Why renewables matter June 2015

RUK15-012-7 Why renewables matter Why renewables matter 3

Why renewables matter

Renewable energy is a UK success story. Renewable energy now provides over 19% of the UK’s electricity, and half of this comes from wind. By 2020 we expect wind, wave and tidal energy to meet 25% of the UK’s electricity needs. The Committee on Climate Change (CCC) predicts that by 2030 renewable electricity should provide 50% of the UK’s power needs, most of which will be .

Across this decade, the UK is renewable energy projects. 34,000 For industry and Government this

expected to cut 45.5 Mt of CO2 from people now have wind, wave and tidal is semi-uncharted territory. In this 9.5% in 2014 25% by 2020 44% by 2030 electricity generation. In the 2020s we energy to thank for their employment, new relationship, industry has a must more than double this, cutting a a figure likely to increase to over responsibility to deliver new low-

Percentage of the UK’s power RenewableUK forecast of wind, Committee on Climate Change further 92.9MtCO2 in order to hit CCC 100,000 by the early 2020s. Over carbon generation on time, while needs coming from wind, wave and tidal energy’s contribution prediction of wind, wave and tidal recommendations. This challenge three quarters of wave and tidal keeping costs down and maximising wave and tidal energy. to UK power needs. energy’s contribution to UK power needs. will require continued investment investment has been spent in the UK value. In turn Government must in renewables like onshore wind, UK supply chain. Over two thirds of seek to provide market stability. offshore wind, wave and tidal, as onshore wind spending stays in the Without this, investment will not flow. well as in other renewables and low- UK, with one quarter spent locally. carbon technologies, while scaling Offshore has a target of 50% UK In June 2014 RenewableUK published 13 GW 28.5 TWh <0 .1% up action on energy efficiency. In content, and, with inward investment its General Election Manifesto, setting its ability to cut CO2, wind energy is in UK manufacturing now certain, is out what the UK could expect from Capacity of UK power needs met UK wind performance in 2014 The reduction in carbon emissions unparalleled, with lifetime emissions set to deliver this target. wind, wave and tidal energy, and by onshore and offshore wind. enough to power more than from wind because of the need to comparable to new nuclear, and far what actions we would like to see a quarter of UK homes. provide thermal back up. below those of other renewables or But this success can only be from a new Government. With the low-carbon alternatives. continued with Government support. election now passed and a new The need to take action on climate Government formed, this document Best of all, we can decarbonise while change, worries over energy security, sets out, with updated information, minimising the cost to the consumer, and the challenges of keeping energy how our new Government can rely on 35,000 105,000 94% confidence and while bringing new employment costs down have all meant that renewable energy to keep the lights to the UK. Onshore wind is already Government plays a pivotal role in on and decarbonise our electricity People employed by the UK’s wind, Potential employment figure in 2020s National Grid’s ability to predict wind cheaper than new nuclear, and is set setting out the long-term framework system, while keeping down costs wave and tidal sectors. for wind, wave and tidal sectors. power output 24 hours ahead. to be cheaper than new gas plant by for our industry. and bringing new skilled employment 2020. Offshore wind costs are also to the UK. We then set out the falling rapidly and by 2020 will have The last Parliament agreed an Energy necessary policy actions required so fallen 30% from their 2012 value, Act which gives Government the that the industry can continue delivery with the industry confident that it can role of architect. Government must out to 2020, and throughout the next compete with new nuclear on price decide the shape of the market, and decade. 69% 50% 75% by the mid-2020s. decisions made through the related Contracts for Difference programme Level of UK content in the Offshore wind sector’s commitment Percentage of wave and tidal The industrial opportunity is also and Capacity Market will define what onshore wind sector. to level of UK content. investment in the UK supply chain. significant. The UK now has a does and does not get built. Now more significant employment base involved than ever it is the Government which in the development, manufacture, has responsibility for keeping the lights construction and operation of on, rather than the energy market. Front cover image: Siemens press picture Why renewables matter 4 Why renewables matter 5

Renewable energy in numbers Actions for Government: wind, wave and tidal

At the end of 2014 renewables were meeting almost 20% of the UK’s electricity needs. According to the Committee on Climate Change, by 2030 over 50% could come from renewables, with wind, wave and tidal making the biggest contribution.

