Gareth Thomas MP Chair PRASEG Renewable Energy House 145 Fourth Floor, 1 Aztec Row, Berners Road London, N1 0PW, UK 35-37 Grosvenor Gardens, London T 020 7689 1960 SW1W 0BS F 020 7689 1969 firstname.lastname@example.org Tuesday 13th May 2003 www.bwea.com www.deepgreenpower.org www.offshorewindfarms.co.uk Dear Gareth, The British Wind Energy Association welcomes the opportunity to participate in PRASEG’s inquiry on the Energy White Paper. You asked three key questions: • Is the vision of the White Paper a generally accepted view of the future? • Are the means in place to secure delivery? • What more, if anything, needs to be done? BWEA believes that that the White Paper does indeed present a generally accepted view of the future in highlighting both the need and the mechanism for a move towards a low-carbon economy. BWEA believes however that more needs to be done to secure this vision. The barriers to further development of the UK’s vast wind resource are not technical, but rather institutional and as such are entirely within Government influence, specifically: • BWEA is concerned that as the industry moves closer towards 2010 without a clear decision being made on renewable energy targets beyond that date, the strong interest in developing onshore and offshore wind energy could decline as a result of an expected fall in ROC values post 2010. Large-scale limited-recourse financed offshore projects in particular could find it increasingly difficult to obtain the necessary finances from the open market. An early review of the RO will be critical to address these and other issues. Registered Office as above Registered in England No. 1874667 VAT 432958530 GB • Access to the grid at reasonable cost is critical to generation projects. Constraints are already apparent and these look set to become worse. They tend to be institutional rather than technical hence increased political commitment to achieving solutions must be applied. • The wind industry is anxious for the ODPM to put in place the revised PPS22 Planning Guidance for Renewables in England. This programme is already running late and it currently looks unlikely to surface much before the end of 2003 and as such its impact on 2005/6 delivery is clearly going to be limited. Similar guidance in Scotland was published more rapidly and has already proved beneficial in promoting planning consents. • Radar related restrictions on wind farm siting due to low-flying military aircraft are continuing to prove problematic. There are numerous technical and organisational issues involved. BWEA believes there needs to be a greater political will to break this log-jam which is constraining both onshore and offshore wind projects. • Last, but not least, the ‘hearts and minds’ campaign to inform and win over the public decision-makers to the need for renewables is, BWEA believes, key to the successful acceleration of renewables capacity. Government has a key leadership role to play here and BWEA welcomes and encourages the work which has started under the auspices of the Renewables Advisory Board. To summarise, all these issues have been correctly identified within the Energy White Paper. BWEA welcomes this recognition and now urges Government to rapidly progress their resolution so that targets and aspirations can be achieved. BWEA would further suggest that Government brings forward, as soon as possible, its planned 2005/6 review of the Obligation. This will provide greater confidence in the continued growth of the renewables industry, vital for the investor community. More detailed responses to the key questions are given below. BWEA would be happy to offer any further advice that PRASEG may require. Marcus Rand Chief Executive British Wind Energy Association KEY QUESTIONS 1. The Government’s approach in the White Paper is based on modelling work that suggests the switch to a low carbon energy can be done at little or no cost to the economy. Have you reviewed their modelling work? Do you consider it robust and realistic? BWEA has not at this stage reviewed the modelling work and therefore is unable to comment. 2. It has been suggested that targets for renewables, CHP and energy efficiency post 2010 are inappropriate at this stage. Is this a view you share? What impact (if any) do you consider the absence of targets will have? BWEA agrees that it would be inappropriate to set new targets without first having reviewed the effectiveness of the Renewable Obligation as a delivery mechanism for increased contributions from renewables. However, BWEA strongly believes, as noted above, that the importance of firm targets will increase with time and will become critical to future investment by the time the proposed 2005/6 review of the Obligation takes place. The absence of such targets will greatly reduce investor confidence, thus creating a significant barrier to further development of the sector. Hence our recommendation to bring forward the review as soon as possible (see our response to Q12). 