RHI criteria are still to be finalised.

• The REA, in conjunction with other trade associations including the Solar Trade Association (STA) launched a campaign to increase the payment levels in response, including a joint letter from the REA, STA and other renewable heat trade associations.

• The RHPP support levels will now be as follows, solar thermal installations can be in any property but all other technologies must be installed in properties which are off the gas grid:

                     Previous RHPP   New RHPP
ASHP                       £850           £1300
GSHP                     £1250          £2300
Biomass boiler     £950           £2000
Solar thermal        £300            £600

About the REA:

• 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 1,000 members, ranging from major multinationals to sole traders. For more information, see: www.r-e-a.net
 

The race is on: Biomass project developers rush to fit their projects within the 400MW cap

DECC has today launched a “Consultation on a notification process for new build dedicated biomass projects”, with proposals on how to limit new biomass projects [1] under the Renewables Obligation.

DECC ran a series of workshops with the REA in February, to establish the best process for implementing the 400MW cap. Much of the feedback from these workshops is reflected in the consultation document, which is welcome. However, the REA’s view that a cap on new capacity is a deeply flawed concept has not changed.

REA Chief Executive Gaynor Hartnell said:

“The entire concept of capping new dedicated biomass capacity is wrong. There may be as much as 1,000MW of projects still in active development, yet DECC wants to limit the build to only 400MW.”

Whilst DECC claims the cap is to do with affordability, these projects generate electricity much more cheaply than offshore wind. In addition, their cost of carbon saving is either on a par with offshore wind and can even be lower, such as in the case of some agricultural residue and waste wood projects.

Gaynor Hartnell said:

“Whilst the proposal is probably the best means of implementing this deeply flawed concept, it is not without risk. There could be a situation where more than 400MW applies to go on the register on the same day. The irony is that DECC should be welcoming such projects, rather than turning them away. The UK faces an impending capacity crunch in 2015-16 and the steady, baseload green electricity generation from these biomass projects is needed, and can provide significant investment and jobs across the country.

“The majority of projects proposed today could be operational, had there not been a series of policy changes and prolonged lack of clarity on the Government’s part.”

ENDS

For more information or to request an interview, please contact the REA press office:

James Beard
Press Officer, REA
+44 (0)20 7981 0856
jbeard@r-e-a.net

• 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 1,000 members, ranging from major multinationals to sole traders. For more information, see: www.r-e-a.net

1. DECC: ‘Consultation on a notification process for new build dedicated biomass projects’, 13th May 2013. Available at: https://www.gov.uk/government/consultations/renewables-obligation-notification-process-for-new-build-dedicated-biomass-projects

The REA is pleased to reveal today details of the shortlist, judging panel and media supporters for the Eighth Annual British Renewable Energy Awards. Registration is now open for the Awards Gala Dinner, which will take place at the Jumeirah Carlton Tower Hotel in London on 13th June. Table bookings for the Gala Dinner are open now [1].

Now in their eighth year, the British Renewable Energy Awards celebrate the contribution of renewables to the UK economy and society – as well as the contribution of exceptional individuals to the renewables industry itself.

Image shows Gaynor Hartnell and winners of last year's Pioneer Award Stockport Homes.

Finalists

Champion Award

• John Baldwin – CNG Services
• Peter Fraenkel – Fraenkel-Wright
• David Handley – Renewable Energy Systems
• Clare Lukehurst – IEA Task 37
• Mark Shorrock – Tidal Lagoon Power
• Guy Watson – Dulas

Community Award

• Devon Association for Renewable Energy
• Repowering
• TGV Hydro
• Westmill Solar Co-operative

Company Award

• Forest Fuels
• Gentoo Group
• Good Energy
• Marches Biogas

Innovation Award

• 3sun Group
• Econic
• Evergreen Gas
• Oxford PV

Installer Award

• Bright Green Energy
• British Gas New Energy & Walsall Housing Group
• Ecohill
• Feed It Green

Leadership Award

• J V Energen
• Lightsource Renewable Energy
• Vale Green Energy

Pioneer Award sponsored by Blue & Green Tomorrow

• Dytecna Ltd
• Eco Sustainable Solutions
• Golden Gates Housing Trust
• Lancashire County Pension Fund
• Tamar Energy
• Vale Green Energy

Project Award sponsored by reNews

• Clearfleau – Dailuaine anaerobic digestion plant
• Ignis Biomass – Wick district heating scheme
• J V Energen/Scotia Gas Networks – Poundbury biomethane injection project
• Solarcentury – Blackfriars solar bridge

Skills Development Award

• 3sun Group
• A P Chant Renewable Energy
• Clarke Energy
• NatWest Bank
• Vivergo Fuels
   

Judges

The REA has again brought together an eclectic mix of respected figures from across business, academia and the media to sit on this year’s Judging Panel. Extra special thanks to Peter Ainsworth for once again offering his services as both Chair of Judges and Presenter at the Awards Dinner.

• Peter Ainsworth (Chair of Judges) - Chairman, Big Lottery Fund & ex-MP
• Phillip Cozens - Director, Progressive Energy
• Juliet Davenport - CEO, Good Energy
• Virginia Graham - CEO, Renewable Energy Assurance Ltd
• Gaynor Hartnell - CEO, REA
• Tom Heap - Broadcast journalist
• Seb Kennedy - Deputy Editor, reNews
• Miriam Maes - CEO, Foresee
• Catherine Mitchell - Professor of Energy Policy, Exeter University
• Richard Nourse - Managing Partner, Greencoat Capital
• Iain Stewart - Geologist & television presenter
• Michael Ware - Partner, BDO

Media supporters

We would like to thank Blue & Green Tomorrow [2] and reNews [3] for supporting our Pioneer and Project Awards respectively.

The Pioneer Award celebrates trailblazers who set a path for others to follow, which fits neatly with Blue & Green Tomorrow’s aim of promoting sustainable and responsible investment in the industries of the future. Likewise reNews seemed a perfect fit for the Project Award, as it is the newsletter which keeps the whole renewables industry up to date with developments on the ground (and in the ocean!).

We are also pleased to announce that this year’s after-dinner speaker is the Right Honourable Michael Portillo. Since leaving politics, Michael Portillo has embarked on a hugely successful writing and broadcasting career across BBC television and radio [4].

REA Chief Executive Gaynor Hartnell comments:

“As always, the shortlist for this year’s Awards reflects the diversity, diligence and ingenuity of the UK renewables industry. We have lifelong renewables champions alongside exciting young entrepreneurs. Small start-ups showing their peers how it’s done, and huge projects setting a path for others to follow. These fascinating stories reveal how renewable energy is powering society, heating homes and businesses and getting us from A to B. I look forward to welcoming guests and judges alike one last time at our Awards Gala Dinner in June.”

ENDS

For more information on the Awards Shortlist and Gala Dinner, please contact the REA Events Team:

Lindsay Barnett
Head of Operations, REA
+44 (0)20 7925 3570
lbarnett@r-e-a.net

For more information on shortlisted companies in your sector or your region, please contact the REA press office:

James Beard
Press Officer, REA
+44 (0)20 7981 0856
jbeard@r-e-a.net

Notes to editors

• 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 1,000 members, ranging from major multinationals to sole traders. For more information, see: www.r-e-a.net

1. REA: British Renewable Energy Awards 2013, 13th June 2013. For more information or to register, visit: http://www.r-e-a.net/events/british-renewable-energy-awards-2013
    
2. For more information, visit: www.blueandgreentomorrow.com
    
3. For more information, visit: www.renews.biz
    
4. For more information, visit: http://www.michaelportillo.co.uk/profile.htm

Industry Committee (ITRE) of European Parliament to discuss Draft Opinion

Industries urge Governments to oppose damaging and unscientific ILUC proposals

Five industry associations from across the EU have agreed a joint position paper [1] opposed to the European Commission’s proposals on indirect land use change (ILUC) [2]. The European Parliament’s Industry Committee (ITRE) will be discussing its Draft Opinion in response to the proposals tomorrow [3].

The paper, endorsed by industry associations in Germany, Poland, Portugal, Spain and the UK, argues that the Commission’s proposals to account for carbon emissions from ILUC in the biofuels industry are based on unsound science. The proposals would put at risk hundreds of thousands of jobs and billions of pounds of investments, both committed and future, as well as jeopardising UK and European climate change and renewable energy targets.