First 100 days 2015 –2020 action 2.5%

10% 14% 19% Government to confirm the timetable Government to set a clear 2030 30.2% Gas Gas of, and budget for, the 2nd allocation decarbonisation framework. 19% 9.6% 2014 Coal 2030 Wind, wave and tidal renewables renewables round under the Contracts for We strongly advocate a firm make-up Wind, wave and tidal make-up Biomass & other renewables 44% 9.6% Other renewables Other Difference regime. Indicative dates 2030 decarbonisation target, as 12% 29.1% Other Nuclear and budget for the 3rd round to be recommended by the Committee on Nuclear 1% Carbon capture & storage published. Climate Change. – – The continued growth of renewables is not surprising in Not only are renewables important in helping us to decarbonise, light of the fact that between 2020 and 2030, the UK must they’re also important in helping us to deal with energy security. Clarification on the role of onshore wind Parliamentary consensus on tackling cut carbon emissions from the power sector by two times Our reliance on imports is increasing rapidly. In 2010 we im- in meeting Government’s 2020 targets, climate change must not waiver. All the the level agreed between 2010 and 2020. ported 20% of our fuel needs. By 2013, this had risen to 47%. given its place as the UK’s cheapest main parties were clear on this in the

1990 Baseline (204.51 MtCO2) source of low carbon electricity. 2015 election. Government needs to lead – action to secure a Fifth Carbon Budget. Set out a clear timetable for FIT Review – 2013 2010 28% to support householders, farmers By 2016 at the latest, agree the Levy 204.51 47.2% MtCO2 and small businesses benefit from Control Framework budget covering the 2011 renewable energy deployment. period up to 2025, to be extended on a 2012 36.5% 43% – rolling basis thereafter, accompanied 15.98 MtCO2 Government to make a strong by a clear timetable of CfD auctions commitment to maintain the UK’s that includes visibility of their budgets market lead in wave and tidal as part two years in advance. of the UK’s electricity mix. – Almost 35,000 people currently work in the wind, wave and tidal sectors. By the early 2020s this could rise to over 100,000. To work together with all devolved 37,119 44,653 administrations to implement a strategy 18,859 13,058 to deliver at least three pilot tidal

2013 2023 (high scenario) 2013 2023 (high scenario) arrays, and bring wave energy to a Onshore Offshore point where private investment will re- = 1,000 jobs 104,793 enter the market.

23,021 34,373 2,457

2013 2023 (high scenario) 2013 2023 (high scenario) For further information, see RenewableUK’s General Election Manifesto and our 2014 Marine All State of the Industry report. Why renewables matter 6 Why renewables matter 7

Our 2030 vision

Running the country is a complex and difficult task, and a workable energy policy is a necessary part of this task. Government has recognised that the market is the best place to deliver cost efficiency, but Government itself also has an important role.

