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Brian Wilson MPSCDI Influencer Dinner Speech |
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I am delighted to have been asked to attend this event tonight and to talk to you about renewable energy. It is particularly gratifying to see such a wide ranging audience – this gives an indication of the importance with which renewables are viewed, not only within the energy industry, but also more widely. If renewables are to fulfil their potential, then it is vital that we all work in partnership – local government, central government, the electricity industry, the construction industry and local communities. I want to talk to you tonight about central government's role in that partnership, and what we are doing to develop a comprehensive framework on which the building blocks of the industry will be built. Scotland has traditionally been at the forefront of renewables development in the UK, and I am sure that trend is set to continue. It's always worth remembering, to put more recent developments in perspective, that the hydro electricity schemes which were built, many of them in the Highlands, several decades ago still provide the United Kingdom with it largest source of renewable energy. We have a long way to go before we begin to match that visionary programme which, sadly was cut unnaturally short in the early 1960s and which I now fervently hope can be resumed. But there have been other more recent developments. We are already home to the world's first commercial wave power station on Islay, and I believe that we will soon see major tidal stream developments taking place off the Shetland coastline. There are exciting plans for wind power developments both onshore- in Lewis, Skye, Caithness, Argyll and elsewhere- as well as offshore. The opportunities exist to advance on all fronts and I believe that there is a consensus in favour of this kind of development activity in the Highlands and Islands. However, it is no use generating renewable electricity in the Highlands and Islands unless we have the right infrastructure to enable that power to be accessed by the consumers who need to use it. I therefore want to talk a little about how the Government is addressing infrastructure issues. Liberalisation and competition in the electricity sector have enabled us to move away from the prescriptive NFFO system of contracts to the more flexible market-driven Renewables Obligation. The introduction of BETTA (the British Electricity Trading & Transmission Arrangements) will enable us to drive further forward with this in Scotland. Although there was no reference to BETTA in the Queen's Speech, I can assure you that work is continuing on the preparation of that legislation and that the target date for introduction is still 2004. Because of the way the electricity industry was privatised, its structure in Scotland is significantly different from the rest of the UK. That has certainly allowed the main utility companies, Scottish Power and Scottish and Southern, to maintain a stronger market position than most of their counterparts in England and Wales. I regard it as a matter for satisfaction that these two companies remain firmly in domestic ownership but we also have to ensure that Scotland's consumers, both domestic and industrial, have access to the competitive benefits that are available elsewhere in the UK. The Scotland Office, the Scottish Executive and Energywatch are all in support of consumers north and south of the border being treated in the same way and see the introduction of a competitive wholesale market as a vital step. The Government believes the time is now right to create such a market for the whole of Britain. And it is absolutely vital, for renewables, for the industry and for the consumer, that we get it right first time. Crucially, in the context of the renewables debate, BETTA will mean one set of trading rules; one set of connection policies and will reduce the barriers which inhibit independent generators in getting power south to customers. It will mean that the Government can take a joined-up approach to particular issues, such as those faced by renewables, CHP and other smaller generators. This will help us create a diverse generating base in Britain. In particular, these new arrangements will encourage new transmission capacity to be built, helping to support renewables development. We have set ourselves the target of April 2004 for the implementation of these new arrangements. We are committed to developing and implementing the right conditions to ensure a long-term diverse and secure supply of energy for Britain. I intend to use the next few months before BETTA is introduced to start the process of improving the grid infrastructure in Scotland, and particularly in the Highlands and Islands, with the aim of facilitating the development of renewables. The DTI has been working with the transmission companies and Ofgem, through the Transmission Issues Working Group to address the implications for the electricity network of a much larger contribution from renewables. They have looked at a range of possibilities including 2, 4 and 6 GW of new wind capacity in Scotland. It has become clear that all of these possibilities will require, as the first step, a major reinforcement of the Grid in Scotland and in England. The companies are in discussion with Ofgem on the regulatory framework for making this happen. I have made clear from the outset that this approach must extend to the furthest northern and western points of the Highlands and Islands if the potential for renewable energy in these areas is to be fully realised. But I want to make one important statement of principle tonight. This is a national undertaking rather than a local one. The costs of providing the infrastructure which will enable generation to take place on the periphery of the country, contributing in an environmentally-friendly way to serve the energy needs of the great centres of population, cannot be borne disproportionately by consumers within this relatively sparsely populated region. As things stand, that is what the regulatory framework would dictate But with the introduction of BETTA, which we