The past few months have seen several landmark events for the renewable energy industry in the UK, including the introductions of key government proposals and initiatives. But with binding international agreements demanding serious reductions in UK carbon emissions by 2050, how exactly will the country reach its challenging targets?
Over the past few months, the government’s climate change targets, including reductions in carbon emissions and increases in the proportion of the UK’s energy to be produces by renewable methods, have been repeatedly revised. The major long-term target is to reduce carbon emissions by 80% on the 1990 figures by 2050, with a binding international agreement to make a cut of 34% by 2020. The latter of these targets will only be achieved if a minimum of 15% of the UK’s energy is generated from renewable resources.
These targets essentially demand the growth of an entire, fledgling business sector in the economy to produce the means for generating renewable energy. The construction industry will of course have to play the leading role, as the UK currently does not have the facilities to produce the amount of ‘green’ energy that these agreements will require.
Some of these effects are already being seen: on June 23rd the Energy Secretary Chris Huhne named eight sites around which the government will build nuclear power plants. At some of these sites, such as Sellafield in Cumbria, contracts have already been undertaken to demolish old facilities and begin preparing the areas for the construction of the new reactor plants.
The UK construction industry has the practise and expertise to deliver nuclear plants, but what about building the facilities to generate power from other sources such as wind, wave and tidal power?
Recently, delegates from the world-wide renewable energy industry attended the RenewableUK 2011 Offshore Wind Exhibition and Conference in Liverpool. Premier Construction went along to find out what those at the forefront of renewable energy construction thought about the future growth and success of the industry.
Day two of the 2011 Offshore Wind Conference, June 29th, opened with speeches by RenewableUK Chief Executive Maria McCafferey, Shadow Secretary for Energy and Climate Change Meg Hillier and the Director of Poyry Energy Consulting, Richard Slark. Taking into account the UK’s targets for producing renewable energy, Miss Hillier MP and Mr Slark outlined the recent progress and setbacks of the relatively young industry, whilst Miss Hillier MP offered the Labour point of view on future growth.
Government investment in renewable energy was top of the agenda, with Meg Hillier pointing to Labour’s 2010 competition as an example of a successful initiative to encourage construction activity. Alastair Darling’s spring budget had included an invitation to bid for £60 million worth of funding to build renewable energy plants. Meg Hillier said that sustained incentives were needed to encourage more businesses to move into the sector, suggesting that if the current government pass their Fourth Carbon Budget and introduce their proposed ‘Green Investment Bank’, it will be a huge boost to the industry.
Richard Slark added that the UK renewable energy market would need an injection of approximately £35 billion investment in order to achieve the 2020 15% renewable energy target, and a further £50-100 billion for the 2030 target.
Meg Hillier also spoke on the five main themes of Labour’s policy regarding change in the energy sector. In brief, the ideas were as follows: the market should be powered by ‘home grown’ businesses; progress should be ‘market led’ by ‘innovative’ developments in technology; the market should be ‘fair’, rather than dominated by the Big Six; and government investment should be ‘permanent’ rather than short-term.
The second day of the Conference also saw RenewableUK’s announcement of a report into the overall cost of generating electricity from offshore wind in the next ten years. The report, ‘Offshore Wind – Forecasts of Future Costs and Benefits?’, was compiled by BVG Associates. It studied the ‘whole-life cost’ of offshore wind farms, including capital expenditure, operational costs and the energy yield.
Taking into account technological advances, the larger-scale of wind farms and the increasing use of sites with better wind resources further offshore, the report predicts that the whole-life cost of energy from UK offshore wind projects could be driven down by more than 15% in real terms between 2011 and 2022, under standard market conditions. Under more favourable conditions this fall could be as much as 33%.
Naturally the report came with a warning that this scale of reduction would require significant and successful government stimulation and investment in the industry. With this support, the offshore wind sector could support 45,000 long-term jobs until 2020 – representing an injection of around £60 million in the economy and carbon emission savings of 800 million tonnes.