The politics of Government requires The signing of the 2008 Climate Passing of the Fifth Carbon Budget The challenge of decarbonisation Technology changes and continued Power sector scenarios to reach 50gCO2/kWh a focus on immediate issues Change Act and the passing of the will mean getting agreement on also allows industry and our research evolution in how we generate and by 2030—generation (TWh/year) and an emphasis on keeping a 2013 Energy Act were important a clear pathway to electricity institutions to look at how we improve use energy will mean that across the 500 programme on track. Currently, that actions which set out a long-term decarbonisation by 2030; a our overall energy system; quickening decade electricity storage will come 450 means ensuring that the UK hits its plan for decarbonising our economy. necessary long-term signal to its evolution into a modern energy to the fore. Different storage options 400 renewable energy targets effectively. The next Government must set out investors. And this pathway network that will stand the test of time. will help put consumers back in a credible but ambitious pathway for underlines the importance of charge of how they consume energy 350 Achievement of the 2020 targets is by decarbonisation post-2020. extending the Levy Control Wind is a variable technology, which and help companies actively manage 300 no means assured and Government Framework into the next decade is to say that its electricity output how they trade energy to reduce their 250 needs to see a pipeline of renewable In December 2015 Parliament so that investment in low carbon goes up and down as wind levels operating costs. Our future energy 200 projects continue their development. and Government will receive generation continues. In turn this vary. Thankfully this output is very system will have more variable power 150 But while securing this, Government recommendations from the CCC means Government backing to predictable and easily managed sources such as wind and solar, but must also lift its sights and focus setting out a proposed Fifth Carbon renewables through the coming owing to the reliable wind forecasting also be more reliable and resilient, 100 attention on the next decade, for one Budget. Currently the CCC is drawing Comprehensive Spending Review. now used by National Grid. In fact, thanks to storage. Many of the UK’s 50 simple reason: energy infrastructure up and reviewing its evidence base. These decision points likely come in National Grid says there is no limit to wind companies are already investing 0 takes time to be delivered. But we already know a lot from the 2016, and all will strongly influence how much wind can be connected. in electricity storage; helping to speed Ambitious Ambitious Ambitious Higher Energy Nuclear Renewables CCS Efficiency Fourth Carbon Budget covering action across the 2020s. Without And technology changes are making up this transition to a better market Perhaps more than any other issue, 2023–27. Delivering on this budget clarity in 2016, industry cannot this task easier, even as more and grid system, and want to see Other Offshore wind Gas CCGT Onshore wind this new Government’s actions on will require a reduction in carbon confidently unleash a new programme capacity is connected. Government play its part in making Coal CCS energy will be judged by the progress emissions of 50% from 1990 levels. of investment. this shift a reality, through the use of Biomass & other renewables Nuclear which comes after its term has finished. better regulation and incentives. Wave & tidal The Budgets must set out how to Infrastructure investors need reduce emissions at least cost. Government as a partner and to The Fourth Carbon Budget made it champion a clear, long term vision. clear that wind, wave and tidal will Continued decarbonisation allows be delivering a quarter of the UK’s the UK to lead efforts on climate electricity needs by 2020. But by change, but also helps us to reduce 2030, the CCC expects them to our dependence on energy imports deliver at least 40%. and grow our economy. Why renewables matter 8 Why renewables matter 9

Offshore wind

The UK leads the world’s offshore wind roll-out. In 2002 there were only two wind turbines in UK waters, and in 2004, there were 50. Today there are close to 1,500 offshore wind turbines either in operation or construction in the UK. In fact, since 2008, a turbine has gone up in UK waters on average every 36 hours.

