new energy: Michael Fallon recently replaced wind power sceptic John Hayes (Conservative Party) as energy minister at the Department of Energy and Climate Change (DECC). What impact does this decision have on renewables policies in the UK?
Gordon Edge: The decision caused a collective sigh of relief in the industry. Mr Hayes had not hidden his dislike of onshore wind in particular. We found him to be quite difficult. His successor Michael Fallon is a joint appointment between the Department of Energy and the Department for Business. He is also seen as a robust right-winger but he has “form” in renewables – in opposition he brought forward some useful measures to deal with renewables. So he is moderately sympathetic – certainly an improvement in terms of how that ministry is perceived in the industry.
new energy: What were the reasons behind the decision to replace John Hayes at DECC?
Gordon Edge: The fact that John Hayes was causing internal problems for the coalition government was probably a “push” reason for Prime Minister David Cameron. In the end, the minister was causing a lot of headaches for the coalition, so the decision to replace him can be seen as an attempt to close down this debate by removing that particular minister from his position.
new energy: How does this episode reflect on the current situation within DECC?
Gordon Edge: John Hayes was only put in post in September 2012. At that time we were quite shocked because he replaced Charles Hendry, who had wide respect across the entire energy sector – not just in the renewables industry. We did not necessarily agree with him all the time, but he was a person who listened, understood, and had a complete hold of the brief. I was genuinely shocked when the news broke. We had a major Electricity Market Reform (EMR) going through and a new energy bill coming up. Parachuting in someone else, who did not have the proper background, was difficult for us to understand.
new energy: Looking to the future, what are the consequences for renewables policies in the United Kingdom?
Gordon Edge: Hopefully, it will settle everything down. About the only downside of John Hayes moving on is that the energy bill was being piloted primarily by him. And he left DECC in the middle of a very difficult and complicated legislative process. We are a little bit nervous about that. But we think the secretary of state for energy and climate change, Ed Davey, knows what he is doing. The policy is moving forward, so we are hopeful that we are on an upward track. At the end of last year confidence was running quite low. The bill was taking a very long time to come through and a lot of issues were not being decided during this process. There are still a lot of things to do and we have a key milestone coming up in July, which is the publication date for the draft delivery plan of the EMR. That will include the strike prices that are available for the new Contracts for Difference (CfD) from 2014.
new energy: What is the current situation for renewables in the UK?
Gordon Edge: With wind power we are doing pretty well. According to last year’s figures we were more or less on level terms with Germany when it comes to installed wind power capacity. We added about 1,000 megawatts (MW) each for on- and offshore. In the most recent issue of “Windpower Monthly” they even reckoned we had added 2.5 gigawatts in total. At RenewableUK we think it is a bit less. Later this year we expect to hit the 10,000-MW total for on- and offshore wind. Right now we have just under 6,000 MW onshore and 3,300 MW offshore in terms of installed wind power. Reaching 10,000 MW would put us in the premier league of the global wind power business, since only five other countries have hit that mark so far.
new energy: With respect to renewables the UK can be described as a late bloomer. How would you rank your development so far?
Gordon Edge: We definitely had a lot of catching up to do. But the introduction of the Renewables Obligation in 2002 spurred a very large amount of activity on the development side. Somewhere in excess of 20,000 MW of onshore wind projects were entered into the planning system in the last ten years. The fact that we only have just under 6,000 MW coming through and being built says a lot about the planning system and all the other barriers that we have. The actual support mechanism was very successful in terms of bringing these projects forward. People wanted to exploit and use it. Planning and grid issues were primarily responsible for holding those projects up. Sometimes there were also issues around radar. Those issues have proved quite difficult to overcome. However, given the amount of projects that we have got out there, eventually things get built.
new energy: From your organisation’s point of view, do you think the EMR and the new energy bill do enough to address these issues?
Gordon Edge: It is not focused on planning at all. It is purely about the support mechanism. Issues concerning the grid and the planning process are dealt with separately. Let us be clear: the EMR was not brought forward because renewables needed it. We had the Renewables Obligation and it was working. And we could have kept that going. It was done because our government wanted to bring forward a mix of low carbon technologies. So, renewables yes, but also nuclear and carbon capture and storage (CCS). The mechanisms in the bill are aimed with that in mind.
new energy: So from a renewables perspective the EMR is not necessarily an improvement…
Gordon Edge: No system is perfect, but we have had the Renewables Obligation for ten years and people know how it works. One of the other reasons that the government was claiming that it needed a reform was the cost of the Renewables Obligation – it was too expensive. The way it has evolved, it has become a fixed premium type of system. The government argued that if power prices rise, you get a very healthy rate of return, an unwanted uplift to the fair price. The idea behind the CfD is basically that the income is fixed. You get the power price plus a variable top-up to the strike price level. Politically, the key advantage of that model is that it is seen as the cheapest way of delivering these technologies, by only topping up what you need to. That makes it more acceptable politically, but there are so many different complexities to it. The government could have come up with something simpler.