intend will take place in April 2004, the costs of this new capacity will be spread fairly across all those that use electricity in Great Britain. This will represent a major step towards opening the door for the huge renewables potential of Scotland in general and the Highlands and Islands in particular. I also want to make clear that, even in advance of BETTA, this is the approach which I want to see adopted in so far as existing legislation permits, since we certainly cannot wait until 2004 for these major and crucial infrastructural changes to begin. As you probably know, we are planning to publish our Energy White Paper early in the New Year, and this will set our goals for the future, and how we plan to get there. An obvious component of the paper will be our future targets for renewable energy. Our current target nationally is that, by 2010, 10% of the UK's electricity needs will be supplied from sources which are eligible for the recently-introduced Renewables Obligation. When I talk about the Renewables Oblgiation, I am of course including the Renewables Obligation Scotland which runs parallel to the Obligation in England and Wales. The Obligation itself represents a secure basis for the development of the industry by providing a market for renewable energy for the next quarter of a century. We want to rise steadily to 10% in 2010. These are challenging targets, requiring us to quadruple the current contribution from renewable sources. Perhaps the most difficult task will be to achieve the essential initial momentum of expansion. To meet the challenge, we therefore need to make a concerted and united effort. You all – local and regional government, developers, the construction industry, the electricity industry – can play a vital role in encouraging uptake and understanding. The opportunities (and the rewards) are there, and it is up to you to take advantage of them, and push the boundaries. The efforts you make now will pay dividends – both financial and environmental. How are we going to meet the targets we have set? Hopefully, the next speaker Mr Dinning from Scottish Power will update us on his company's efforts. We are obviously keen to see the more instantly identifiable and classic technologies – such as wind and hydro – going from strength to strength, but we are working equally hard to put in place programmes of support for emerging technologies. To that end, over £250 million is now available to support capital grants in technologies as diverse as solar photovoltaics, offshore wind and biomass. In addition, £19 million per year will go towards my Department's R&D programme. As I mentioned earlier, we have already had some promising breakthroughs in areas such as wave and tidal power, but much work is still required to make these, and the other emerging technologies more competitive and technically robust. Many undoubtedly have the potential to contribute to the UK's energy mix in the longer term – hence our drive to nurture them. Offshore wind I was delighted to announce the first two grants under the first offshore licensing round for offshore wind last month. £10 million will be given to each of two projects – National Wind Power's North Hoyle project off the coast of Wales, and PowerGen's Scroby Sands windfarm off Lincolnshire. Together, these two projects have the capacity to provide 100,000 homes with clean electricity. Applications have also been received from a further 8 projects, so this is a promising sign of interest in this particular area. I will shortly be publishing a consultation paper setting out the options for putting in place a robust framework which will ensure that we can maximise the UK's strong potential in offshore wind. There is already one very exciting offshore wind farm proposal not very far from here which could have massive industrial implications for the Highlands. It is still at the early stages of development but that is the scale of exciting concept that has to realised if our targets are to be met. Photovoltaic technology is now coming of age and we have given a major boost to our solar R&D programme. The domestic and large-scale field trials are expected to deliver 500 PV roofs and 15 larger installations on public buildings for a combined budget of £10 million. In addition, we launched the first phase of a major PV demonstration programme in Spring this year. This is backed by a £20 million budget and offers 50% capital grants for the installation of PV systems in residential and larger commercial and public buildings. In the medium to longer term, we still expect cost reductions and increased efficiencies for these systems. For the future, we are confident that photovoltaic systems will have a valuable contribution to make to the UK's energy requirements. Solar power might not be the most obvious renewables technology to apply in the Highlands and Islands but I was delighted that one of the applications which I approved in the last round was to fit solar panels on Ionad Cholm Chille Ile, at Bowmore, the new Gaelic college which is itself a project close to my heart. Like photovoltaics, bio-energy – including energy crops - have a significant input to make to the UK's energy mix, in the medium to long term. For that very reason, capital grants have been made available for the development of these projects. DTI's aim is to fund a number of demonstration projects to help reduce both the costs and risks involved in such developments, and to maximise the contribution to the Government's targets for renewable electricity supply within the UK. £66 million in total funding is available from the DTI and the New Opportunities Fund under the scheme. The deadline for applications has now passed, and early indications are that it has been heavily over subscribed. Again, a very promising sign of movement, dynamism and interest within that particular industry sector. I know that the Scottish Executive and the Forestry Commission are also working hard to stimulate the supply side of this particular market by providing much needed assistance for farmers and other crop growers. Given the current challenges facing farmers, energy from biomass could offer new diversification opportunities. Again I am