3. Do you consider that the measures set out in the White Paper will deliver the “step change” in energy efficiency that the PIU called for? If not, how should this be achieved? - 4. Renewables have been given a central role in the post White Paper energy landscape. Do you consider this realistic? Will the 10% by 2010 target be met on the basis of current measures? If not, what more do you believe needs to be done? BWEA welcomes the aspiration to double the 10% renewable energy target by 2020 and believes that a greater role for renewables is both desirable and deliverable, and is confident that Government’s expectation that wind power will play the largest part is correct. BWEA is firmly of the opinion that issues relating to grid access, financing, planning, aviation (the Ministry of Defence) and the legal framework for offshore development must be addressed as a matter of urgency in order for both the 10% target and 20% aspiration to become realities. These issues are presented in more detail below in answer to other questions. 5. What else do you believe should be done to ensure the Government achieves its target of 10 GW from CHP by 2010, or do you feel that there are now sufficient measures in place to secure the goal? BWEA recommends the response of our colleagues at the CHPA. 6. The White Paper places a lot of emphasis on emissions trading. Are you already involved in the UK Emissions Trading Scheme? If not, why not? Revenue from Emissions Trading currently represents only a small portion of the total revenue of wind energy developments; the bulk derives from the ROC and the wholesale price of the electricity generated. Some of the companies in membership of BWEA (primarily the larger vertically integrated electricity supply companies that possess in-house trading operations) are involved in emissions trading, the majority of members are currently not. Nonetheless BWEA strongly believes that Emissions Trading in the UK will have an increasing influence on renewable energy development and hence we anticipate that our members will become increasingly involved in emissions trading; if not directly then indirectly. 7. What implication do you feel the proposed EU emissions trading regime will have for your work and the delivery of a low-carbon economy? All generators in Europe will have to hold sufficient GHG allowances to account for their emissions, which will radically change the drivers in the European electricity generation industry and furthermore could be significant in closing the gap between the costs of conventional and renewable generation. The key issue from the perspective of the renewables industry is that successful implementation of the Emissions Trading Scheme in the UK will require convergence of the Renewables Obligation and the Greenhouse Gas (GHG) markets. The EU emissions trading scheme thus has far reaching implications and although the detail is uncertain the scheme is forecast to create a demand driven GHG allowance market. Such a market will confer advantages on wind generators however it will also bring with it risks and threats. Principle amongst these is concern about what the introduction of a scheme running in parallel to the RO mechanism will mean for ROC prices in the short and long term. This may have significant financing implications. • BWEA welcomes the fact that conventional generation markets are being forced rapidly towards an internalisation of their external climate change impacts as this should result in a positive knock on for wind generators. Nonetheless in order to ensure compatibility between emissions and RO trading mechanisms it is vital that the RO review currently scheduled for 2005/6 is brought forward. 8. Media commentators have suggested that the nuclear option is “on hold” for five years to see if sustainable energy can deliver. Do you share such a view? Are you confident sustainable energy will deliver? BWEA would agree that the general perception is that the renewables industry has been given a period of grace in which to prove itself. The status of the industry in the period immediately preceding the proposed review will be vital in determining further target setting. While greatly increased contributions from wind energy are likely within the time period specified, (there is now over 1.3GW of new wind capacity which has secured the necessary planning consents and is ready for construction over the next two years alone), achieving this will be challenging. Much has to be done to convert planning consents into operational projects, and BWEA would highlight the importance of grid access and financing in realizing this conversion. 9. Are you satisfied with the current departmental split between the DTI and DEFRA? If not, what would you like to see happen? Which do you think the long term role should be of the Energy Saving Trust, the Carbon Trust and Renewables UK? Should they all remain separate? BWEA is not satisfied with progress being realised under the present departmental split of renewable energy responsibilities and feels that the current allocation of responsibilities and interdepartmental working is not effective and could jeopardise central Government targets and policies set out in the Energy White Paper. BWEA’s opinion is that there are difficulties in cross-working between Government departments to consistently push forward a focused renewable energy agenda. Each department has different priorities and often conflicting remits. There are three key areas in need of improvement: i) The Offshore consents process see Q12 ii) Securing a positive planning framework see Q10 iii) Overcoming the barriers in relation to aviation concerns Before reaching the planning stages for a proposal, a developer must be confident that it will not run into serious opposition from the Ministry of Defence on either low flying and/or radar impact grounds. Due to the costs involved in taking a project through to planning, developers now elect