BRITS PUT 5 BILLION POUNDS INTO NEW ENERGY

Budget 2009: Darling gives renewables a £5bn shot in the arm; British Wind Energy Association welcomes package, but planning and grid connections still restrict renewables revolution
Terry Macalister, 22 April 2009 (UK Guardian)

SUMMARY
The new British budget, announced by Chancellor of the Exchequer Alistair Darling, allocates £5 billion ($7.35 billion, £1 = $1.47) to New Energy development.

Investment in New Energy is vital but, says the British Wind Energy Association (BWEA), delays due to planning and permitting and access to the grid may still prevent New Energy from fulfilling its potential and keep the UK from meeting its New Energy and emissions reduction goals.

Increased subsidies to offshore wind will add £525 million ($770.8 million) for development between 2011 and 2014.

£405 million ($594.5 million) is expected to be available for wind and tidal energy development.

click to enlarge

£45 million ($66.16 million) will go into the Low Carbon Buildings Programme. It is expected get solar grant applications flowing once again and allow the British solar industry to prepare for the launch of a new feed-in tariff (FiT) in April 2010.

£4 billion ($5.88 million) of the new capital will come from the European Union’s European Investment Bank as part of the EU’s effort to finance the New Energy projects private, cash-strapped commercial banks are not financing.

The budget includes £250 million ($367.6 million) of a £750 million ($1.1 billion) strategic investment fund for business that will specifically go to “low-carbon” opportunities and innovation.

The UK presently has 8 gigawatts of wind power that have been planned and permitted but have not gone into construction for lack of financing.

The ultimate objective? (click to enlarge)

COMMENTARY
Unlike EU nations which largely rely on an FiT, the British have so far chosen a Renewables Obligation Certificates (ROC) system of incentives. The new subsidy comes in the form of an increase from banding level 1.5 to banding level 2.0 for offshore wind, meaning the government is giving offshore wind a higher priority and twice as much in subsidies per megawatt-hour as goes to more mature New Energies such as hydroelectric or onshore wind.

The adoption by the UK of an FiT, like the one that has made Germany's installed solar energy capacity the biggest in the world despite mediocre solar resources, is an historic shift. The UK solar energy industry expects a boom in installations when it takes effect.

click to enlarge

The UK government's big cash injection for New Energy is in the same spirit and along the same lines as the Obama administration's funneling of stimulus funds to the U.S. New Energies, a vote of confidence that they will spur economic growth and job creation.

It is interesting to see how parallel the situations in the U.S. and the UK are. In both cases, the clamor last year was for incentives and the clamor early this year has been for financing. Both governments have taken advantage of the financial crisis to move stimulus funds into the New Energies because both the Brown and Obama administrations are strongly committed to the proposition that creating activity there will spur their economies. And, with incentives and financing in place, the New Energies in both countries have discovered new obstacles in (1) the complexities of the permitting process and in (2) the inadequacy of getting the electricity they generate into the transmission system.

click to enlarge

In the UK (and in the U.S.), there is controversy over money in the budget that may go to fund nuclear energy projects. Environmentalists and the more liberal among the government’s constituency believe provisions in the new budget violate a platform commitment not to fund nuclear.

As in the U.S. and industrial nations around the world, activist environmentalists are also fighting funding for new coal plants in the UK. The coal industry, as usual, has responded with promises to only build plants that are “carbon capture-ready.” There is at present no proven “carbon capture” technology, which means that such an argument would essentially win for the coal industry the permitting and funding of dirty coal plants if such plants simply retain an open space on the lot “ready” for whatever “carbon capture” technology might eventually emerge in 10-to-20 years.

The same UK activist constituency is resentful that a portion of the budget funding is directed at getting more production out of some of the UK’s fading North Sea oil fields.

QUOTES
- Charles Anglin, spokesman, BWEA: "They have given us what we asked for so it must give this a thumbs up…But we are still faced with a £10bn to £15bn cost of an offshore grid, a cost that needs to be accepted as a social cost and spread across all users including coal and nuclear. There is also the need for changes in the planning system which remain unaddressed…"

click to enlarge

- Derry Newman, CEO, Solar Century: "The Treasury is to be congratulated for recognising the important contribution that technologies such as solar PV can make to delivering a low-carbon Britain. We look forward to working with the Department for Energy to ensure that the current hiatus in solar PV support is lifted urgently…"
John Sauven, executive director, Greenpeace UK: "E.ON and its partners should now give an immediate green light to the proposed London array, which if built will be the largest offshore wind farm in Europe…"
- David Lowry, environmental consultant: "This will include initiatives on low-carbon vehicles, as well as the nuclear and renewable energy industries…"
- Doug Parr, chief scientist, Greenpeace: "Nuclear has had 50 years to get its act together. It should not need more money and this is cash that could and should have all all gone to renewables."