Clare Wenner, Head of Renewable Transport at the REA, said:

“We welcome the contribution of the ITRE Committee to the ILUC debate, and many of its proposed amendments are broadly in line with the measures we recommend in our joint position paper. We urge the Committee to do all it can to bring these amendments into the European Parliament’s final position.

“The Commission’s proposals on indirect land use change are based on unsound science and emotive NGO campaigning on food prices rather than real world facts and data. In their current form, these proposals risk jeopardising billions of pounds of investment and the hundreds of thousands of jobs that go with that across the whole supply chain.”

The European industry’s position paper makes clear that targeted measures, such as bilateral agreements on forest protection, can allow for both a healthy biofuels industry and healthy forests and peatland. It also stresses that many benefits of biofuels are often ignored in the ILUC and food and fuel debates. The food industry benefits for example both from increased agricultural productivity driven by demand for biofuels, and from co-products of the biofuels industry (such as high protein DDGS) which can displace high-carbon soy imports in animal feed.

Clare Wenner concluded:

“We also urge the UK Government to take stock of both the European industry’s joint position paper and the ITRE Draft Opinion. Government must show strong leadership if it is to safeguard the UK biofuels industry, which is among the best and most sustainable in the world, but which is at risk of being stopped dead in its tracks by the ILUC proposals.”

ENDS

For more information or to request an interview, please contact the REA press office:

James Beard
Press Officer, REA
+44 (0)20 7981 0856
jbeard@r-e-a.net

Or for further comment, please contact:

Clare Wenner
Head of Renewable Transport, REA
+44 (0)7802 487 679

Notes to editors

• 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 1,000 members, ranging from major multinationals to sole traders. For more information, see: www.r-e-a.net

1. Asociación de Productores de Energías Renovables Biocarburantes, Associação Portuguesa de Produtores de Biocombustíveis, Krajowa Izba Biopaliw, Renewable Energy Association and Verband der Deutschen Biokraftstoffindustrie: ‘National Associations refuse Commission’s proposal on iLUC’, 23rd April 2013. Available at: http://www.r-e-a.net/images/upload/news_165_130423_National_Associations_refuse_Commissions_proposal_on_iLUC.pdf
   
   Alternatively, click the pdf link at the bottom of this page.
    
2. European Commission: ‘Proposal for a Directive amending Directive 98/70/EC relating to the quality of petrol and diesel fuels and amending Council Directive 93/12/EC and amending Directive 2009/28/EC on the promotion of the use of energy from renewable sources’, 17th October 2012. Available at: http://ec.europa.eu/energy/renewables/biofuels/land_use_change_en.htm
    
3. European Parliament Industry, Research and Energy Committee (ITRE): ‘DRAFT OPINION on the proposal for a directive of the European Parliament and of the Council amending Directive 98/70/EC relating to the quality of petrol and diesel fuels and amending Directive 2009/28/EC on the promotion of the use of energy from renewable sources’, 28th March 2013. Available at: http://www.europarl.europa.eu/committees/en/itre/draft-opinions.html

Mike Landy has written an article for the April issue of Modern Building Services explaining why the time is right to install on-site renewable energy systems in homes, offices and industrial sites.

To read the article on the Modern Building Services website, click here.

To read the article in the digital edition of the latest issue of Modern Building Services, click here (p. 29).

Image shows a section of the 240kW solar PV system installed by Sundog Energy at London King's Cross last year. Photo by James Beard.

Please note that since this article was written DECC has announced that the introduction of new technologies to the non-domestic RHI and the introduction of the domestic RHI will now not take place until Spring 2014.

Mike Landy has written an article for Renewable Energy magazine on the status of Government policy to drive the incorporation of on-site renewable energy systems into new build developments.

Renewable Energy have kindly allowed us to reproduce the article here - click below to download, or click here to read the latest issue of Renewable Energy in full.

Image shows a 950kW biomass boiler which heats the Milton Keynes IKEA store (courtesy of 3G Energi).

Mike Landy has written an article for Construction National on the current confidence levels in the renewables industry, and what this means for the construction sector. The article features graphics provided by Blue & Green Tomorrow.

Construction National have kindly allowed us to reproduce the article here - click below to download.

Image shows the overall score for the first edition of the Renewables industry Confidence Index (RICI).

Gaynor Hartnell, in collaboration with REA colleagues, has written an article for Materials Recycling World on the importance of quality inputs to achieve quality outputs in various waste to energy applications, including combustion, gasification & pyrolysis and anaerobic digestion.

MRW have kindly allowed us to reproduce the article, which first appeared in the magazine's EfW supplement on 29th March. Download both pages of the article below.

You can also read the article online at the MRW website.

Image shows Gaynor Hartnell at the opening of Viridor’s landfill gas power plant at Rigmuir, Glasgow.

'Eco-Report March 2013: A special report on smart grids' was published by Lyonsdown, who have kindly allowed us to reproduce pages from it here.

Click below to view pdfs of the pages where Gaynor and Mike are interviewed, and click here to read the report in full.

Gaynor discusses the interaction of decentralised power and smart grids, while Mike examines whether the UK is on track to meet its 2020 renewables targets. The REA is the European Renewable Energy Council's UK partner for the 'Keep on track!' project, which aims to check how EU member states are measuring up to their Renewable Energy Directive (RED) targets, and Mike is the UK project leader. For more information on 'Keep on track!', visit the EREC website.

The sole responsibility for the content of these publications lies with the authors. It does not necessarily reflect the opinion of the European Union. Neither the EACI nor the European Commission are responsible for any use that may be made of the information contained therein. 

Renewable electricity up 20% on previous year

2012 was a strong year for the performance of renewable energy generation, mainly due to new renewable power projects coming on-stream, Government figures reveal today [1]. 11.3% of the UK’s electricity last year was generated from renewables overall, and 12.5% in the fourth quarter.

Much of this growth is due to new on- and offshore wind farms, in spite of lower than average wind speeds over the year. 2012 was also fairly dry, meaning less output from hydro. Biomass generation increased 17%, largely thanks to Tilbury’s conversion to biomass, and the capacity of solar PV increased 70%, up to 1.7GW. Total UK renewable power capacity now stands at 15.5GW.

REA Chief Executive Gaynor Hartnell comments:

“Renewables now generate more than 10% of our electricity on average. Compared to 2011, generation from onshore and offshore wind increased by 15% and 46% respectively, while solar PV capacity is up 70%. The conversion of Tilbury also shows what a big difference biomass can make, especially at a time when the Government is desperate to bring forward affordable, baseload, low carbon generation.

“It is a critical time for industry as the Energy Bill makes its way through Parliament. We look forward to working with Michael Fallon in his new role as Energy Minister, particularly in light of his work on the 2008 Planning and Energy Act, but a change of Ministers at this crucial time further complicates matters.”

However, there was a reduction in the consumption of liquid biofuels for transport. Biofuels remain a small sector of UK motor fuel (down to 2.6%), and urgently need certainty in the policy framework to fulfil their potential for decarbonising transport. All biofuels consumed in the UK must meet strict sustainability criteria, and UK-produced biofuels are among the best in the world for greenhouse gas savings.

Gaynor Hartnell said:

“These are trying times for producers of renewable transport fuels. The removal of the fuel duty rebate for used cooking oil has significantly reduced biodiesel consumption, but the 5% cap on first generation biofuels proposed by the EU poses a much greater problem. We are pleased to hear that Ministers are prepared to be flexible on the level of the cap. The REA, alongside representatives of other land-based industries, will continue to call for greater use of genuinely sustainable biofuels.”

Today’s release does not include statistics on renewable heat. The REA anticipates modest growth in renewable heat capacity since the introduction of the Renewable Heat Incentive (RHI).

Gaynor Hartnell said:

“Heating accounts for around half of the UK’s carbon emissions. We urge Ministers to ensure that there are no further delays to the domestic RHI. This will be crucial for raising awareness of renewable heat among consumers, and boosting confidence in the industry.”

