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Breakthrough 2017: Reframing Energy Policy

Posted By Luke Clark, 10 January 2018

2017 has indisputably been the year of clean, renewable power. Low carbon overall generated a majority of the UK’s electricity for the first time ever and wind generated more than coal plants on more than 75% of days last year and proved itself as the low cost option for our future power system. September’s auction results showed just how low the costs of mainstream renewable technologies have fallen, with offshore wind – previously seen as the outlier for low carbon technologies – halving costs and coming in cheaper than new nuclear and gas plants at £57.50 per MWh.

 

The stunning result for offshore wind has helped to reframe the debate about renewables more widely and, in particular, how the UK can take advantage of our cheapest option for new power capacity – onshore wind. Following very difficult years for the sector, we begin 2018 with a new recognition from Government that, as BEIS Minister Claire Perry said in November, “onshore wind is absolutely part of the future”. Industry has much to do to ensure new projects can get to market and RenewableUK is working with our members to make this a reality.

 

For marine renewables, 2017 brought more mixed results. The Hendry Review concluded that tidal lagoons can deliver a secure supply of energy for a price which is competitive in the long-term. But as the anniversary of the Hendry Review approaches we are still waiting for the Government’s response and a decision to take forward this world-leading project. The wider wave and tidal stream sector is continuing to innovate and bring forward new technologies to deliver the broad range of low carbon technologies we need for our future power mix. Last year the MeyGen project in the Pentland Firth delivered the world’s first commercial scale tidal array and Scotrenewables’s tidal turbine smashed the record for generating one gigawatt hour of power in testing at EMEC in Orkney.

 

The ambition of the sector isn’t matched, however, by the policy framework. Government is starting to recognise the need for new ways to support innovative technologies and Energy Minister Richard Harrington has said that Government is examining industry’s Innovation Power Purchase Agreement proposal. We know that the sector needs a robust evidence base and in the coming months, the Offshore Renewable Energy Catapult and RenewableUK are producing a new study on the potential for cost reduction, UK exports and cuts in emissions from the marine renewables.

 

Innovation in 2017 wasn’t confined to wave and tidal energy; October saw Statoil and Masdar’s Hywind Scotland, the world’s first floating offshore wind farm, beginning to deliver electricity to the grid, and in May the world’s largest turbines, the MHI Vestas V164-8.0MW, started turning at Ørsted’s Burbo Bank Extension. The Queen’s visit to the Siemens Gamesa blade factory in Hull last November was a powerful signal of how renewables, and the UK industries we have built up, are now a part of the new energy mainstream.

 

In 2018, we want to go further still in building an energy system fit for the future – and the UK supply chains to deliver it. The consultation on our Smart Power Future and the launch of the £246 million Faraday Challenge to support innovation in batteries and storage were clear signals that the Government recognises the direction of travel for our power system. Last year RenewableUK joined forces with a range of energy bodies to launch the Smart Power Industries Alliance to look beyond individual technologies and take a whole system view of a renewables-dominated power mix.

 

We ended 2017 with new projections from Government that underline the move to a low carbon mix with renewables as the main source of energy. Just as 2017 marked the crossover point where we proved our case on costs, so 2018 will mark the moment we begin to reshape the power system to seize fully the opportunities of a clean energy future: reduced electricity bills, secure power supplies and more productive industries and high-value jobs across the UK.

Tags:  CfD  Innovation  Offshore Wind  Onshore Wind  Smart Energy  Tidal  Wave 

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Innovation: Waiting for Ofgem?

Posted By Dr Gordon Edge, 15 February 2016
Updated: 16 February 2016

Another day, another event about innovation. The latest was Ofgem’s “Innovation in a transforming energy system” event, in which the energy regulator set out its approach to technical and business innovation. This follows on from the various network innovation funding streams that Ofgem has presided over, and the consultation last year on ‘Non-Traditional Business Models’ (NTBMs, for those who like acronyms). While Ofgem should take some credit for trying to get on the front foot, it seems held back from taking a strong lead. If we are forced to wait on Ofgem taking on that role, however, I fear that, like Vladimir and Estragon ever hoping for the arrival of Godot, we shall be waiting a long time.

The room was full for Ofgem’s exposition of what it is doing in the area, followed by presentations from InnovateUK (snazzy, though somewhat lightweight) and the Financial Conduct Authority. The latter provided some interesting read-across from another regulatory body, and seemed to have some good lessons in terms of getting down on the innovators’ level and giving them time- and situation-appropriate advice on what would and wouldn’t work from a regulatory perspective. But overall there was a sense of Ofgem wanting to play the game by saying ‘the door is open – come on in’, but not actively striving to make innovation happen.

To an extent, this is a function of being on the edge of a predicted market transformation. While there are lots of exciting technological developments here or clearly coming soon, the environment to allow them to be adopted and flourish is only now starting to be developed. For there to be real progress here, then Ofgem and Government have to follow through quickly on the agenda to move to principles-based supply regulation (which would make the taking on of a supply licence much less onerous), having half-hour settlement for all consumers, and driving the uptake of smart meters and smart grid solutions alongside the move from DNOs to DSOs (Distribution Network Operators to Distribution System Operators). All these are only just starting to happen, and will take some years to deliver and bed down.

As an aside, it is interesting to note the submission by Ovo Energy to the NTBM consultation, which raises the issues of retail regulation and half-hourly settlement as priorities: the author? One Guy Newey, who is now… Amber Rudd’s Special Adviser. And now we seem to be getting action on these issues, including having the latter in the new Energy Bill now before Parliament for pre-legislative scrutiny.

So we seem to be being told to both hurry up and to be patient. We’re hurrying to get the new technologies and business models in place to support market-led development of mature renewables, but waiting for all these enabling regulatory and policy changes to happen. This is a delicate balance. If the two parts don’t advance together, then the businesses investing in innovation will fail because of a lack of viable business models.

What is needed is a pacesetter to force the pace and promote real-life demonstrations of pairing up local generation with local demand, using new technologies such as storage and demand-side response to provide local area balancing. At the Ofgem event, Judith Ward from Sustainability First hit the nail on the head, saying that to tackle specifically the issue of developing ‘energy ecosystems’ in cities, real-life pilots would have to pushed through, tackling the layer upon layer of barriers that lie in the way of making this a reality. This is just as applicable in rural areas, in fact more so, as this is where local, distributed renewable resources could have the ability to cover an area’s entire needs.

I’m not seeing such a scheme being talked about, let alone being planned anywhere in particular, various municipal supply initiatives notwithstanding. I’m waiting. But I’m not holding my breath.

Tags:  energy  Innovation  Ofgem 

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