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Economy

Getting good energy

Written by Juliet Davenport is chief executive of renewable electricity provider Good Energy
Friday, 12 September 2008
How will the UK break its foreign oil dependence? Earlier this year, Gordon Brown called for a massive investment to reduce the nation's dependence on oil and to help meet European targets for developing renewable energy sources. Related Articles Global economy dire RBS: Glass half empty at Bank of England Egypt economic growth to remain strong UK businesses RIP Credit Suisse: Europe economic conditions improve Economy News The prime minister proposed spending £100 billion over 12 years in an attempt to meet our EU target of producing 15% of the country's energy from renewable sources by 2020. Technically, the UK is quite capable of meeting this target without resorting to fiddling the figures. And it must achieve it. As the price of oil stays stubbornly above $100 and energy prices continue to soar, it is simply good economic sense to develop the nation’s energy security. A thriving renewables industry in the UK is also vital to help lift the economy out of the doldrums. What’s more, the demand is there. Companies want to be seen to be going green. Switching to a renewable energy supplier is an easy and affordable way of doing that. Now we just need some joined up policies to boost the supply-side. In wind alone, the UK has 40% of Europe's entire resources. And yet, the UK is very close to the bottom of the European league table in terms of meeting its renewables targets, only faring better than Malta and Luxembourg. At present less than 1.5% of the country’s energy is generated by renewable sources, compared with Sweden at almost 40%. Despite a burgeoning wind industry at the beginning of the nineties, the UK market didn’t sort out the issues on the ground, while the likes of Spain and Germany were busy building thriving solar and wind industries. These countries have led with their use of government policy. Both have had consistent incentives for long periods of time. For me, what has been crucial is that these countries have had consistent planning regulations, which allow the risks in building sites to be minimised. This ensures the profitability of renewable ventures, and has been key to encouraging investment in the sector. The UK by comparison has a muddled approach to renewable energy that impedes the industry rather than nurturing it. The biggest problem is the failure of different parts of the system to work together. The necessary policies to support the roll-out of renewable energy are already in place. What’s needed is support for the implementation of those policies, and administrators with the remit to enforce it. Planning is a prime example of how consistency within the system could transform the current roadblocks. It’s not about relaxing planning regulations, but about implementing existing ones. To a great extent, planning approval remains dependent on local political issues and perceptions. There are conflicting views in planning around the country, and therefore different levels of strictness are applied. Planning committees don’t have to get balanced views, they simply review what is put in front of them and, in the UK, the anti-wind lobby is well organised and vocal. The government also needs to dedicate resources to manage the regulatory environment more effectively. If planning committees don’t follow the guidelines, and don’t do their jobs, they should be held accountable. There are good and clear guidelines available, but the process is lengthy and expensive if applications are wrongly turned down. As to the energy watchdog Ofgem, it must change its remit to better suit the current climate. Ofgem says its first priority is to protect consumers. That has traditionally been interpreted as being about price, so all market reviews and implementation issues are undertaken through that filter, rather than energy efficiency or greater use of renewable sources. So, while it is reasonably successful at looking after today’s consumer, Ofgem does nothing for consumers 10 years down the line. The National Grid causes its own problems. While it has said that it could carry up to 20% of renewable power without major structural changes, it penalises wind farms disproportionately for the variability of the energy generated. If the government is serious about its targets, it should incentivise the grid to make sure it connects and distributes wind as a priority, as outlined in the recent EU Directive. It’s clear that there is a disconnect in the UK between departments responsible for renewable energy and carbon emissions: the Department for Business, Enterprise & Regulatory Reform is responsible for energy, while the Department for Environment, Food and Rural Affairs covers carbon. We can reach the 15% target but joined up thinking is the key. It’s fine to come up with a policy but it needs to cascade through the system, and everyone needs to realise it is their responsibility to implement it, whether as an employee or as a citizen. For me the potential success for the UK renewables industry will not come from a complete re-engineering of the systems, but from the development and expansion of existing incentives, making the whole market work from top to tail.