ENDS

For more information or to request an interview, please contact the REA press office:

James Beard
Press Officer, REA
+44 (0)20 7981 0856
jbeard@r-e-a.net

Or for further comment, please contact:

Gaynor Hartnell
Chief Executive, REA
+44 (0)7870 629 575

Notes to editors

• 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 1,000 members, ranging from major multinationals to sole traders. For more information, see: www.r-e-a.net

1. DECC: ‘Energy Trends and Prices statistical release: 28 March 2013’, 28th March 2013. Available at: https://www.gov.uk/government/news/energy-trends-and-prices-statistical-release-28-march-2013

European Commission opens debate on 2030 climate and energy framework and reviews current renewables progress and biofuels policies

The REA welcomes two reports published today by the European Commission: a Green Paper on a 2030 framework for climate and energy policies [1] and a progress report on renewable energy [2], and a working document on the social sustainability of EU biofuels policies [3].

Response to the Commission’s Green Paper on a 2030 framework for climate and energy policies

The REA welcomes an open debate on the 2030 framework, as investment decisions which will decide our energy mix in 2030 - including in the supply chain - are being made today.

The REA strongly supports an extension of existing national renewables targets to 2030. The Green Paper shows that annual growth in renewables has increased since the introduction of indicative targets from 1.9% per annum (1995-2000) to 4.5% per annum (2001-2010).

REA Chief Executive Gaynor Hartnell said:

“It would be a mistake for the European Union to rely solely on a 2030 carbon target to drive the uptake of low-carbon energy. It does not bode well that the EU Emissions Trading Scheme has failed to date to deliver long-term carbon signals. The mandatory renewable energy targets for 2020 are accelerating the deployment of renewable energy across the EU and we need to maintain that momentum by continuing this approach to 2030.

“It is important to remember that renewables are not just about carbon – they improve our energy security, help with the balance of trade, create jobs and contribute to economic growth – plus they can be deployed much faster than other low carbon generation. However, the EU is in danger of falling into the trap of focussing almost exclusively on the power sector, when heat and transport are responsible for the majority of emissions.”

Response to the Commission’s progress report on renewable energy in the EU

The REA, which is the UK partner for the pan-European ‘Keep on track!’ project [4], welcomes this latest progress report. The report suggests that the EU is broadly on track to meet its renewable energy targets, although it does also raise concerns that particular technologies (e.g. biomass and onshore wind) are deploying more slowly than required. Progress must also be seen in the context of reduced overall energy consumption due to the European economic downturn, which makes the proportion of renewable energy higher than it would otherwise have been.

The UK needs a higher growth rate than almost all other Member States, starting from one of the lowest bases [5]. It is encouraging that the UK is broadly on track to meet its interim 2011-2012 target (with 2010 share of renewables in UK energy at 3.3% in relation to the interim target of 4%). However, most other Member States are actually ahead of schedule and have already met their interim target.

UK project leader for ‘Keep on track!’ Mike Landy said:

“The UK is roughly on track for the 2020 target, but most countries are ahead of their interim targets. The rest of the EU realises the broader benefits of renewables and is powering ahead. The UK must catch up. The prize is 400,000 green jobs in an industry worth £12.5 billion in 2020 [6]. We need joined up, consistent political support from across Government to send a clear message to investors that the UK is serious about green growth.”

Response to the Commission’s assessment of the sustainability of EU biofuels policies

Biofuels and bioliquids are subject to strict sustainability criteria in order to count towards the EU’s 2020 targets. Within the progress report published today the Commission assessed the sustainability of EU biofuels, as part of a wider report expected shortly on the social sustainability of the increased demand of biofuels.

REA Head of Renewable Transport Clare Wenner said:

“The Commission’s assessment has highlighted the sustainable nature of biofuels produced and used in the EU. This is in stark contrast to recent stories which have wrongly linked biofuels to high food prices and poor GHG savings.

“The analysis shows that biofuels in fact have had only a minor effect on global commodity prices, and that biofuel demand is in fact more price sensitive than the food market, meaning that use of crops for biofuels actually declines as food prices increase. Biofuels used in the EU consume only 3 million hectares of the 1.5 billion hectares of total arable land available worldwide [7]. Today’s report also shows that over 80% of biofuels consumed in Europe is produced within the EU.

“The report confirms that biofuels encourage best agricultural practices through voluntary schemes, generate much needed jobs (220,000 in the EU and 1.4 million internationally), and have contributed to significant carbon savings estimated at 25.5 Mt CO2eq. Beyond 2020, first generation biofuels have a significant role to play in contributing to GHG reductions in the transport sector, which is responsible for 25% of the UK’s emissions. Support for first generation biofuels in the short to medium term will help to stimulate much needed investment in second generation biofuels.”

ENDS

For more information or to request an interview, please contact the REA press office:

James Beard
Press Officer, REA
+44 (0)20 7981 0856
jbeard@r-e-a.net

Or for further comment, please contact:

Leonie Greene
Head of External Affairs, REA
+44 (0)7932 720 091
lgreene@r-e-a.net

Notes to editors

• 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 1,000 members, ranging from major multinationals to sole traders. For more information, see: www.r-e-a.net

1. European Commission: ‘Green Paper on 2030 Policy Framework’, 27th March 2013. Available at: http://ec.europa.eu/energy/green_paper_2030_en.htm
    
2. European Commission: ‘2013 Renewable Energy Progress Report’ 27th March 2013. Available at: http://ec.europa.eu/energy/renewables/reports/reports_en.htm
    
3. European Commission: 'COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Renewable energy progress report', 27th March 2013. Available at: http://ec.europa.eu/energy/renewables/reports/doc/swd_2013_0102_res_en.pdf
    
4. Please note that the sole responsibility for the content of this press release lies with the authors. It does not necessarily reflect the opinion of the European Union. Neither the EACI nor the European Commission are responsible for any use that may be made of the information contained therein.
   
   For more information on the ‘Keep on track!’ project, visit: http://www.erec.org/projects/ongoing-projects/keep-on-track.html
    
5. REA: ‘Renewables Industry Confidence Survey Q1 2013’, 18th March 2013. Press release available at: http://www.r-e-a.net/news/rea-publishes-first-ever-industry-confidence-survey
    
6. REA: ‘Renewable Energy, Made in Britain’, 23rd April 2012. Press release available at: http://www.r-e-a.net/news/report-on-employment-and-skills-in-the-uk-renewable-energy-sector-to-be-launched-with-greg-barker
    
7. DfT/DECC/Defra: ‘UK Bioenergy Strategy’, 13th April 2012. Available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/48337/5142-bioenergy-strategy-.pdf 

Government intervention means modern UK energy infrastructure and potential household savings

The Government's revised analysis of the estimated impact of its energy policies on energy bills was published today [1]. The analysis makes clear the distinction between the cost of energy, and energy bills, which could be reduced by energy efficiency measures and investment in on-site renewables.

Overall the package of measures, under DECC's 'central fossil fuel' scenario, is estimated to reduce household energy bills in 2020 by an average of 11%, or £166, compared to the 'do nothing' scenario.

REA Chief Executive Gaynor Hartnell said:

“The cost of energy may be rising but households and businesses can take positive steps to limit bill increases with efficiency measures and investment in on-site renewables.

“Predicting future fossil fuel costs in a volatile international market is fraught with uncertainties. Investment in energy infrastructure is essential, as is the switch to renewable energy. Government intervention on both new generation and demand reduction should save households money overall. That's got to be good news for the UK's future security and prosperity.”

The report attributes £112 of today's household bills to current policy measures. This year (2013) renewable energy policies will comprise just a quarter of this figure (i.e. £27) [2]. The great majority of the policy costs are from energy efficiency measures, whilst most of the overall increase is due to rising gas prices [3].

The report makes clear that the wholesale gas prices have increased very substantially over recent years (see Chart 6, p. 22). With wholesale energy prices responsible for 50% of energy bills, UK households and businesses are very exposed to international fossil fuel price volatility. The central price scenario, on which the analysis is based, does not appear to reflect the likely rise in gas prices indicated by Ofgem CEO Alastair Buchanan’s recent warnings of a serious gas supply crunch. It shows gas prices peaking at 78p/therm in 2016, only 13% higher than the 2013 gas price (of 69p/therm). It also anticipates gas prices stabilising from 2018 at 72p/therm - up just 2% from the 2013 figure. However, a 'high' price scenario seems more likely, in which case average household bills will be 14% lower than they would have been.