Government Action

Despite this rapid rate of progress, Already our coastlines and coastal First 100 days offshore wind farms currently take up communities are witnessing growth only around 0.1% of the UK’s marine thanks to offshore wind. Port commu- 13, Ensure an ambitious 2nd Allocation Round to Exclusive Economic Zone (EEZ). This nities are benefiting from construction deliver continued deployment up to and beyond modest footprint is in contrast to and operation work, with industry Offshore wind supports over 2020, including budget for the ‘less established’ the significant amounts of electricity creating highly skilled long-term jobs 13,000 jobs across the UK. pot at least as large as in the 1st round, and with offshore supplies to the grid, currently to meet its future growth plans. the years 2019/20 and 2020/21 open for bidding. at around 5% per annum. Between 2010 and 2014, the cost of As things stand, every 1GW of offshore wind has fallen: from £136 to 2015 –2020 action offshore capacity provides 1% of net £121 per MWh, for projects delivering 50% UK electricity consumption, and the 2012 to 2014. Recent CfD auctions Use the 5th Carbon Budget to agree a more expectation is that by 2020, with the show that costs are continuing to fall, The industry has committed to having clearly defined level of ambition, delivering UK hosting around 10GW of offshore, showing that the offshore wind sector is 50% UK content in its offshore wind farms. volume certainty to the offshore wind industry. the technology will be providing ahead of target in efforts to bring costs – around 10% of UK electricity. This down to £100/MWH by 2020. Industry Set a clear programme of support for offshore is just the beginning of what we can expects to go further and to be cost wind into the next decade, including agreeing expect from offshore wind. competitive with new nuclear by 2025. new industry/government cost reduction targets 7MW = which will act as milestones for ongoing support Offshore wind is ahead of schedule The current UK offshore wind and UK confidence. in its efforts to meet the Government/ pipeline, if fully built out, would deliver industry target of £100 per MWh around 20% of the UK’s electricity by 2020. The big shift has been the needs. Next generation turbines x 1000 move to larger offshore turbines, averaging an installed capacity of and this also means that the UK is around 7MW each, produce enough A single 7MW turbine can power set to be an offshore manufacturing electricity on an annual basis for up to 5,000 UK homes. powerhouse. With Siemens and MHI 5,000 homes. Just 40 of these Vestas now bringing manufacturing to turbines could power every home in a the UK, industry is looking forward to city the size of Manchester. scaling up the UK supply chain and increasing UK content to 50%. The UK is seen as the international leader in the development of offshore wind technology with UK regulatory and industrial expertise sought out in key developing offshore markets. For further information, see RenewableUK’s Offshore Timelines, Over 50 % of global installed offshore the Offshore Wind Programme Board’s report into Offshore Wind Cost Reduction and industry Guidance on measuring UK content. wind capacity is in UK waters. Why renewables matter 10 Why renewables matter 11

Onshore wind

Onshore wind energy is a topic of debate which can often seem to create more heat than light. Some still insist that onshore wind does not work. But this ignores the fact that it is the largest source of renewable Government Action electricity in the UK. First 100 days

Clarification on the role of onshore wind in meeting the UK’s 2020 renewable energy target, given its role as the UK’s lowest cost source of low carbon electricity. – Onshore wind already provides five The onshore wind industry has Continuation of technology neutral auctions per cent of the UK’s electricity. By also long been at the forefront of between biofuels, hydro, onshore wind and 2020 this could rise to 10%. The initiatives to share the benefits solar in the ‘established’ pot so that the Committee on Climate Change of their developments with local consumer benefits from lowest cost path to projected continued growth of communities; onshore wind leads the decarbonisation. onshore wind between 2020 and energy sector in levels of local and UK – 2030, as one of the lowest cost content, and in levels of community A YouGov poll for The Sunday Times Continue an effective transition to the CfD from the means of decarbonisation. benefit contributions that are paid in May 2015 found that: 37% of Renewables Obligation, so that investors retain to communities near developments. people think the government should confidence in Government, and avoid the energy The UK’s excellent wind resource Onshore wind proposals now encourage more onshore wind, 24% sector having to write off substantial investment. makes onshore wind one of our routinely offer shared ownership as think the government should allow most competitive options for part of development, to give local more onshore wind, 10% think the decarbonisation. It is cheaper than communities the chance to benefit government should discourage onshore 2015 –2020 action all other low-carbon alternatives like directly from projects. wind, 14% think government should biomass, nuclear and solar. And ban onshore wind, 14% didn’t know. Firm commitment to support industry efforts falling costs mean that by 2020 it Schemes which offer significant to roll out shared ownership to communities should be the lowest costs of any new benefits, while helping deliver low across the UK generation, including new combined cost decarbonisation, should be – cycle gas turbines. Onshore able to secure local support and Support industry efforts to bring the costs wind does all this while providing planning consent to develop. Given 69% of onshore wind down further significant economic benefit to local their low cost, it is expected that – communities and the UK as a whole. these locally backed schemes will be Level of UK content for onshore wind. Ensure that planning guidelines are clear and able to compete effectively in new objective and applied consistently The UK Government wants to put technology neutral auctions set up – local communities in charge of by the last Government. Any onshore Cost (£) Work with the NI Executive to ensure that the CfD decisions about future onshore wind wind coming through such an auction 80 is accessible by NI developers, and that action 75 £4 will demonstrably be delivering low farms and end subsidies. Industry 70 £3 is taken to make the CfD work in the island of £2 agrees with the importance of local carbon energy at a lower cost to the £1 65 £1 £64 Ireland’s new Single Electricity Market. decision making in deciding which consumer than other alternatives. 60 – projects come forward, and is 55 Commitment to work with the sector and with 50 confident it can be the lowest cost the Committee on Climate Change to establish option. Onshore wind developers The Onshore Cost Reduction Taskforce an appropriate level of ambition out to 2030 routinely consult with communities on has set out the steps required to reduce wind farm proposals at a very early the cost of onshore wind from £75-£90 to stage and work closely with local as little as £64 by 2020; lower than the For further information, see RenewableUK’s Onshore Wind Economic Benefits study, the report of the Onshore Cost Reduction Taskforce, people and local interest groups when cost of electricity from new combined and the report of the Shared Ownership Taskforce. shaping their planning proposals. cycle gas turbines (shown above). Why renewables matter 12 Why renewables matter 13