to consult MoD at the scoping stages, leading to a more speculative process and therefore great numbers of inquiries being submitted to MoD. Until recently, MoD objected to around 50% of these and still objects to 35%. This is another typical example where one Government department is carrying forward its responsibility (to airport/aircraft safety), while conflicting with the objectives of another, namely the DTI’s renewable energy targets. There are severe resources limitations (in terms of staff, research and implementation) which are constraining MoD efforts to resolve the potential conflicts between wind turbines and radar. An agreed consultation process is up and running and currently being refined by industry and MoD. However, there is such a backlog that clearly more staff resources are required. DTI have funded a number of research studies which are being undertaken and point to technological solutions, but these come at a cost. BWEA believes there needs to be recognition that both the Government commitment and the wind industry has grown to such an extent that it is impacting upon other sectors and policy areas across all levels of Government and inevitably there are resource implications as a result. If central Government wants the wind industry, and indeed the wider renewables sector to deliver, then all levels of Government need to cooperate and contribute to facilitating the process. This requires both resource commitments and effective interdepartmental working. • BWEA recommends that a dedicated cross-working team is set up at Government level to investigate measures to resolve sticking points in achieving the wider Government aim for renewable energy. This core team would identify problem areas and facilitate policy change throughout and between departments. 10. What changes to the planning system do you think are needed to help assist sustainable energy options? i) Urgent requirement for national planning policy guidance Securing planning permissions is one of the most serious and influential challenges facing the wind industry, primarily due to the delay at all levels of Government in producing dedicated planning policy for this sector. If there is a similar delay in providing clear policy guidance for other renewable technologies then their progress towards commercialisation may also be delayed and frustrated beyond normal planning procedures. Planning approval rates in England and Wales illustrate the essence of the problem, falling well below the national average. While Scotland has an approval rate of 96.6%, this is almost double that of England at 51.9% and three times the 33.5% approval rate in Wales. These figures still do not fully reflect the scale of the problem as they factor in successful appeal decisions. Indeed, taking account of recommendations at the local and devolved parliament level, the approval rate in Wales averaged a mere 12.6% from January 1999 – October 2002 if decisions had not been contested. The quality and clarity of national guidance is clearly a deciding factor which can be seen in Scotland, where developers and planners alike are working within a clear planning policy framework with National Planning Policy Guidance note 6 (NPPG6). Yet, in England and Wales the picture is quite different as developers and planners are working with policies designed at a time when only one wind farm existed in the UK. Now there are nearly one hundred operational wind farms with fifty waiting to be built and a further sixty in the planning system. This is a form of development that is being encountered by greater numbers of local planning authorities. The repercussions of not producing national planning policy as soon as possible in England and Wales would exacerbate the already uncertain and inconsistent approaches being made in different parts of the country. One example worthy of comment is Devon, where every single application for wind energy development to date has been refused. Devon is the second largest county in England, with a good wind resource, but its various district councils are patently failing to reflect the strong encouragement of Government to the development of renewable energy resources. The deficiency in up-to-date guidance is a void which those who oppose wind energy at a local level are currently exploiting in Devon and other areas of England. The absence of national planning policy is felt equally at the regional level whereby Regional Assemblies and/or Regional Development Agencies looking to produce regional plans have no national guidance to work with. This impacts heavily on decision making at local level because local policy must conform to regional local policy. Whilst BWEA welcomes the dynamic approach to renewable energy development taken by the Scottish Executive through the publication of NPPG6 and the handsome implementation of the advice in that document at a local and national level, it cannot be sensible to encourage a concentration of development activity in only one part of the UK. This is however what is happening on the ground, both as a result of failure of the National Assembly in Wales to update its renewable energy advice and of delays in the publication of PPS22. Another aspect to the imbalance of UK planning advice between Scotland, England and Wales is that Scotland is in danger of attracting too much development attention in the short term, a trend which may well produce difficulties in securing planning permission in the medium