The 2020 figures in the report are subject to huge uncertainties and do not clearly identify the anticipated overall cost of renewables policy support by 2020. The Electricity Market Reform (EMR) package does not distinguish between renewables and other low carbon technologies. It is also unclear whether the interaction of Contracts for Difference (CfDs) and the Carbon Price Floor (CPF) has been dealt with correctly. The increase in electricity wholesale price resulting from the CPF will reduce the cost of CfDs, as what gets given with one hand, will be taken with the other.

Gaynor Hartnell said:

“The CPF is a tax on pollution (polluter pays principle) that seeks to internalise environmental costs. Ideally the full costs to society of carbon emissions should be reflected in the price we pay for fuels and electricity. The CPF is the first small step in this direction. Ultimately this approach should supersede other more direct subsidies, but it should not be done too soon.

“Renewables deliver many other benefits, in addition to carbon savings. Very importantly they help with security of supply. With most renewable technologies there are no fuel costs, and we aren’t dependent on imports which leave us vulnerable in an ever energy-hungry world.”

It would also be helpful if the analysis distinguished between savings from energy efficiency and savings from on-site generation, as there is huge potential for businesses and households to save money by supplying themselves with renewable heat and power. Furthermore, the switch to renewables could also deliver up to 400,000 diverse jobs nationwide by 2020 [4], as well as greater price stability and national energy security.

Gaynor Hartnell said:

“We think the analysis overestimates the cost of delivering the renewables targets - particularly if Ofgem's anticipated gas supply crunch hits the UK. Nevertheless this analysis should help to reassure households that the cost of modernising our energy infrastructure can be mitigated. But given the relatively low proportion of energy coming from renewables in the UK and our continued dependence on fossil fuels, households remain vulnerable to unexpected and significant bill rises well beyond the figures suggested in this analysis.”

ENDS

For more information or to request an interview, please contact the REA press office:

James Beard
Press Officer, REA
+44 (0)20 7981 0856
jbeard@r-e-a.net

Or for further comment, please contact:

Leonie Greene
Head of External Affairs, REA
+44 (0)7932 720 091
lgreene@r-e-a.net

Notes to editors

• 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 1,000 members, ranging from major multinationals to sole traders. For more information, see: www.r-e-a.net

1. DECC: ‘Policies are putting a cushion between energy prices and household bills - Davey’, 27th March 2013. Available at: https://www.gov.uk/government/news/policies-are-putting-a-cushion-between-energy-prices-and-household-bills-davey
    
2. Ofgem: ‘Updated household energy bills explained’, 16th January 2013. Available at: http://www.ofgem.gov.uk/Media/FactSheets/Documents1/household-bills.pdf
    
3. See, for example:
   
   Committee on Climate Change: ‘Household energy bills – impacts of meeting carbon budgets’, 15th December 2011. Available at: http://downloads.theccc.org.uk.s3.amazonaws.com/Household Energy Bills/CCC_Energy Note Bill_bookmarked_1.pdf
   
   Ofgem: ‘Why are energy prices rising?’, 14th October 2011. Available at: http://www.ofgem.gov.uk/Media/FactSheets/Documents1/Why%20are%20energy%20prices%20rising_factsheet_108.pdf
    
4. REA: ‘Renewable Energy, Made in Britain’, 23rd April 2012. Press release available at: http://www.r-e-a.net/news/report-on-employment-and-skills-in-the-uk-renewable-energy-sector-to-be-launched-with-greg-barker 

Renewable Energy Association
Press Release
22nd March 2013

Nominations for British Renewable Energy Awards extended until midnight this Sunday

The REA has expressed disappointment that George Osborne’s Budget Statement on Wednesday made no mention of renewable energy, despite it being one of the few sectors of the UK economy with genuine jobs and growth potential right now [1].

With the Chancellor out of the running, now is the perfect time to get online and nominate a client, colleague, company or community for a 2013 REA Award.

Renewable energy is a hotbed of growth and innovation, and telling the industry’s success stories is vital to raising broader public awareness of, and support for, the expansion of renewable energy in the UK. Our Awards recognise both the renewables industry itself, but also mainstream businesses and organisations which are successfully integrating renewables into their operations.

The REA will soon reveal the final line-up for the Judging Panel, which includes leading voices from business, academia and the media.

Submit your nominations here: www.surveymonkey.com/s/BREA2013

Don’t forget to share your nominations with the hash tag #BREA2013.

Award Categories

Champion
An individual who deserves recognition in the sector

Community
A group who has been locally active in a renewable energy programme /project

Company
A company who has done the most in the last year to advance the UK renewables

Innovation
For any innovative, renewable energy conversion device, invention or application which has achieved a major milestone or reached market since 2012

Installer
A company which has excelled in the installation of on-site renewables equipment

Leadership
A company that is mainstreaming renewable energy through the scale of its investment and its commitment to secure its energy needs from renewables

Pioneer
A company or organisation in a sector not previously associated with renewables that has now become involved and created a pathway that others can follow

Project
A company that has developed an outstanding building-integrated, on-site or noteworthy stand-alone project

Skills Development
Any company or organisation which has excelled in improving the skills base in the industry

Judges' Award
Judges will consider lifetime achievement or contribution to renewables if the category is not covered by the other Awards

To book your place at the Awards Gala Dinner, which will again be held at the Jumeirah Carlton Tower Hotel in Knightsbridge on 13th June, visit: www.r-e-a.net/events/british-renewable-energy-awards-2013

ENDS

For more information, please contact the REA events team:

+44 (0)20 7925 3570
events@r-e-a.net

Notes to editors

• 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 1,000 members, ranging from major multinationals to sole traders. For more information, see: www.r-e-a.net

1. REA: ‘2013 Budget 'more of the same'’, 20th March 2013. Available at: http://www.r-e-a.net/news/2013-budget-more-of-the-same

Renewables policies only account for 3% of energy bill increases since 2011

The Government has announced that it will accept the great majority of Lord Heseltine’s 'No Stone Unturned' recommendations [1], strengthening the welcome theme of growth ahead of this year’s Budget. The REA is keen to see recognition by the Chancellor that renewable energy projects are ‘shovel ready’ and have a lead role to play in driving jobs and growth. Lord Heseltine recommended that Government needs “to set out a definitive and unambiguous energy policy, including the supporting financial regime, to give the sector the certainty to invest.”

REA Chief Executive Gaynor Hartnell said:

“Lord Heseltine understands strong energy investments will underpin successful economic growth - and he sensibly recommended that Government seeks to boost long-term certainty for investors. After conflict with DECC on energy policy, the Chancellor has an important role to play to establish confidence in a more consistent and supportive political landscape. We very much hope to hear positive rhetoric from him on renewables and, even better, some hard measures to boost renewables investment. This would build on his recognition in last year’s Budget speech that renewable energy has a 'crucial' role to play.”

A survey of members published yesterday by the REA [2] shows high levels of concern about policy efficacy and about the mixed messages coming from Government. Last year the Chancellor described gas as “cheap” in his Budget and promised to keep an eye on the costs of renewables. However, data from Ofgem shows that renewable energy support has been responsible for only 3% of the overall £250 increase to household energy bill over the past two years. The great majority of the price rises are down to international fossil fuel price volatility [3].

Gaynor Hartnell said:

“The European Energy Commissioner is clear that a low-carbon pathway is more cost-effective than business as usual. In addition, renewables deliver energy security, growth and potentially 400,000 UK jobs by 2020. With more emphasis on growth we expect to see the Chancellor unlocking the prosperity renewable energy investment can foster. Renewables work very well with the Government's emphasis on regional and local growth. Local, smaller-scale renewables are every bit as critical to modern energy infrastructure as major centralised infrastructure projects.”

The REA is looking out for announcements on the following:

Infrastructure investment
The REA would like to see renewable energy playing a bigger role in the Government’s infrastructure narrative and being prioritised for strategic support, for example as part of the BIS Infrastructure Strategy programme. Policy clarity is vital to delivering renewables infrastructure investment.

