Government unveils renewable strategy plan

The UK Government issued today a consultation paper on the UK’s Renewable Energy Strategy. The aim of this paper is to set out the measures which the UK will need to take, in addition to already existing measures, to meet the UK’s share of the EU’s renewable energy target for 2020, which is likely to require 15% of the UK’s energy consumption to come from renewable sources by that date. This consultation paper, which follows the recent launch of Round 3 of the UK’s offshore wind programme, will be of great interest to renewable energy companies and other stakeholders wishing to invest in the UK’s renewable energy industry.

Key measures

The consultation paper sets out additional measures, which if all successfully implemented (and if no cost constraints were applied in deciding which measures to pursue), would, according to the Government’s scenarios, enable the UK to reach its proposed renewable energy target for 2020. Measures being consulted on include:

· extending and raising the level of the Renewables Obligation to encourage up to 30-35% of the UK’s electricity to be generated from renewable sources

· introducing a new financial incentive mechanism to encourage a very large increase in renewable heat

· ensuring that the planning system is better able to deliver renewable energy projects, by for instance agreeing a clear deployment strategy at a regional level similar to the approach established for housing

· ensuring that appropriate incentives are put in place for new electricity grid infrastructure to enable the efficient connection of renewable energy projects to the national grid

· delivering more effective financial support for micro-generation heat and electricity technologies in homes and buildings

Anticipated costs

The Government’s impact assessment estimates that the cost to the UK of meeting a 15% target could be around £5 to £6 billion a year in 2020. However, this estimate is based on a range of projected prices for oil and other commodities by 2020 that are inherently uncertain.

The costs to the UK will also depend on the final design of the EU’s Renewable Energy Directive. Although all the measures suggested in the consultation paper relate to increasing the deployment of renewable energy in the UK, the Government estimates that the costs to the UK of meeting its renewable energy target could be much lower if the EU allows member states to discharge some of their renewable energy targets by investing in renewable energy projects outside the EU.

Next steps

Stakeholders are invited to submit their views by 26 September 2008 and the Government’s aim is to publish its Renewable Energy Strategy in spring 2009.

To access the consultation paper, please click here.

To access our recent law-now on the launch of Round 3 of the UK’s offshore wind programme, please click here.