Since the 2011 Offshore Wind Conference, changes and proposed changes to government legislation in the renewable energy sector have been welcomed by RenewableUK as steps forward, and address some of the themes on which Meg Hillier spoke. The white paper on Energy Market Reform and the government’s ‘UK Renewable Energy Roadmap’ were published on July 12th, proposing that up to 18GW of offshore wind capacity be built by 2020. The ‘Big Six’ (Npower, British Gas, Southern Electric, Scottish Power, E.on, EDF) acknowledged that the plans would drive forward investment in low-carbon energy, although it would cost both them and the consumer.
Moving from the conference room to the exhibition hall, one thing was clear: there are many energy and construction companies who see the immense potential of the UK renewables sector and are eager to carve out their share of the market and get building.
However, seeing and speaking to those running the exhibition stands raised further questions about the UK renewable industry, on top of those discussed by Hillier, Slark and McCafferey. Some of the problems raised by those in the business emerged as more pressing hindrances to the development of UK renewable energy plants.
One of the main trends was that companies found major difficulties with contacts and the supply chain in the UK, as the industry – still so young – lacks centralised co-ordination and information sources.
Alexander Jonat, Head of Communications for the German firm Areva (core sponsor of the event), expressed surprise that the main focus of the Offshore Wind convention had been in the exhibition hall rather than the conference. He said that Areva were there to create a buzz about their decision to enter the UK market, and that they had experienced great success in building up a contact-base with suppliers and technicians in a short period of time.
Mr Jonat’s feelings were echoed by many. Project Manager Casper Toft spoke for Danish company Vestas, and was very encouraged by the number of good contacts that the firm had made. He also saw some issues with the supply chain – including pricing – but felt that these would prove surmountable problems if the right relationships and dialogues were created with the right people.
Many of the companies present are giants on the continent, some globally, who are prepared to bring all their experience to the UK. However they have been slowed down by the current lack of connections throughout the sector.
Several representatives also identified that the Crown Estates Round Three programme is set to have a major impact on the renewables construction industry over the coming decades.
The Crown Estate, which controls the UK’s offshore territory, announced in 2008 that it would take a more prominent role in its third round of offshore wind farm leasing. It pledged to co-invest with developers, combining the technical experience of the offshore wind industry with efficiencies generated by The Crown Estate’s access to resources and stakeholders. This suggests the promise of sustained investment combined with expertise which has the potential to really get large-scale construction of wind turbines of the ground.
Amongst all of the discussion, it must be noted that one of the most striking things about the exhibition hall was the not just the variety of companies present aside from the ‘Big Six’, but the high representation of specialists from mainland Europe.
Warnings to home-grown industry not to fall behind
If the keen foreign interest in investing in renewables in the UK is utilised efficiently, it will prove a great asset in reaching the UK’s mandatory 2030 targets for carbon consumption. However, some industry experts have taken a different stance on the issue, warning that the UK industry should not hold back on investment, with new figures indicating the potential value of the UK’s wind and marine energy sectors between now and 2021.
The findings of the report by RenewableUK and Energy & Utility Skills were published in early July. It included models for three potential growth scenarios in the sector, claiming that the lowest growth scenario – defined as up to 25.7GW capacity from offshore wind and marine energy – would lead to the creation of 44,000 jobs. A high growth scenario would mean 51.8GW production capacity and the creation of 115,000 full-time jobs through the supporting sectors, including raw material suppliers and manufacturers.
The study also suggests that the UK skills system is currently failing to ensure that an adequate supply of newly-qualified recruits is entering the UK labour market. It warns that if this is not rectified then more jobs will be moved abroad, or will be carried out in Britain by non-UK companies and workers. Certainly the range of overseas companies represented at the 2011 Offshore Wind Conference seems to confirm this theory. Foreign investors are clearly aware of the opportunity to offer their experience in a country that is lacking in renewable energy construction specialists.
RenewableUK and Energy & Utility Skills say that the messages for employers and the government are clear: employers must step out and invest in their current and future workforces, and the government must also show a willingness to invest, and establish stable policies and frameworks for renewable energy, with clear incentives for all parties to invest.