and longer term. There is an urgent need to readdress this imbalance through the production in England and Wales of positive national planning advice. • ODPM should prioritise or provide additional resources to ensure the production of PPS22 with no further delay. The absence of national planning policy means the absence of local planning policy leading to inconsistent and unbalanced decision making. The objectives of the White Paper can only be met within a positive planning framework. ii) Interdepartmental working (See also Q9) BWEA welcomed the thrust of the policy and commitment outlined in the Energy White Paper. It ‘recognises planning as a serious problem for renewables’ and indicates the intention for national guidance to be used ‘by local authorities and developers to promote renewable energy through the planning system’ which reinforces the need to provide a positive planning framework through which this industry can flourish. BWEA is aware that priorities and remits differ across departments and understand that while the need for renewable energy deployment is being encouraged at the DTI, it is not necessarily a top priority for ODPM. BWEA would strongly recommend that more resources and priorities are given to renewable energy at the ODPM, leading to a more proactive approach to planning for renewables as described in the White Paper. • As outlined in the response to Q9, BWEA believes a dedicated cross-working renewables team should be established to provide impetus to all relevant departments and coordinate a positive approach to renewables between them. iii) Planning policy to provide for incorporation of renewable energy into development proposals Local planning authorities remain unable to incorporate policies into their local plans requiring renewable energy to be incorporated into buildings. Such a policy could have huge benefits by reducing energy demand, and in-so-doing increasing savings in greenhouse gas emissions. This additional contribution from renewables can only serve to help meet UK Government targets. Incorporating renewable energy into new developments will also provide a trigger to manufacturers of appropriate renewable energy equipment. This could have significant benefits to local economies. BWEA would recommend that efforts are made to investigate changes in planning legislation that would allow for policies to be introduced into local plans to stipulate a percentage of predicted energy demand to be met through micro renewable energy schemes within developments. This local plan policy development should then be encouraged through national and regional planning policy. • Government should investigate legislation that would allow for the introduction of local plan policy to stipulate the incorporation of renewable energy into new development proposals. Such policy development should then be encouraged at national and regional level. 11. What is your analysis of the performance of OFGEM in helping to deliver an increase in sustainable energy? What changes to our transmission, distribution and supply systems do you think are necessary to help deliver the White Paper objectives? BWEA created a sub-body of membership, the Wind Developers Grid Forum, in late 2002 as a direct response to the need for a coordinated approach to tackling the numerous grid-related issues which face wind farm developers during the development, construction and operation of both on- and off-shore projects. The Forum consists of 10 or so BWEA member companies, either wind farm developers or electrical engineering specialists intimately acquainted with issues pertaining to connecting wind farms to the Grid. The Forum drafts position papers for wider circulation and comment within BWEA ahead of formal submission. BWEA’s response to this question is drawn from the work of the Forum over the last few months. What is your analysis of the performance of Ofgem to date? BWEA has worked with Ofgem on a number of issues over the years; principally amendments to the various Grid Codes, the introduction of NETA and the pending introduction of BETTA. These two matters are considered in more detail below; Amendments to the Grid Codes. In this section we refer specifically to; - Generation Licence Exemptions - Amendments to the E&W Grid Code - Amendments to the Scottish Grid Code - Introduction of a GB Grid Code For more than a year BWEA has been involved in proposing amendments to both the Scottish and the England & Wales Grid Codes, to ensure that the specific technical parameters of wind turbines are correctly incorporated into the Grid Codes such that there are clear, explicit and fair rules under which wind farms will able to connect to the UK Grid, thus clearly signalling to all developers the ‘rules of the game’. Even more important is the fact that a transparent and stable set of technical conditions is vital for financiers. The work of the BWEA Finance Forum (as outlined in Q12) has clearly shown that Grid-related risks represent one of the most significant risk categories that a financier will need to resolve before financial closure. Despite the clear need for the modifications required, BWEA does not feel that, at a political level, there is appreciation of the need to conclude these consultations in a satisfactory manner as soon as possible. All the modifications are taking what is, in BWEA’s view, an excessive amount of time. In addition; the proposals that we have thus far seen from the Scottish Grid