Introduction
It’s great to be back at the annual conference of RenewableUK.
First, to help celebrate your many successes over this last year. To celebrate
also your contribution to our energy security. To celebrate your
contribution to our economy – jobs, investment, green growth. And
of course to celebrate your contribution to meeting our environmental responsibilities
to the planet – reducing emissions, tackling climate change, protecting
our quality of life. And I’d like to address each of these successes today.
But I also want to talk about the politics of renewables.
Because we are now approaching a general election. This is the time politicians
and parties make commitments. And set future directions, for the next Parliament
and beyond.
And I am clear, that if we are to meet our legal commitments to decarbonisation.
If we are to meet our energy security needs.
And if we are to do so in the most cost-effective way possible.
The five years of the next Parliament must see a continued rapid expansion
of renewable power – more onshore wind, more offshore wind, more solar.
The next Parliament must see less mature renewable power technologies actually
being deployed – especially tidal.
And the next Parliament must continue to map out with ever greater certainty
the 2020s - and the expansion the next decade will bring for Britain’s
growing renewables industry.
Commitment to renewables
So let me start by reiterating this current Coalition Government’s commitment
to renewables. And my personal commitment too.
We trebled the support available to 2020 as part of the Levy Control Framework.
Cumulatively the LCF will be worth almost £40bn between now and then.
And I believe there are few industries in the UK that have the certainty
and stability we have provided to the renewables industry and its investors.
Over this last year we have moved to cement the framework for our renewable
energy future.
First at European level.
The 2030 Framework agreed last month is ambitious - but it’s realistic
and fully achievable.
A target to reduce Europe’s domestic greenhouse gas emissions by at least
40% by 2030.
That’s a target that our research suggests will continue to require a
major expansion of renewables here in the UK and across Europe.
And it’s backed up by a European-wide renewables target of 27% - that
combines flexibility for member states to judge their own power mix, with
a strong long term signal for the industry.
I’m really proud of that low carbon deal. It was only possible because
the UK helped lead the debate. And only possible because we engaged with
other climate ambitious European countries in the Green Growth Group I
established nearly two years ago.
For your industry, this new European 2030 policy provides additional certainty,
and will underpin British law – especially the targets we set in our Carbon
Budgets.
For I was also pleased to announce in the summer that we have maintained
our course, kept to our climate change commitments and confirmed the 4th
Carbon Budget at its original level.
People had speculated we would go soft on our climate change targets and
revise the 4th Carbon Budget upwards. We didn’t. So, by the period of
the 4th Carbon Budget – 2023 to 2027 – Britain will continue to have
to up its low carbon game still further.
And I remember, when we last met, the Energy Bill was going through Parliament.
It’s now the law.
The 2013 Energy Act represents the biggest revolution in our energy sector
since privatisation in the 1990s.
It establishes the world’s first low-carbon electricity market.
And the most comprehensive long-term legal and financial framework for
cost-effective energy decarbonisation anywhere in the world.
A framework that recognises that despite significant cost reductions –
we still have more work to do on costs. And so it incentivises further
cost reduction for mature renewables technologies – alongside the development
of new less mature renewables.
When I spoke last year there may have been some who doubted we could deliver
on our timescale for Electricity Market Reform.
Yet last week I published an update on EMR. To date, we have met all our
project milestones.
In April I announced that eight major renewable energy projects had been
awarded Investment Contracts under the Final Investment Decision CfD allocation
that will provide up to £12bn of private sector investment.
And today I can confirm we are on target to run the first auction for Contracts
for Difference in a few weeks’ time.
Cost-effectiveness
And I’d like to dwell on the first auction of CfDs.
For we are going to auctions faster than originally envisaged.
And for some in the industry, that early introduction of competition has
been scary.
But you have to remember, my job is to look after the electricity bill
payer, just as much as it is to bring on vital new renewables.
So it is a balance. Not every project will get through.
Newspapers may write about offshore wind projects being dropped, for example,
as if something is going wrong. But we never envisaged or indeed wanted
every project to succeed.
For there is no bottomless pit of bill payer support for low carbon. Setting
a budget – as the UK has done – forces an ever greater focus on cost.
It supercharges the competition we want – and it’s a mark of policy success
not failure.
Collectively, we do have a task to speak more loudly about the cost reductions
and innovations being achieved.
For some reason your cost reduction successes aren’t always reported!
How many people outside this hall know that raw Solar PV costs have plummeted
by almost two-thirds in recent years? And are projected to fall much further
still.
How many people outside the industry know that onshore wind is the cheapest
large-scale renewable? And that onshore wind is set to be even more cost-competitive
by the end of the decade.
How many people know that the offshore wind industry is becoming more and
more efficient, the more deployment rolls out? And that the offshore wind
industry has a credible pathway for major future cost reductions.
Security
So we need to make the case for renewables based on past and future cost
reductions.
But we must also make the case for renewables because they are vital for
the UK’s future energy security.
As the Foreign Secretary said recently “Renewable energy sources will
be critical to reducing our vulnerability to energy supply shocks”.
For we have had a salient reminder this year, from President Putin, about
what can happen if you are over-reliant on any one provider and any one
fuel.
You can be held to ransom.
Thankfully, the UK is not exposed to Russian energy blackmail in the way
some of our partners in Europe are.
But we must heed the lessons.
We must make the best use of our own natural resources.