Levy Control Framework (LCF)
This sets the amount of potential budget draw for renewable power, carbon capture and storage (CCS) and nuclear. The figure was agreed as part of the Energy Bill settlement, the main share of which will cover support for renewable power through to 2020. It is important that this sum is not diluted by the addition of other support measure to draw from this pot.

Renewable Heat Incentive (RHI) budget to 2020
The REA has been concerned that the budget for renewable heat is only set to 2015, unlike the LCF which extends until 2020. The REA is keen to see a budget consistent with meeting the objective of 12% renewable heat by 2020, to support major expansion in this area.

Carbon Reduction Commitment (CRC)
The controversial CRC, which incentivises commercial sector investment in energy efficiency, has been under consultation. The CRC had dis-incentivised the commercial sector from investing in on-site renewable power and DECC’s response to the consultation on this concluded that this must be rectified. We await Treasury's decision. The commercial sector has a vital role to play in renewables investment, so this scheme is potentially important.

Business rates freeze and adjustment of renewable energy project business rates
From April, business rates for renewables will be retained by Local Government, potentially creating an incentive for wider acceptance of proposed projects. New renewable energy projects will be valued as at April 2008 assessments with rates increasing with RPI until April 2017. However the REA would warmly welcome a freeze on the RPI price increase.

Furthermore, renewables projects pay higher business rates than fossil fuel plant because valuations of renewable energy projects reflect income from Renewable Obligation Certificates (ROCs). The REA would like to see this policy anomaly addressed, reducing the burden of business rates for renewable energy projects and accelerating the much needed deployment of renewables.

Potential imposition of 20% VAT rate on domestic energy products
HMT is opposing the European Commission’s efforts to increase VAT from 5% to 20% on domestic energy efficiency and microgeneration products such as solar panels. This will impact negatively on the Green Deal and the domestic renewables industry. We would welcome a robust stance from Treasury and hope its intervention is successful.

Marine renewables tax breaks
The REA is keen to see investment in marine energy projects accelerated, particularly as grid issues are creating an investment hurdle. The REA proposes investment in renewables projects in Marine Energy Parks should be treated as an R&D tax credit for five years. We would also welcome tax credits for companies setting up in Marine Energy Parks to encourage the formation of ‘clusters’ of supply chain companies and retain the UK lead in this area.

It has been reported that the Chancellor may give tax relief for oil and gas decommissioning. The marine renewables sector currently has to meet 100% of its decommissioning costs. We will be watching out for decommissioning tax relief to ensure it is fair and properly reflects environmental risks.

Renewable transport incentives
The REA urges the Chancellor to introduce tax incentives to support the development of advanced biofuels, as will be introduced in Germany in 2015.

Zero Carbon Buildings policy
Government has suggested that for buildings to achieve full ‘zero carbon’ status they will have to make use of ‘Allowable Solutions’ (off-site carbon offsetting mechanisms) but it has yet to commit to how this might work and, importantly, Treasury and DCLG need to specify the target carbon price for the abated emissions. The 2016 target date is looming and time is now getting very short to map out and implement the policy, so we urge Treasury to do all it can to expedite this process.

Enhanced capital allowances (ECAs)
The Treasury recently made changes to the rules for ECAs such that they can no longer be claimed if the user receives support through FITs or the RHI. In addition it designated expenditure on solar panels at a higher rate for capital allowances purposes. The REA opposes these measures. There is a case for providing ECAs to electricity storage technologies that can complement the use of on-site renewable electricity. This would bring forward what is likely to become an increasing important way of maximising use of on-site generation, thereby reducing the need for major investment in distribution networks.

Landfill Tax Escalator
The Landfill Tax Escalator is due to end in 2015. The Escalator has been very successful at diverting waste away from landfill. To secure longer term confidence for the treatment of organic wastes the REA would like to see the Escalator extended until 2020.

ENDS

For more information or to request an interview, please contact the REA press office:

James Beard
Press Officer, REA
+44 (0)20 7981 0856
jbeard@r-e-a.net

Or for further comment, please contact:

Leonie Greene
Head of External Affairs, REA
+44 (0)7932 720 091
lgreene@r-e-a.net

Notes to editors

• 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 1,000 members, ranging from major multinationals to sole traders. For more information, see: www.r-e-a.net

1. Lord Heseltine: ‘No Stone Unturned: In Pursuit of Growth’, October 2012. Available at: https://www.gov.uk/government/publications/no-stone-unturned-in-pursuit-of-growth
    
2. REA (Nicola Darvill & Mike Landy): ‘Renewables Industry Confidence Survey Q1 2013’, 18th March 2013. Available at: www.r-e-a.net/resources/rea-publications
    
3. Ofgem’s ‘Electricity and Gas Supply Market Indicators’, updated 13th March 2013, show that customer bills have increased from £1,170 in 2011 to £1,420 in March 2013 – an increase of £250. Available at: http://www.ofgem.gov.uk/Markets/RetMkts/rmr/smr/Pages/indicators.aspx
   
   The calculation for the increase in the cost of support for renewable electricity (the Renewables Obligation and Feed-in Tariff) over the same period draws on two sources. The 2011 figure is from the DECC website:
   
   ‘DECC’s analysis for the Annual Energy Statement 2011 estimates that the impact of the RO on average household electricity bills (including VAT) was £20 in 2011.’
   
   Note that as the FIT had only just launched in 2011, its contribution to bills would have been minimal (a few pence at most). Available at: https://www.gov.uk/government/policies/increasing-the-use-of-low-carbon-technologies/supporting-pages/the-renewables-obligation-ro
   
   The 2013 figure is taken from Ofgem: ‘Updated household energy bills explained’, 16th January 2013. Ofgem estimates that the cost of the RO this year is £21 per household bill, and the cost of the FIT £6 per household bill – a total of £27. Available at: http://www.ofgem.gov.uk/Media/FactSheets/Documents1/household-bills.pdf
   
   The increase in support for renewables over the period 2011-13 is therefore £7.
   
   Therefore approximately 3% of the increase to energy bills over the period 2011-13 is attributable to increases in support for renewable energy.
   
   See also:
   
   Committee on Climate Change: ‘Household energy bills – impacts of meeting carbon budgets’, 15th December 2011. Available at: http://downloads.theccc.org.uk.s3.amazonaws.com/Household Energy Bills/CCC_Energy Note Bill_bookmarked_1.pdf
   
   Ofgem: ‘Why are energy prices rising?’, 14th October 2011. Available at: http://www.ofgem.gov.uk/Media/FactSheets/Documents1/Why%20are%20energy%20prices%20rising_factsheet_108.pdf 

Broken records on both sides

The REA was disappointed there was no mention of renewables nor of the exceptional potential of the renewables sector to drive growth, jobs and energy security in the Chancellor’s Budget Statement today. Lord Heseltine recommended that Government “set out a definitive and unambiguous energy policy, including the supporting financial regime, to give the sector the certainty to invest" [1].

REA Chief Executive Gaynor Hartnell said:

“In response to Lord Heseltine’s call, the Budget referred to the Energy Bill, but our members are sceptical that the new regime will bring forward the major investments needed. We are working with DECC to resolve this, but there are no guarantees at this stage. The Chancellor missed an opportunity today to ensure us that there is consistent, strong support for our sector across Government.”

A survey of members published on Monday by the REA [2] shows concern about policy efficacy and about the mixed messages coming from Government. Data from Ofgem shows that energy bills have increased by £250 over the past two years, and that only £7 (3%) of this is due to increases in support for renewables. The great majority of the price rises are down to international fossil fuel price volatility [3]. Nevertheless many contributors to the budget debate in the Commons continued to ignore the facts and repeat myths about the costs of renewable energy.

Gaynor Hartnell said:

“There is no meaningful dialogue between the Chancellor, who speaks solely of the growth opportunities of gas and nuclear, and those calling for investment in renewables.

“We welcome the renewed emphasis on infrastructure, as well as the Budget document’s statement that Government will consider making more use of independent experts. Local, smaller scale renewables are every bit as critical to modern energy infrastructure as the major projects.”