Code Review Panel (SGCRP) (for the Scottish Grid Code) and from National Grid Transco Plc (NGT) (for the England and Wales Grid Code) do not recognize what is technically possible given the current state of wind turbine technology. BWEA is of the opinion that there is a disconnect between the Government’s stated intention to encourage the development of renewable generation and the effort that NGT and the SGCRP are devoting to ensuring that wind generated electricity can meet the renewable targets. • BWEA believes that Ofgem could do more to encourage NGT and SGCRP to work with the wind industry to ensure that any Grid Code amendments are reasonable, technically achievable, do not discriminate against wind generation and are introduced in a timely fashion. NETA/BETTA. NETA has been, and BETTA will be, damaging to renewables. Imbalance charges penalise renewables (particularly smaller generators) and part-loading caused by the 6-8 largest UK generators seeking to act as self sufficient ‘islands’ within NETA (hence free of balancing charges) is giving rise to significant part-loading emissions (which runs counter to what the Government is currently trying to achieve by way of CO2 emissions reductions). BWEA has been advised that intermittent renewables should seek to avoid NETA charges by developing electricity storage facilities. BWEA is of the view that these suggestions are not particularly helpful, nor do they reflect the reality of the situation which is that the variation in output of wind generation relative to daily demand variations is currently insignificant. • BWEA would like to see consideration given to a fundamental review of NETA that will make it less onerous for renewables generators and, particularly, for smaller generators, to connect. What changes to our transmission, distribution and supply systems do you think are necessary to help deliver the White Paper objectives? Detailed Technical Study on Grid Capabilities to absorb wind- powered generation capacity. There is much debate at the present time about the technical ability of the UK Grid to support the connection of wind generated electricity; unfortunately this debate is taking place in a vacuum. To date there has been no detailed study, carried out in a manner acceptable to all involved parties, on the ability of the Grid to absorb significant amounts of installed wind capacity while maintaining overall system stability. • Given the significant amounts of wind capacity coming onto the system between now and 2010 (with even more to follow after that date) it is vital that this detailed technical study is initiated as soon as possible. Only once the results of this work are available will it be possible to make informed decisions about the need for, and hence the specific wording of, revisions to the Grid Codes in order to incorporate the specifics of wind generation technology. GB Grid Code, England & Wales Grid Code and the Scottish Grid Code As has previously been mentioned, BWEA is currently involved in amendments to both the E&W and the Scottish Grid Codes. BWEA notes that both of these sets of amendments will, by-mid 2005 at the latest, have had to have been incorporated into a single GB Grid Code. The amount of work required for each of these consultations is significant. This is especially true for our nascent wind industry which is resource constrained and hence does not have as much time, money or manpower to devote to consultations as is the case with mature sectors of the power industry. In this regard BWEA notes that it does not seem sensible to have two parallel consultations (E&W Grid Code and the Scottish Grid Code) running on a common issue when both are imminently going to merge into a single GB Code. • BWEA believes that consideration should be given to merging the three parallel consultation processes relating to the E&W Grid Code, the Scottish Grid Code and the GB Grid Code, into one. The Provision and Regulation of Offshore Grid Infrastructure. In terms of grid infrastructure there will be two principle forms of offshore development. i) the first type will seek to build and own their grid connections to the onshore grid. ii) the second type, for which centralized coordination of the construction and operation of grid infrastructure will probably be needed, will involve several developers building a number of separate developments each of which will connect to shared offshore grid infrastructure. To reflect these dual needs BWEA believes that there needs to be a dual system of offshore grid ownership. On one hand, developers need to be able to build, own and operate their own transmission and distribution networks where necessary. On the other hand, serious consideration must be given to the extension of TSO and DNO licences offshore. On this latter point BWEA was disappointed to note the statement in the DTI’s Future Offshore consultation; ‘The Government’s conclusion is that, although extending the licences of the TSOs and DNOs offshore might be a workable solution, there are no compelling reasons for adopting this approach, rather than leaving the responsibility for providing infrastructure with offshore generators and third party providers. In particular, it is not clear that the regulated businesses of the transmission and distribution companies would have better incentives to invest efficiently in new cables than non-regulated companies.’ BWEA does not agree as this would rule out the option of having a centralised and coordinated approach to the construction of offshore grid networks where it is appropriate for linking together a number of wind farms (i.e. option ii) above). • BWEA believes that TSO and DNO licences should be extended. However individual developers should nonetheless retain the right to be able to construct, own and operate their own grid infrastructure where necessary. As recognized by the DTI in the Future Offshore consultation, BWEA believes that the real issue relates to providing the TSO with the correct financial incentives to adjust for the higher risks involved with developing offshore (as opposed to onshore) grid infrastructure. 12. Do you believe there is sufficient access to capital (private and public sector) to help fund the necessary investment in sustainable energy options? If not, what do you believe needs to be done to boost investment from both the public and private sector? BWEA held the first meeting of the Offshore Wind Finance Forum in October 2002. This Forum brings together city financiers, insurers, wind farm developers, electricity suppliers, turbine manufacturers, engineering contractors and lawyers and was convened in order to tease out the issues that are preventing and/or delaying sufficient levels of capital being made available to finance offshore wind farms. The Forum has developed a detailed ‘Risk Register’ which lists and ranks 47 risks based on their perceived likelihood of occurrence and their impact in the event that they occur. Our answer to Q12 is drawn from the work of the Finance Forum and is divided into three broad areas on which financiers are currently seeking resolution: Grid, Finance and Legal. Without going into the detail of the risks contained in the Register it would be fair to say that most of the risks highlighted relate to the fact that global offshore wind technology has almost no track record. What this means in practical terms is that most of the risks associated with development are difficult to quantify and hence financiers tend to build large contingency premiums into their debt costs. These (and other) additional costs mean that offshore wind developments are in the region of 30-40% more expensive than those onshore. Grid Issues As already stated, Grid issues rank highly with financiers and it is therefore vital that a rapid resolution of the issues raised in answer to Q11 is achieved. Financing: Government Support: ROCs - the mechanism When assessing the project economics a financier will want to see that gross revenues will cover costs with a margin sufficient to cover the risk that the financier has assumed by agreeing to finance the project. In looking specifically at wind farm revenues the financier will initially note that the Renewable Obligation Certificate (ROC) is vital to ensuring project viability hence it is crucial to the ongoing development of offshore wind (and of lesser significance for onshore developments). The ROC mechanism has been very successful at stimulating new developments onshore and ROC price variability has not been a major issue. The reasons for this are, 1) as already discussed, onshore development costs are 30-40% lower than offshore 2) there is now 30,000MW of wind capacity installed onshore worldwide which means that the various risks associated with onshore development can be measured and costed with a reasonable degree of accuracy. Consequently financial risk premiums are significantly lower. As a result of these two points the wholesale price of electricity + the ROC together provide sufficient revenue to make onshore projects financially attractive. 3) onshore projects are small relative to those envisaged in Round One and beyond. Banks are more willing to accept ROC price variability risk on a portfolio of relatively small onshore wind developments than they would be to accept such risk on a single, large, high risk offshore project. While there is clear evidence that the ROC is hastening the pace of onshore developments BWEA has reservations about the ability of the ROC system, in its current format, to provide a similar stimulus to future offshore projects. The Government has set a target of 10% of the UK’s electricity from renewable sources by 2010. It is this target that supports the ROC price. At the present time the target has not been increased beyond 2010 which means that there will be downward pressure on the ROC price after this time (assuming that by 2010 the renewable target has still not been extended). Government intends to undertake a review of the RO in 2005/6, at which time it will make a decision on whether or not to increase the 10% target beyond 2010. Between now and 2005 the industry, and particularly financiers, are left with limited means of estimating what will happen to prices post 2010. Projects that are currently in the ‘concept’ stage of project planning are unlikely to be completed before the end of 2005 at the earliest which means that financiers, who typically will seek to recover debt capital over 10 years, are able to count on only 4 years of ROC revenue. This issue is, given their already marginal economics, of particular significance for offshore developments. As a result of this, BWEA strongly urges the Government to bring forward the review of the RO (currently scheduled for 2005/6) to begin as soon as possible. BWEA believes such action would also send a strong message to potential financiers of existing Round One offshore projects. • The combination of - high risk premiums - significantly larger projects - the desire of companies to get larger projects off balance sheets - the much higher value at risk (VAR) that banks must deal with and - the fact that the value of the ROC post 2010 is currently unclear means that it will be very difficult to obtain financing for large scale offshore wind farm projects. If the offshore industry is to reach its full potential and hence if the UK is to meet its 2010 renewable energy targets, it is imperative that the attractiveness of offshore wind to limited recourse financing is increased. • BWEA believes that the review of the Renewable Obligation should be bought forward and that, subject to the outcome of the review, the 10% target should be extended as soon as possible. Financing: Government Support: Capital Grants The Government has stated that capital grants would be made available to assist the first offshore wind farms and it has subsequently made awards totalling £62 million to the first 6 sites to have received planning consent. BWEA is concerned that the capital grants are not as effective as they could be, principally because a developer does not know, until it is officially announced late in the project planning phase, how much he will receive if, indeed, he will receive anything. Government has been extremely supportive in stating that if additional funds are needed, they will be granted. Unfortunately this is insufficient for financiers who, when modelling project economics, will always take the worst case and hence will assume that capital grants will not be available. • BWEA believes that it would be beneficial to have a capital grants process that is much more predictable (for instance something akin to accelerated depreciation) and hence that can be included as part of the revenue stream by financiers at the modelling stage. Legal & Consents Regime for offshore wind Experience from Round One has shown that the offshore wind farm consenting regime is not ideal. In addition to which BWEA also notes that there is currently no legal basis in accordance with which wind farms can be developed beyond 12 nautical miles. The Government could be acting ultra vires if it permitted development (other than oil & gas) on the UKCS outside 12nm. This is potentially a serious problem because third parties could then challenge the legality of such developments. The absence of an appropriate legal regime effectively rules out any development outside 12nm. New legislation beyond 12nm is therefore urgently required for two purposes; to establish a legal regime and to create a streamlined consents process. Legal risk is another significant risk that was identified within the BWEA Offshore Wind Finance Forum hence it is important that, in order to bring down costs and speed offshore developments, this risk be removed as soon as possible. BWEA is aware that DTI is already seeking to have an Offshore Wind Bill included in the Queen’s speech at the opening of Parliament in November. If, however, the Bill is not included in the next session there will be additional uncertainty as we wait for the 2005 session. • BWEA would strongly welcome any support that can be given to getting this key legislation included in the Queen’s speech for this November. 13. What is your assessment about whether the workforce needs of sustainable energy are being met and what further steps are required? Renewables UK have commissioned a definitive analysis of the renewables sector, which should do much to identify gaps in both workforce needs and the supply chain which must be addressed if the renewables industry is to meet targets laid out for it. It is BWEA’s opinion that skills shortages are likely to increase, across all sectors of the industry, but particularly with regard to specialist staff, for example in electrical engineering disciplines. Encouraging closer links with universities, etc in providing graduates with applied skills for development and related engineering and other support skills will help to reduce any short-fall. Technology transfer from the existing oil and gas sector will be necessary and more influence needs to be exerted in these sectors, through for example, the PILOT programme. 14. Are there any specific measures you have not outlined above that you would like to see taken forward to help deliver the goods of the White Paper? There is without doubt a role for Government in explaining to the public why the basis of generation needs to change and why encouraging the understanding and appreciation of the role of renewables is necessary. Whatever the industry publishes (no matter how legitimate) it is at risk of being dismissed as propaganda. The ‘hearts and minds’ campaign will be of enormous value in helping people understand. Without a supply of skilled personnel there is a real risk that the ability of industry to expand in the future will be hampered. Following on from this, promotion of wind energy opportunities to UK companies that can be a part of a greater wind energy supply chain also needs to occur. Without such an integrated approach, jobs through industrial advancement and R&D are going to be more difficult. These two, together with financing, planning and grid related issues, have all been identified as work programmes for the Renewables Advisory Board; BWEA looks forward to working closely with the Board and the early publication of the results of its labours.
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