Danielle Bragg, from our Construction, Energy and Projects team, recently attended South West Connect incorporating the Bristol Tidal Energy Forum. Here, she outlines the key messages she took away from the event that were of interest to the renewable energy sector.
Companies hoping to build tidal lagoons, new windfarms, and solar plants have been stymied by the government’s announcement that there won’t be any new subsidies for clean energy projects until 2025 – at the earliest.
Speaking at the event, Emma Pinchbeck, RenewableUK, explained that the funding deficit is mainly due to the huge drop in the cost of energy supplied by offshore wind farms. Currently, electricity produced by tidal energy is about £300 per mega-watt hour (mwh) – but energy produced by offshore wind is being sold for £100 per mwh. £200 is a tough gap to close, and will require a lot of innovation from within the sector to drive down costs.
The Government pulling the Contracts for Difference (CfD) funding was another blow for the sector. By reducing exposure to volatile wholesale prices, CfDs would ensure more certain and stable revenue for electricity generators. Consumers would also be protected from paying for higher support costs when electricity prices are high. And, the Government has set no ‘minima’ level of money to be specifically allocated for the funding of wave and tidal energy.
The final nail in the coffin is that wave and tidal were never afforded a feed-in tariff. Introduced on 1 April 2010, the Feed-in Tariffs (FIT) scheme is a government programme designed to promote the uptake of renewable and low-carbon electricity generation technologies. The scheme requires participating licensed electricity suppliers to make proportional payments to households or businesses generating their own electricity, via methods that don’t contribute to the depletion of natural resources.
Conversely, as an unintended consequence of Brexit, the UK Government has now had to develop a specific industrial strategy which has been particularly helpful to the renewable energy sector. Unfortunately, it’s done little to diminish the fact that wave and tidal energy cannot compete with the lower price electricity produced by offshore wind. However, we hope to see change over the next few years.
The Department for Business, Energy and Industrial Strategy (BEIS) commissioned the Catapult Review (a report prepared by Ernst & Young LLP on 17 November 2017). The report aims to bridge the gap between Research & Development and Industry and looks at how innovative ideas can be commercialised. The review puts forward a triple test for funding; a renewable energy project must:
- Achieve maximum carbon reduction, moving towards decarbonisation
- Show a clear cost reduction pathway
- Demonstrate that the UK can be a world-leader in a global market i.e. does it bring jobs growth and economic prosperity?
From a Welsh perspective, we’re waiting for the go ahead from Westminster Government for the Swansea Bay Tidal Lagoon. Tidal Lagoon Power are running the scheme, as well as developing six other lagoons around the UK. Swansea is the ‘pathfinder’ project to test how the technology works.
The Hendry Review, led by Charles Hendry, is an independent Government Review which lasted 6 months. Hendry published his final report and recommendations of the Independent Review of tidal lagoons on 12 January 2017. Swansea was hailed as a “no regrets decision for Government” and the advice was that Government needed to act quickly. But, we’re now over a year on from the review – and there has been no real change.
If the pathfinder exercise in Swansea goes well, and the technology can be translated to work on a larger scale, Mike Unsworth of Tidal Lagoon Power explained that lagoon power sources could compete with offshore wind in terms of cost. It would be a huge contributor to reaching the Governments’ target of decarbonisation. If lagoon projects get the go ahead, there’ll also be substantial opportunities for a large-scale supply chain.
Despite the current lack of investment into research and development for renewable energy technology, there was a palpable enthusiasm among the attendees of the Bristol Tidal Forum to drive progress in the sector and get projects off the ground.