Home grown renewables, as part of a diverse and flexible energy mix, have
a crucial role to play in future proofing Britain’s energy security.
Investment, jobs, growth
And we must of course also make the argument for renewables based on economic
growth.
We have seen £29bn of investment in renewables since 2010 alone.
Electricity from renewable sources has more than doubled since 2010.
And renewable power generation and renewable investment are both set to
keep on growing.
Average annual investment has doubled this Parliament, compared to the
last.
We are attracting more new build renewables asset finance than any other
country in Europe – behind only China and the US globally.
With this kind of momentum, I am confident that by 2020 we will more than
meet our objective to supply at least 30% of our electricity needs from
renewables.
But the key economic challenges and opportunities for our renewables strategy
go beyond this investment record.
I’ve been determined to build up Britain’s own supply chain in renewable
power? To attract more investment. And to position a stronger UK renewables
supply chain for the global market.
The decision by Siemens and ABP Ports to invest in new manufacturing facilities
in Hull was a massive step forward.
And I am delighted that MHI Vestas Offshore Wind have today announced the
first part of their UK industrial strategy.
This will involve, subject to orders, serial production of their 80m blade
from their factory on the Isle of Wight.
Yet our task is to go much further still.
That’s why in May, Matthew Chinn of Siemens was invited to undertake an
independent review of the UK offshore wind supply chain. Matthew’s report
and recommendations are published today.
I am very grateful to Matthew and all those who contributed. It’s clear
from his report that we already have a good story to tell.
The perceived wisdom is that the profits from UK offshore wind are spent
overseas.
In fact over 40% of lifetime costs of a UK wind farm are dispersed in the
UK supply chain. And UK capacity in the offshore wind supply chain is growing
– so we can grow that proportion still higher.
That is a challenge for both government and industry, working together
through the Industry Council. Building a strong supply chain needs the
commitment and expertise of local partners.
The Centres for Offshore Renewable Engineering partnership – the CORE
partnership - works to provide the best possible support to businesses
choosing England as an investment location.
Their new prospectus, launching this week, sets out the capabilities of
key areas of England to host offshore wind companies.
We also need to continue to draw on expertise in other countries – to
learn, to collaborate, to drive down costs.
That is why I’m pleased to announce that the UK has led the successful
bid for more than €10m of European Funding to help finance DemoWind.
This is an innovation competition for collaborative offshore wind demonstration
projects between UK businesses and counterparts in Denmark, Spain, Belgium,
Portugal and the Netherlands.
And we partnering across Government to leverage economic advantage from
our renewables programme.
Today UKTI’s Offshore Wind Investment Organisation are publishing this
guide for investors.
This unique collaboration between UKTI, The Green Investment Bank, The
Crown Estate, RUK and the Offshore Wind Programme Board, sets out why the
UK is the best place in the world for doing business in offshore wind.
What gets me excited and inspired by this investment story is the story
of the jobs it’s creating and the people it is benefitting, across Britain
So it’s great RUK are launching their Faces of Wind Energy Campaign today
to help boost the numbers of young people thinking about the renewables
industry as a career.
Their pilot of a new online careers mapping tool can help guide people
through the options available in renewables.
RUK’s State of the Industry report also published today estimates there
has been an 8% growth in jobs in the wind sector in the last year alone
– with almost half of their members planning to take on more staff in
the next 18 months.
So renewables are a great British success story.
Securing the politics of renewable
Yet despite all this, there is concern about the future. Consternation.
And I understand why.
Despite all the progress – from last month’s 2030 package in Europe to
the tumbling costs of solar - the politics of renewables has been turning
ugly. From onshore wind to solar farms, the political voices against an
expansion in renewables have become ever shriller.
Some voices are complaining about a specific renewables project in their
area. That is their right. And I respect reasoned opposition. Indeed, not
every renewables proposal will be appropriately sited. It is right that
some are turned down.
Yet we are seeing other political voices driven by less honourable motives.
Populism. Vested interests. Anti-science.
If we are to win the politics of renewables – as I believe we must –
we have to face down those voices.
In part, that is about winning the public argument. Much of my speech today
has been focused on rehearsing the many arguments in our favour.
And it is very reassuring to see the opinion polls that still show large
majorities in favour of renewables – far larger than other energy forms.
And I want to pay tribute to the industry for working with Government to
go the extra mile to win that argument with everything from new, more generous
community benefits, to the work done by the Shared Ownership Taskforce.
With an approach that reaches out to local communities, I believe we are
winning the argument on the ground, despite the vocal minorities we still
witness.
So it’s vital that politicians at every level of Government – from Town
hall to Whitehall – recognise the huge benefits renewable investment brings.
If politicians use powers in ways that undermine this investment, and which
do not stand up to scrutiny, then they should pay a heavy price.
For the jobs they are destroying. The growth they are stopping. And the
community benefits they are preventing.
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So I make this call today. Just as all the main political parties created
an impressive consensus for the Climate Change Act in the last Parliament.
Just as we have created an impressive coalition for the 2013 Energy Act
in this Parliament.
We need for this coming General Election to create a coalition for renewables.
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So as we approach the next election, all parties need to make clear: do
they stand with your industry, for a renewables future? For a coalition
for renewables?
Or do they stand in the way?
Friends. We can’t duck that question any longer, however difficult it
is.
And I promise you, I will continue to do everything I can to rebuild a
consensus around the politics of renewables. |