Small & medium wind

The UK should be proud of the small & medium wind sector. At this scale (up to 500kW), British companies are involved in the manufacture and installation of turbines, both here and abroad. In fact, for every turbine installed in the UK, one is also exported overseas, a fantastic example of how the low-carbon economy is powering Britain at home and internationally.

Government Action

In 2014, 2,237 small & medium wind Despite these benefits, many UK First 100 days turbines were installed in the UK, companies remain frustrated that while 2,614 were exported to markets the continued growth and many Set out a clear timetable for the Feed-in Tariff like Europe, the USA, and Asia. This achievements of the sector don’t review. export success demonstrates how receive the recognition they deserve. – action to underpin and promote a They are concerned about the Recognise that the small & medium wind domestic market can help boost stability of the UK market, and about industry is rooted in a strong UK manufacturing exports and our balance of trade. the commitment of Government UK small and medium wind base, and delivers significant economic benefits to its continued growth and 15 turbine manufacturers. to our rural economy. Small & medium wind is one of the international success. best ways of spreading the benefits of renewable energy. Locally developed The changes made to the Feed-in 2015 –2020 action and owned renewable energy Tariff during the last review have had projects give communities the chance detrimental effects on the uptake Conclude the Feed-in Tariff review by December to play a role in national carbon of small & medium wind. In 2013, 2015, to ensure a timely response to the reduction and energy production. the deployment of sub-50kW wind challenges facing the sector. Reforms should Many rural homeowners, community turbines decreased by nearly 80% on include appropriate banding and degression groups, farmers and businesses are the previous year. Deployment levels thresholds to allow different parts of the sector choosing wind energy to help them are now too low to sustain an industry to prosper. These reforms can be cost neutral manage energy costs. Ten per cent – in February 2015 only four wind to UK consumers. of UK farms already use wind energy turbines under 50kW were installed – to bring an additional, stable income in the UK. Provide increased and effective support to For every turbine installed in the UK, to their businesses; this helps them communities so that they can continue to benefit one is also exported overseas. manage food price instability, while Government urgently needs to from locally owned energy schemes. cutting their energy bills. recapture momentum and take the – opportunity of the impending Feed-in Ensure that planning requirements for small and By the end of 2014, a total of 27,819 Tariff review to put the industry back medium wind turbines are proportionate to the small and medium turbines had been onto the right path. It is vital that the 10 % scale of the project. deployed across the UK, delivering needs of the industry are recognised over 391GWh of energy across 2014, in order to ensure a long-term and Percentage of UK farms that have and securing 168,257 tonnes of sustainable future for small and installed a wind turbine. carbon dioxide savings. medium wind in the UK.