Issues of relevance in the Budget:

Renewable Heat Incentive budget to 2020
The Budget made virtually no mention of renewables, let alone renewable heat. The REA is concerned that the budget for renewable heat is only set to 2015, unlike the Levy Control Framework for renewable power. The REA is keen to see a budget consistent with meeting the objective of 12% renewable heat by 2020, to support major expansion in this area.

Carbon Reduction Commitment (CRC)
The Budget Document says only English State Schools will be exempt from the CRC. The commercial sector has a vital role to play in renewables investment so the REA is very disappointed not to see anything on this in the budget.

Business rates freeze and adjustment of renewable energy project business rates
The REA had hoped for a freeze on business rate rises but this was not forthcoming. Renewables projects pay higher business rates than fossil fuel plant because valuations of renewable energy projects reflect income from Renewable Obligation Certificates (ROCs).

Oil, gas and marine decommissioning
Tax breaks for oil and gas decommissioning were announced. The marine renewables sector currently pays 100% of decommissioning costs, despite presenting a much lower environmental risk. The REA will look at the details of this to ensure marine renewables are not being put at a disadvantage.

Renewable transport incentives
The REA hoped for incentives to support the development of advanced biofuels, as will be introduced in Germany in 2015, but these were not forthcoming.

On the slightly more positive side:

Employment Allowance
The REA welcomes the announcement of an Employment Allowance, which from April 2014 will enable SMEs to avoid having to pay National Insurance Contributions (NICs) under £2,000, providing a small but meaningful boost to many of our member companies.

Zero Carbon Homes
The Budget confirmed that DCLG will “publish a detailed plan setting out its response to the 2012 consultation on the energy efficiency requirements in building regulations, by May 2013”. While it is good news that the date of introduction has not slipped, the REA is disappointed that it remains a pale shadow of the original policy, having been much watered down in its on-site carbon reduction ambition. We call on the Government to support the ‘halfway to zero carbon’ option in the 2013 building regulations, reflecting the huge cost reductions in solar PV and its ability to reduce consumers’ energy bills.

ENDS

For more information or to request an interview, please contact the REA press office:

James Beard
Press Officer, REA
+44 (0)20 7981 0856
jbeard@r-e-a.net

Or for further comment, please contact:

Leonie Greene
Head of External Affairs, REA
+44 (0)7932 720 091
lgreene@r-e-a.net

Notes to editors

• 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 1,000 members, ranging from major multinationals to sole traders. For more information, see: www.r-e-a.net

1. Lord Heseltine: ‘No Stone Unturned: In Pursuit of Growth’, October 2012. Available at: https://www.gov.uk/government/publications/no-stone-unturned-in-pursuit-of-growth
    
2. REA (Nicola Darvill & Mike Landy): ‘Renewables Industry Confidence Survey Q1 2013’, 18th March 2013. Available at: www.r-e-a.net/resources/rea-publications
    
3. Ofgem’s ‘Electricity and Gas Supply Market Indicators’, updated 13th March 2013, show that customer bills have increased from £1,170 in 2011 to £1,420 in March 2013 – an increase of £250. Available at: http://www.ofgem.gov.uk/Markets/RetMkts/rmr/smr/Pages/indicators.aspx

The calculation for the increase in the cost of support for renewable electricity (the Renewables Obligation and Feed-in Tariff) over the same period draws on two sources. The 2011 figure is from the DECC website:

‘DECC’s analysis for the Annual Energy Statement 2011 estimates that the impact of the RO on average household electricity bills (including VAT) was £20 in 2011.’

Note that as the FIT had only just launched in 2011, its contribution to bills would have been minimal (a few pence at most). Available at: https://www.gov.uk/government/policies/increasing-the-use-of-low-carbon-technologies/supporting-pages/the-renewables-obligation-ro

The 2013 figure is taken from Ofgem: ‘Updated household energy bills explained’, 16th January 2013. Ofgem estimates that the cost of the RO this year is £21 per household bill, and the cost of the FIT £6 per household bill – a total of £27. Available at: http://www.ofgem.gov.uk/Media/FactSheets/Documents1/household-bills.pdf

The increase in support for renewables over the period 2011-13 is therefore £7.

Therefore approximately 3% of the increase to energy bills over the period 2011-13 is attributable to increases in support for renewable energy.

See also:

Committee on Climate Change: ‘Household energy bills – impacts of meeting carbon budgets’, 15th December 2011. Available at: http://downloads.theccc.org.uk.s3.amazonaws.com/Household Energy Bills/CCC_Energy Note Bill_bookmarked_1.pdf

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

The REA has conducted this survey in order to better understand the current state of the UK renewable energy sector [1].

The survey takes place at a time of major policy upheaval for the renewable power and renewable transport sectors and follows several analyses suggesting that investment in the renewables project pipeline has slowed [2]. This morning’s Financial Times [3] reported the concerns of REA members responding to the survey about the new Contracts-for-Difference mechanism under the Energy Bill.

Senior managers from 68 companies responded to the survey. Findings confirm the Energy Bill is cause for concern with 51% of renewables executives believing that Contracts for Difference will not be effective in bringing forward new renewable power capacity. 69% believe that the lack of an emissions target in the Energy Bill sends a ‘poor’ or ‘very poor’ signal to investors. Only 4% believe the UK has a ‘good’ or ‘excellent’ chance of meeting its 2020 renewable energy target.

Graphics by Blue & Green Tomorrow
Click graphic to enlarge/download

However, the survey shows no significant overall deterioration in employment over the past six months. Just under a half of companies reported broadly stable employment levels and nearly as many firms recruited staff as have laid them off. Looking forward over the next six to twelve months 62% of companies expect employment levels to stay the same, and twice as many firms expect to see employment increasing, compared to those expecting a decrease in employment.

Click graphic to enlarge/download

REA Chief Executive Gaynor Hartnell comments:

“We will repeat this survey every six months in order to build up a comprehensive picture showing trends in confidence levels. Billions of pounds of investment needs to flow into renewables infrastructure. Our aim is to provide Government and stakeholders with a tool to gauge how policies are being received.

“The UK has to achieve a higher growth rate than any other Member State in order to reach its 2020 renewables target. Mixed messages remain a problem and industry needs policy certainty and political consistency. The prize is up to 400,000 jobs by 2020, economic growth and greatly improved energy security.

The REA has combined short term business outlook with confidence in meeting the 2020 target and confidence in the regulatory framework to give an overall ‘Renewables Industry Confidence Index’.

The ‘Renewables Industry Confidence Index’ score for this first iteration of the survey is 47% [4].

Click graphic to enlarge/download

While 100% would constitute absolute certainty and a flourishing industry, we believe a score of around 75% would indicate a healthy and confident industry likely to meet the 2020 renewable energy targets. The UK has one of the lowest renewable energy targets in Europe at 15% of total energy, but also one of the most challenging given our low starting point.

The survey reveals serious concerns around Contracts for Difference, as set out in the Energy Bill, and dissatisfaction with the functioning of the Renewable Heat Incentive. It also makes key recommendations for improving investment going forward, including sending a clear signal to investors; ensuring CfD proposals in the Energy Bill work for independent generators; setting an RTFO trajectory to 2020; and introducing new RHI tariffs on time.

A selection of comments from survey respondents is set out below to illustrate industry perspectives.

General comments on UK policy and political landscape

An anonymous respondent from a leading UK manufacturer said:

“Too many conflicting signals have been given recently causing doubt as to whether the Coalition has a unified position on promoting a balanced mix in the future UK energy supply, including renewable technologies. There is also doubt that the Government is convinced that renewables have a long term role to play, and a widespread belief that HM Treasury has the upper hand in determining the ultimate rate of market adoption of renewables.”

An anonymous financier said:

“There is no shortage of capital for energy projects but it is an international market and many other countries are perceived as more predictable and trustworthy than the UK.”

Craig Ibbetson, Director of Regen Energy, said:

                “Simplify the regulatory framework. It is too complex.”

James Astor, Managing Director at Agrivert Biogas, said:

“Recent Government actions mean that private equity and banks see Government renewable policy as a "risk" that has to be priced.”

David Williams, Chief Executive at Eco2, stresses that this uncertainty goes back further than the past six months:

“Investor confidence has deteriorated with the many changes in legislation seen in the UK over the last two years.”