aware of interesting projects which are being developed in the Highlands, particularly based on our forestry assets. Wave & Tidal Power As I said earlier, looking further into the future, wave and tidal power have the potential to make a contribution although the various forms of technology have yet to be proven commercially. The innovative Stingray technology harnesses the energy of tidal systems. Jointly funded by The Engineering Business and the DTI, this is an example of a British technology that may well be in a position to tap the predictable tidal stream energy resource worldwide. We will be particularly interested to see the results of how the prototype has operated on location in Yell Sound. I am also pleased to say that we are continuing to support Wavegen, who have developed the world's first commercial wave power device on Islay. Work is continuing with the DTI's support as Wavegen refines and further develops the technology involved. In May, I announced funding worth up to £2.3 million to support development and demonstration of a series of new wave energy devices off the Western Isles. I very much hope that we will be able to start paying out that money soon and I am delighted to confirm that the technology being used by Wavegen in that project has now passed through all the stages of technical assessment which my Department applies. I am pleased to see other companies coming forward with wave power projects – notably Ocean Power Delivery, based in Edinburgh. They have managed to secure significant private investment to develop their Pelamis system, and this is surely an encouraging sign for renewables as a whole. They have already demonstrated their device in the Firth of Forth as part of one of my Department's programmes looking at technical risk. As someone who has long believed in the potential of wave-power and tidal generation, and who is acutely aware of just how long we have been talking about that potential, I am exceptionally anxious to see them moving from perpetual Rand D to a flourishing manufacturing industry, based on proven technology. I hope that the projects which I have referred to will take us over that hurdle and that we can then lead the world in applying the technologies of wave and tide. Not only are we focusing our sights on industrial research and development but also looking at how the integration of renewables can be stimulated in the domestic sector. We have made available £10 million for a three-year programme of capital grants for renewable energy projects able to demonstrate a strong community or household interest. My officials are presently preparing this scheme and fuller details will be released in January next year. We will be looking at communities across the country taking up this challenge and making savings in carbon dioxide emissions – this is the benefit for the future - not just for the community but ultimately for the region and the country overall. The renewable sector is doubly important for the UK, not only because of the urgent need for offshore renewable energy to meet targets, but also as a tremendous opportunity for UK industry. Increased activity brings opportunities for jobs and investment. Just as the UK developed an immensely profitable supply chain industry for oil and gas, we now have the same opportunity to develop a world-class UK renewables industry and supply chain creating large numbers of jobs in the UK. Renewables UK, the new organisation that I set up earlier this year, is working hard to catalyse change in this field. Renewables UK is about creating renewables jobs and bringing renewables investment to the UK. This unit's overall aim is to maximise UK jobs and investment in renewables both domestically and worldwide by promoting enterprise, innovation and competitiveness in the UK supply chain. The opportunities here in the Highlands are enormous on this front too. We are seeing that already at Machrahanish and through the reopening of the Arnish yard in Lewis. That is the start of the story- not the end of it. From its base in Aberdeen, Renewables UK is working hard to stimulate the awakening renewables industry throughout the UK. Tonight I have emphasised the importance of a partnership approach to developing our strength in renewables. And can I say gently to our colleagues in local government that this approach has to extend to planning which is currently the major obstacle to the growth of renewables. One innovative example of the partnership approach is being pursued by Highlands and Islands Enterprise (HIE). They are already well engaged in the renewables sector, and are helping to place the Highlands at the forefront of this emerging industry. Along the way, they have also forged strong links with the North East of England. Real co-operation has been established between respective Development Agencies. Stingray is perhaps one tangible measure of this success as The Engineering Business chooses to test their equipment in the challenging offshore conditions here in the north of Shetland. Tomorrow morning, I will announce what is surely one of the most innovative and far sighted initiatives of 2002, that is the signing of a Memorandum of Understanding which will see HIE formalise an agreement of co-operation with the Regional Development Agency for the North East of England. This will cement a closer working relationship and pave the way for extending the scope of co-operative working beyond renewables into other engineering sectors. I firmly believe this represents one of the best examples of joined up working and one which I am confident will bear fruit for both regions. I hope I have given you all some environmentally friendly food for thought here tonight. I can only give you a snapshot of the multi-faceted approach which we are taking to developing the renewables industry and how we are paving the way for the future. I encourage all of you to match us in our efforts, and to work hard to create the strong and durable partnerships which will be vital to our success. |
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Other speeches by Brian Wilson MP
(the following are available from the archive) |
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