For further information, see RenewableUK’s Small and Medium Wind Strategy and our 2015 Small and Medium Wind Market Report Why renewables matter 14 Why renewables matter 15

Wave and tidal

The wave and tidal sectors represent a once-in-a- generation opportunity to secure a new low-carbon, indigenous source of electricity which delivers significant economic and industrial growth. The UK is home to some of the best marine energy resource in the world, with the potential to supply 20% of UK electricity, avoiding 30 million tonnes of CO2 emissions each year.

Government Action

A more diverse renewable energy By maintaining our global lead, it has First 100 days portfolio means improved energy been estimated that the UK could security and cost savings. Adding capture a significant slice of a global 20% Government to make a strong commitment to wave and tidal stream energy to the marine energy market worth up to maintain the UK’s market lead in wave and tidal renewable energy mix could save as £76 billion by 2050. Amount of the UK’s current electricity as part of the UK’s electricity mix. much as £867 million per year from demand which wave and tidal could the annual wholesale cost of energy. The UK has a dynamic marine energy potentially supply. sector which is already achieving 2015 –2020 action Over 1,500 people work in the UK outstanding technology progression, wave and tidal sectors, with nearly with many concepts now proven in To support its high-level commitment, Government £450 million spent to date in the real sea conditions. We have world- must provide a joint, clear and consistent vision of UK supply chain. This could grow leading test and demonstration into the role wave and tidal energy will play out to 2030, to over 20,000 skilled jobs in the facilities, and companies are now as well as a strategy to deliver this. next decade. Investment in research moving to development of full-scale £7 of private investment is leveraged – and testing has delivered economic commercial projects, including the by each £1 of UK public investment in Government should take steps to improve access growth and commercial opportunities. Swansea Bay Tidal Lagoon and the wave and tidal. to revenue support for wave and tidal projects in Critically these skilled jobs are often world’s first large-scale tidal stream order to better meet their needs in the absence of created far from commercial centres array in the Pentland Firth. The the Renewables Obligation (RO). where other skilled employment world’s first community owned tidal – opportunities may be limited. For turbine is now operating off Shetland Government should work together with industry to example, in Orkney, for every job and the first large scale tidal turbine 320MW ensure at least three pilot tidal arrays in UK waters created at the European Marine in is due to be deployed in the by 2018. Energy Centre, 10 jobs are created Ramsey Sound. Size of the world’s first tidal lagoon – in the local supply chain. planned for Swansea Bay, Wales. Government should work together with industry The UK’s wave and tidal sector to establish a new and comprehensive UK-wide Wave and tidal energy has received has made an enormous amount of programme to accelerate the demonstration of support from Government at all progress, but there is still much to do robust, reliable and investable wave technology levels in the UK and this has driven to realise the opportunity. To maintain and related enabling technologies. investment in the UK market with an our global lead and commercialise – average of £7 of private investment these industries, sustained and Government should consider the value added by the being leveraged for every £1 of consistent practical and financial enabling of a UK tidal lagoon industry as part of its public money received by companies support from Government at all levels CfD negotiations for Tidal Lagoon Swansea Bay. surveyed by RenewableUK. This is urgently required. has placed the UK at the forefront of marine energy development globally For further information, see the Marine Energy Programme Board’s with more capacity tested in UK 2015 Wave and Tidal Energy in the UK report. waters than in the rest of the world. Our vision is for renewable energy to play a leading role in powering the UK.

RenewableUK is the UK’s leading renewable energy trade association, RenewableUK specialising in onshore wind, offshore wind, and wave & tidal energy. Formed in Greencoat House, Francis Street 1978, we have a large established corporate membership, ranging from small London SW1P 1DH, independent companies to large international corporations and manufacturers.

Tel: +44 (0)20 7901 3000 Acting as a central point of information and a united, representative voice for Fax: +44 (0)20 7901 3001 our membership, we conduct research, find solutions, organise events, facilitate Web: www.RenewableUK.com business development, advocate and promote wind and marine renewables to Email: [email protected] government, industry, the media and the public.