Tim Jackson, Geothermal Development Manager at Sinclair Knight Merz, said:

“The UK is falling behind other countries in Europe and Africa in terms of attractiveness for investment in new renewable generating technologies.”

Energy Bill & Electricity Market Reform

The REA is not surprised that the electricity sector recorded the highest levels of ‘very poor’ confidence. The REA is currently urging Government to solve the critical route-to-market issue for independent generators, and will debate this issue at an open meeting on 27th March [5]. Independent generators are expected to deliver between a third and one half of necessary UK investment in the power sector to 2020. There is widespread concern that, as currently conceived, Contracts for Difference are not investable for independent generators. Ministers have committed to securing a solution and are expected to report back in June/July.

Andrew MacLellan, Director of ENER-G, said:

“Lack of regulatory and incentive stability, with a three to five year outlook, is proving a major obstacle to investment in the sector. Last year it was the RO review, this year it is EMR.”

Steven Edrich, Head of Strategy at 2OC, said:

“Continuing uncertainty over EMR and how the RO will be left to work beyond 2017 are crippling industry’s ability to look ahead and making it very difficult for banks to approve funding on projects now.”

Sector-specific concerns

There is more confidence in the small scale Feed-in Tariff than the Renewables Obligation or Renewable Heat Incentive. Overall, 65% of respondents in renewable heat and electricity had poor or very poor confidence in their sector’s regulatory framework.

Click graphic to enlarge/download

Sam Tilley, Managing Director at Infinite Energy, believes the framework for solar PV is stable, but is concerned about delays to renewable heat policy:

“The continued failure to set the Renewable Heat Incentive for domestic renewables continues to cause uncertainty in the market. However on the plus side the commercial solar PV market is very stable at the moment which is driving business, and the launch of the new MCS Guide, which is very good, actually makes it a very nice environment to work in at the moment.”

One anonymous respondent revealed deep discontent with the treatment of new biomass power projects:

“The biomass energy sector seems to be under continual attack from government officials. The proposed cap on biomass capacity under the Renewables Obligation to 2017 has certainly stopped two of the projects I was personally involved with, both of which had achieved planning consent. Successive governments and ministers are all guilty of kicking the energy supply issue into the long grass.”

ENDS

For more information or to request an interview, please contact the REA press office:

Leonie Greene
Head of External Affairs, REA
+44 (0)7932 720 091
lgreene@r-e-a.net

Or for further comment, please contact:

Gaynor Hartnell
Chief Executive, REA
+44 (0)7870 629 575
 

Notes to editors

• 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 1,000 members, ranging from major multinationals to sole traders. For more information, see: www.r-e-a.net

1. REA (Nicola Darvill & Mike Landy): ‘Renewables Industry Confidence Survey Q1 2013’, 18th March 2013. The full report, with Graphics by Blue & Green Tomorrow, is available at: www.r-e-a.net/resources/rea-publications
    
2. See for example:
   
   Bloomberg New Energy Finance: ‘United Kingdom AF Investment in Renewable Energy by Quarter and by Year, 2004 - Q3 2012 (US$bn)’, November 2012.
   
   Ernst & Young: ‘Powering the UK 2012’, 29th October 2012. Available at: http://www.ey.com/UK/en/Industries/Power---Utilities/Powering-the-UK-2012
    
3. The Financial Times: ‘Green energy groups query subsidy plans’, 18th March 2013. Available at: http://www.ft.com/cms/s/0/c8331318-8c09-11e2-b001-00144feabdc0.html
    
4. The maximum score for the RICI is 100%, which would indicate a highly confident, growing renewables industry.
   
   The minimum score is 0%, which would indicate a shrinking and despondent renewables industry.
   
   The REA estimates that a score of 75% would indicate a healthy industry with a good chance of reaching its 2020 renewables target.
   
   The score is the sum of five separate indicators, each worth 20% of the total. The factors are averages across all respondents (excluding ‘Don’t know’ answers) for the following questions:
   
   a. In comparison to the last six months, what is the outlook for your company with respect to turnover over the next six to twelve months?
   b. In comparison to the last six months, what is the outlook for your company with respect to new business over the next six to twelve months?
   c. In comparison to the last six months, what is the outlook for your company with respect to employment over the next six to twelve months?
   d. How would you describe your confidence that the UK will achieve its target of 15% renewable energy by 2020?
   e. How would you describe your confidence in the regulatory regime for your technology(ies)?
   
   Questions a, b and c had the following response options:
   
   Significantly decrease (=0%)
   Decrease (=25%)
   Broadly the same (=50%)
   Increase (=75%)
   Significantly increase (=100%)
   
   Questions d and e had the following response options:
   
   Very poor (=0%)
   Poor (=25%)
   Fair (=50%)
   Good (=75%)
   Very good (=100%)
    
5. The REA will be holding an ‘Electricity Market Reform Seminar’ on 27th March 2013 to address the issues highlighted here.

For more information or to register, please visit: http://www.r-e-a.net/events/electricity-market-reform-seminar

UK biofuels industry produces joint position paper on ILUC proposals

REA and EREC warn that shifting policy goalposts could prevent UK and EU realising economic benefits of 2020 renewable energy targets

Energy Secretary Ed Davey has told the European Energy Council that a ‘one size fits all’ approach to the issue of indirect land use change (ILUC) for biofuels is “not helpful” [1].

The proposals include an overall cap on the use of crop-based biofuels at 5% of transport, which would make the binding EU-wide 10% renewable transport target virtually impossible to achieve. The REA estimates that the proposals could cost the UK over £1 billion of investments and up to 3,500 jobs.

The UK is the first Member State to produce a unified industry position paper in response to the proposals [2]. Together, the REA, AIC, NFU and SCOPA represent the entire biofuels supply chain. The paper explains that the assumptions behind the ILUC proposals are based on a purely theoretical approach which does not account for the realities of biofuel development. It also urges the Commission to propose a dedicated target for 2% of transport to come from advanced biofuels by 2020, while allowing electric vehicles and conventional biofuels to make up the rest of the target.

REA Head of Renewable Transport Clare Wenner comments:

“We welcome Ed Davey’s useful intervention at the European Energy Council. ILUC is a serious issue, but the debate about the sustainability of biofuels and their effect on food prices is fuelled more by emotion than science. We need strong representation to ensure the Commission delivers a framework which encourages the reinvestment of revenues from the first generation market into the development of advanced biofuels.

“We are working hard at home and abroad to inform decision-makers of the problems with these proposals, which not only threaten our climate change and renewable energy objectives, but over £1 billion of investment, and thousands of green jobs.”

The ILUC proposals were a major item on the agenda this Tuesday, when REA Chief Executive Gaynor Hartnell and Head of Renewable Transport Clare Wenner explained to MEPs at the European Parliament in Brussels the particular challenges the UK faces in meeting its 2020 targets. The meeting was part of the ‘Keep on track!’ project, which seeks to assess Member States’ progress on their 2020 renewable energy targets [3].

The REA is the UK partner for the ‘Keep on track!’ project, which is coordinated at the European level by the European Renewable Energy Council (EREC). EREC warned this week that while the EU is presently ‘on track’ to meet the 2020 targets, recent and upcoming policy shifts will make it difficult for many member states, including the UK, to remain ‘on track’ over the next few years [4].

The UK has the most challenging target in Europe, starting from one of the lowest bases. The REA estimates that meeting the 2020 targets would create an industry comprising 400,000 green jobs with a turnover of £12.5 billion [5].

UK ‘Keep on track!’ project leader Mike Landy adds:

“Our renewable energy targets constitute a huge economic opportunity for the UK, with 400,000 green jobs up for grabs. However, there is a long way to go, and industry needs strong representation across heat, power and renewable transport if we are to achieve these challenging targets, and reap the economic and environmental benefits that they offer. We welcome Ed Davey’s contribution to the ILUC debate, and we echo the sentiments of our colleagues at EREC: rushed and ill-conceived policy reversals must not be allowed to derail our renewable energy objectives.”

