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The Energy Minister discusses the role of renewable energy in the overall energy mix strategy of the Government and highlights the economic opportunities that renewable energy brings to the UK. He confirms renewable energy as a key priority for the UK.

In March I visited one of the country’s new generation of green buildings. Hampton Hill Junior School in Richmond, Middlesex, has installed 50 solar panels using almost £25,000 of Government funding. The school is already producing electricity and using the sun to heat its water supply – reducing its impact on the environment and potentially cutting its energy bills by up to 40%.

Hampton Hill has joined a growing list of public and private organisations generating their own ‘green’ power. Funding for their panels – through the Department for Business, Enterprise and Regulatory Reform’s Low Carbon Buildings Programme – is just one strand of the Government’s commitment to generate 10% of the UK’s electricity from renewable sources by 2010 and to meet our share of the European Commission’s renewable target. Last year EU leaders agreed to generate 20% of the EU’s energy from renewable sources by 2020 – the UK’s proposed target is currently 15%.

The most up-to-date figures put our renewable electricity generation at 4.6% in 2006, up from 1.5% in 2002.

Renewable energy - using the sun, sea and wind to generate power - is a key component of the Government’s overall energy strategy. It has never been more important. We have more evidence of the adverse effect of climate change. We are moving into an era when we’ll be importing more of our energy, when relatively low energy prices are unlikely to be repeated and when global demand for energy will rise dramatically.

Renewable energy also has distinct economic advantages. World Energy Council projections indicate that cumulative investment in renewable technology will be worth between £500 billion and £1500 billion by 2020. Just a 5% share would mean a £25 billion market for the UK.

We’ve already established ourselves as world-leaders in the development and deployment of renewable technology, so I’m confident the market share could be even higher.

In the last year alone the Government has consented to a series of large-scale projects, set to make a real difference to the way we generate our power.

Throughout the UK onshore and offshore wind farms, one of the world’s largest biomass plants and groundbreaking tidal demonstrators are all now in the pipeline. But we need to go further.

Since 2002 we have committed around £500 million to develop renewable and low-carbon technology. That’s money for offshore wind farms, biomass technology – generating fuel from plants – and marine renewable technology.

As well as investing in new technology, it’s vital to have real incentives for suppliers. Under the Renewables Obligation (RO), power companies have to provide an increasing percentage of electricity from eligible sources of renewable energy. The obligation for 2007/08 is 7.9% and rises each year to 15.4% in 2015/16.  

Suppliers meet this target, pay a buy-out price or a combination of both.  

There’s no doubt the RO has stimulated growth in the development of renewable energy. Since its introduction in 2002 renewable energy generation has more than doubled. The UK is now the number one location for investment in offshore wind in the world and this year we will overtake Denmark as the country with the most offshore wind capacity.

But we need to go further. Denmark already generates approximately 20% of its electricity from wind power. If the UK wants to take advantage of emerging industries, as well as secure the environmental benefits, we need to do all we can to reach our 10% target and our share of the EU 2020 target.

So my Department has proposed changes to the RO to encourage developments in emerging technology. This includes increasing support available to the next wave of renewable generation such as offshore wind farms and dedicated biomass plants and those further from the market such as wave and tidal stream.  

This is part of a raft of measures, including a major consultation on what we need to do to increase the amount of renewable energy generated in the UK. This will inform our new Renewable Energy Strategy due to be published in 2009.

My Secretary of State announced late last year plans for future offshore wind development which could generate a further 25GW of wind power. This is on top of 8GW already planned – if approved the wind farms could produce enough energy to power the equivalent of every home in the UK.

We’re also addressing the issues that could hold us back.

Planning delays are recognised as a real obstacle to renewables deployment in the UK. The Planning Bill, if passed, will establish a new independent Infrastructure Planning Commission to deal with large-scale renewable planning applications more quickly. Smaller projects would benefit from the reforms too.

Another barrier has been the amount of time it takes to connect to the grid. We’re working closely with Ofgem, National Grid and others to tackle this issue. The key challenges are to build new infrastructure on time and make efficient use of the available network. The Government is carrying out the Transmission Access Review to find ways to improve and speed up connections. We plan to publish our recommendations in May – following on from our interim report in January.
 
I’ve been talking about large-scale projects, but microgeneration – smaller projects like Hampton Hill School’s solar installation – is crucial to meeting our renewable energy target. This is why we’ve allocated £86 million to the Low Carbon Buildings Programme, which has already helped nearly 200 organisations and over 4000 householders install their own renewable energy supply.

In March I announced higher grant levels for public sector and charitable organisations, which should boost the number of green buildings across the country.
The Government’s renewable energy policy is part of a wider programme to secure a diverse, clean and competitively priced energy supply for the UK.
Our potential renewable energy resource is vast. We are surrounded by water, with one of the best wind profiles in Europe. And when I see the benefits renewable energy brings – both economic and environmental – I’m determined the UK will continue to be a world leader.