Maria McCafferey spoke for RenewableUK: ”This report shows the enormous potential that exists within the renewable energy industries to provide tens of thousands of permanent, well-paid jobs for the engineers, scientists, technicians and economists of the future – building on the enormous successes we have achieved already. However, we must ensure that the right training is available to ensure that the workforce has the appropriate skills to serve this dynamic sector, as it continues to expand at an extraordinary rate.”
Meanwhile Tim Balcon, Chief Executive for Energy & Utility Skills suggested, amongst other things, that the government has a responsibility to continue to back national initiatives to boost the industry. He said: “This research provides clear and compelling evidence for the need for government, employers and the providers of skills to work in collaboration to meet the skills needs of this rapidly growing sector of the UK economy. No one organisation can achieve this on their own. Both EU Skills and the national Skills Academy for Power are working hard to make sure that the UK skills system is aware of the scale of the challenges ahead and are capable of meeting employers’ needs going forward.”
July also heralded the announcement of a bid by the Technology Strategy Board to establish an Offshore Renewable Energy Technology and Innovation Centre.
Secretary of State for Business, Vince Cable said: “An offshore renewable energy technology and innovation centre is the next step towards fulfilling the Government’s commitment to creating a greener economy.”
The industry may be wondering, however, whether -if the idea is given the green light -the centre will prove to be the deliverance of the UK industry, equipping the country with home-grown workers with the skills to drive the sector without such great reliance on foreign investment.
Moving on from a series of landmarks and debates in the history of the UK’s renewable energy industry, challenging targets lie ahead, and rapid growth is required to meet them.
The impression given by the Offshore Wind Exhibition was that if foreign construction firms are welcomed on board and provided with better information about suppliers, then that growth will not be difficult to achieve: the components simply need combining efficiently.
But in addition to that, if the home-grown construction industry can work with national organisations to equip workers with the skills to take on these building projects, then it could also see a sudden boom.
The board is set; there is no doubt about the potential. Perhaps the remaining question is simply, who will monopolise first?
RenewableUK is the largest trade association that represents the interests of the marine energy in the country. With 676 company members, including small firms to the largest international corporations, RenewableUK plays a vital part in initiating discussion within the industry and then providing a collective voice speaking out for change.
Established in 1978 as the British Wind Energy Association, the name was changed in 2004, and since then wind power has been the world’s fastest-growing renewable energy. The name change reflected the broadening horizons of the association, as they aimed to steer wave and tidal energy technologies in the same direction of growth and commercialisation as the wind sector.
The association’s primary aim is to promote the use of wind, wave and tidal power throughout the UK, acting as a central body which performs various roles to ensure the continual growth of the industry.
Communication is central to the operations of RenewableUK: it is a mouthpiece between the government, the industry and the general public. The organisation commissions and publishes research and statistics, notifies the industry of relevant government legislation and provides a forum for those in the industry to discuss current issues. The information available on their website and in their quarterly journal, Real Power, is always an up-to-the-minute, comprehensive overview of the industry.
But it is by no means all talk: RenewableUk always initiates research and discussion with a focus on finding solutions to current issues. The result is a trusted voice of authority who lobbies for the promotion of wind, wave and tidal energy to the government, media and public – acting as a catalyst for policy change to support the maximum deployment of these technologies in the shortest possible time.
The RenewableUK Conferences are must-attend events on the industry calendar.
Looking ahead to the annual conference in Manchester in October 2010, RenewableUK’s Head of Brand and Marketing described the conference as the company’s “biggest event of the year”, and said that every year saw an increase in the number of exhibiting companies.
“We are expecting up to three hundred companies in total,” he said of the Manchester 2011 conference. “More than five thousand delegates are expected to attend.” He commented that the conference has had to extend into new facilities in order to meet the demand for exhibition space.
He concluded by pointing out that the conference is of benefit to those from all aspects of the marine energy sector, saying: “Overall, it is a great opportunity for manufacturers, developers, suppliers, financiers and research institutes to find out about the latest developments in the fast-growing wind, wave and tidal sectors.”