ENDS

For more information or to request an interview, please contact the REA press office:

James Beard
Press Officer, REA
+44 (0)20 7981 0856
jbeard@r-e-a.net

Or for further comment, please contact:

Clare Wenner
Head of Renewable Transport, REA
+44 (0)7802 487 679
cwenner@r-e-a.net

Mike Landy
Senior Policy Analyst, REA and UK Project Leader, ‘Keep on track!’
mlandy@r-e-a.net

Notes to editors

• 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 1,000 members, ranging from major multinationals to sole traders. For more information, see: www.r-e-a.net

1. DECC: ‘Written ministerial statement by Edward Davey; post Energy Council statement’, 1st March 2013. Available at: https://www.gov.uk/government/speeches/written-ministerial-statement-by-edward-davey-post-energy-council-statement
    
2. AIC, NFU, REA & Scopa: ‘The effects on the UK biofuel industry of the EU proposals on Indirect Land Use Change (COM 2012) 595 final of 17 October 2012, and UK Biofuels Industry counter-proposals – February 2013’, 28th February 2013. Available at: http://www.r-e-a.net/resources/pdf/104/FINALREANFUSCOPAAICIndustry_positionILUC18Feb13.pdf
    
3. Further information, including links to downloads of the presentations, is available at: http://www.r-e-a.net/resources/rea-publications
    
4. EREC: ‘Meeting the Renewable Energy Targets: Governments Make it More Difficult for Themselves in the Long-run’, 25th February 2013. Available at: http://www.r-e-a.net/news/meeting-renewable-energy-targets-governments-make-it-more-difficult-for-themselves-in-the-long-run
    
5. REA/Innovas: ‘Renewable Energy: Made in Britain’, 23rd April 2012. Details available at: http://www.r-e-a.net/news/report-on-employment-and-skills-in-the-uk-renewable-energy-sector-to-be-launched-with-greg-barker

Press Release - Meeting the Renewable Energy Targets: Governments Make it More Difficult for Themselves in the Long-run

Brussels, 25th February 2013. A consortium of actors in the renewable energy sector provide their view that while the EU has met its 2010 targets under the Renewable Energy Directive (2009/EC/28 Directive), recent government policy changes are making it much more difficult to ‘keep on track’ and meet the goals set for 2020. This analysis comes ahead of the release by the European Commission of its biannual progress report on the basis of the Member States’ reports which were submitted at the end of 2011.

"The European Union is currently on track to meet the 2020 renewable energy target. However, negative developments observed in Member States over the last twelve months dangerously harm investor confidence at a crucial time and make it much more difficult to achieve the target", said EREC’s President Rainer Hinrichs-Rahlwes, as coordinator of this project. "If the EU is not to derail, governments must be advised that harmful behaviour such as cuts to support schemes or moratoriums on new projects will only make it more difficult for them in the last few years of the decade", Hinrichs-Rahlwes added.

Member States’ Progress Reports show that the EU had already met in 2010 the milestone established for 2012 (according to the Renewable Energy Directive), as highlighted by the eleven national renewable energy associations that contributed to the in-depth national analyses available online. However, this positive picture hides a gloomy outlook. 

"Due to abrupt regulatory changes, notably the retroactive changes observed in several countries such as Spain and Bulgaria or the moratorium on new renewable energy developments introduced in Spain and Portugal, the European Union could miss its overall 2020 renewable energy target, contrary to previous assumptions. Another issue concerns the heating sector where most Member States introduce first and foremost ‘stop and go’ measures, harming investor confidence", adds EREC Senior Policy Adviser Lucie Tesnière. 

The European renewable energy sector brings important benefits within the Member States in terms of job creation, additional investments, and growth. These skilled jobs should not be threatened by abrupt, short-sighted regulatory changes and this could be avoided with the adoption of a stable longer-term vision by national governments, which could instead spur economy recovery at low costs. 

“Keep on track!” is an IEE funded project, coordinated by the European Renewable Energy Council, and bringing together a range of different actors in the renewable energy sector. The aim is to provide a close-to-market monitoring of the fulfilment of the 2020 renewable energy targets in the EU-27, as well as suggest solutions in case of delay. The first publications will be out in the summer.

FOR INFORMATION PLEASE CONTACT:
EREC, Eleanor Smith
Communication and Policy Officer
E-mail: smith@erec.org
Tel.: +32 2 400.1081

Targeted support enables innovation and cost reduction

The REA welcomes the news that several marine renewables projects are set to progress having been successful in securing funding.

MeyGen Ltd and Sea Generation Wales Ltd have won £10 million each under the Government’s Marine Energy Array Demonstrator scheme (MEAD), which will progress their tidal stream projects at Pentland Firth and Anglesey respectively [1].

Pelamis has been granted £1.4 million by the Energy Technologies Institute (ETI) to advance a project seeking to enhance the cost-effectiveness of its wave energy devices [2].

And the European Marine Energy Centre (EMEC) has just today been awarded £4 million by the Scottish Government to fund a new testing berth [3].

Pelamis, EMEC, and Sea Generation’s parent company Marine Current Turbines are all members of the REA’s Ocean Energy Group.

REA Head of Marine Renewables Dr Stephanie Merry comments:

“Energy policy seems to be a sea of troubles at present, and indeed there are clouds on the horizon for marine renewables. Along with the rest of the sector, we face uncertainty over strike prices and the allocation process of CFDs under Electricity Market Reform. But we also have the added challenge of having to achieve significant cost reductions in advance of CFDs being awarded under a competitive process.

“However, credit where it is due – Government support for marine renewables is one area of relatively calm waters. The existing support available under the Renewables Obligation, combined with targeted support such as this, is doing much to help drive these cost reductions, as well as advancing innovations, proving concepts and improving efficiencies.”

ENDS

For more information or to request an interview, please contact the REA press office:

James Beard
Press Officer, REA
+44 (0)2079 810 856
jbeard@r-e-a.net

Or for further comment, please contact:

Dr Stephanie Merry
Head of Marine Renewables, REA
+44 (0)7786 543 138
smerry@r-e-a.net

Notes to Editors

• 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

1. DECC: ‘£20 million boost for UK marine power’, 27th February 2013. Available at: https://www.gov.uk/government/news/20-million-boost-for-uk-marine-power
    
2. ETI: ‘ETI launches £1.4m project with Pelamis to boost wave energy sector’, 27th February 2013. Available at: http://www.eti.co.uk/news/article/eti_launches_1.4m_project_with_pelamis_to_boost_wave_energy_sector
    
3. The Scottish Government: ‘New berth for European Marine Energy Centre’, 28th February 2013. Available at: http://www.scotland.gov.uk/News/Releases/2013/02/EMEC28

REA contributed to public-facing guide which will raise awareness of waste-to-energy

A new guide on waste-to-energy was published yesterday by Defra [1]. The guide aims to raise awareness of waste-to-energy among the general public and those wishing to contribute to waste and energy debates. The REA has provided input into the guide over the past several months.

Chair of the REA Bioenergy Group Alex Young comments:

“The REA welcomes this comprehensive guide to waste-to-energy. It is a diverse sector with a range of technology solutions all contributing to delivering the transition to a green economy which is both low waste and low carbon.

“Waste-to-energy solutions can provide an important contribution to security of energy supplies, but the UK policy framework has not yet proven sufficient to drive a significant expansion in waste-to-energy infrastructure. This means an increasing amount of refuse derived fuel (RDF) is being sent overseas to countries which have fully embraced waste-to-energy. The REA continues to work with Government on dealing with the barriers to deployment of the right technology for the right feedstock in the right location.”

The REA also produced its own ‘Guide for decision-makers’ on waste-to-energy in 2011, which is available at: www.r-e-a.net/resources/pdf/63/EnergyFromWasteGuideForDecision-Makers.pdf

ENDS

For more information or to request an interview, please contact the REA press office:

James Beard
Press Officer, REA
+44 (0)2079 810 856
jbeard@r-e-a.net

Or for further comment, please contact:

Alex Young
Chair of the REA Bioenergy Group & Director, Cobalt Energy Ltd
+44 (0)7767 222 604
Alex.Young@cobaltenergy.co.uk

Notes to Editors

• 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 1,000 members, ranging from major multinationals to sole traders. For more information, see: www.r-e-a.net

1. Defra: ‘Energy from waste: a guide to the debate’, 27th February 2013. Available at: www.defra.gov.uk/publications/2013/02/27/pb13892-energy-from-waste/