24 March/April 2011 | Renewable Energy Focus

Part of the explanation for the

apathy on the part of renewables pro-

ponents towards Government plans

lies in the complexities of the Govern-

ment’s Electricity Market Reform (EMR) consultation document,

issued in December, and which baffl es

most people.

People have also placed a lot of

trust in the Government’s green

credentials, and this probably helps

further explain the muted response.

But some people have issued warn-

ings that the Government’s green

record faces mounting criticism, and

an assessment of the Government’s

plans for renewable energy bear this

out very strongly.

Sea-change in policyThere is little general understand-

ing of the sea-change in energy pol-

icy that is signalled by the EMR. The

Government has seized the notion of

“green energy”, as a means of mask-

ing the fact that nuclear power is

now the central aim of Government

development of non-fossil generating

capacity. It sees renewable energy as

a distinctly junior partner.

People have not realised that

despite Government support for new

nuclear being heralded since 2006,

it is only with the publication of

the EMR that the funding, yes, the

subsidies, that can make this actually

happen, seem likely to materialise.

Also, people do not fully realise that

the Government’s proposals seri-

ously threaten the existing renewable

energy programme.

The whole general thrust of Gov-

ernment policy on electricity market

reform is driven by a desire to put

the nuclear subsidy system in place.

Renewable energy interests take sec-

ond place, a long way behind nuclear,

in this new order.

Party politics is paramount here,

because both the Conservative and

Liberal Democrat election platforms

promised that there would be no sub-

sidies for nuclear power stations. So

the Government’s proposals on EMR

seem to have been fashioned partly

by a desire to mask this broken elec-

tion promise.

And this is part of the reason that

renewable energy is being threatened

with a funding mechanism - the low carbon mechanism - which does not

suit it.

Obscure funding mechanismA very obscure way of funding both

nuclear and renewables is proposed

- namely Contracts for Diff erences. This will minimise the chance of

public scrutiny concerning how much

electricity bills will need to increase

to fund new nuclear power stations.

comment | Dr David Toke

UK EMR – nuclear funding from thin air?

AS THE public reels from the impact of seem-

ingly never-ending fuel price rises, the UK

Government seems to be on the way to pull-

ing off a conjuring trick of shifting incentives

towards nuclear and away from renewables,

without hardly a whimper of opposition. And despite the

tragedy at the Fukushima Dai-ichi nuclear plant in Japan,

unlike in countries such as Germany there is no cast iron

guarantee that the UK will seriously water down its future

nuclear ambitions.

Rabbit out of the hat? Despite promising that the nuclear industry in the UK will receive no public subsidies for new build, is the Government trying to use the Electric-ity Market Reform (EMR) as a way of conjuring up such fi nancial incentives?

REF12-2_p24-25.indd 24 11/04/2011 15:28:01

Nuclear developers may well be given

‘guarantees’ that the state will ensure

extra subsidies when constructions

costs overrun (as they always do).

Renewables, of course, do not

receive, and will not receive, such

guarantees. The role of renewables

in this new system of obscuring

nuclear funding is to provide ‘green’

public relations cover. Both renew-

able energy and nuclear power will

be funded from the same set of policy

mechanisms. Both are called ‘green’,

and so the political problem of scal-

ing back the renewables programme

can also be obscured.

Upon taking offi ce the Coalition

Government was faced with targets,

under the Renewables Obligation,

to supply 30% of electricity from

renewable energy by 2020. Then

there is the Feed-in Tariff system to

fund small renewable projects. This

system held out a promise to fund

a range of renewable technologies,

and the Government has on its books

- in various stages of planning and

issue of leases by The Crown Estate (TCE) - enough wind power (the

bulk of it off shore) to supply around

50% of UK electricity supply.

This in itself is a problem for the

nuclear power industry, since this

cramps the possibilities for nuclear

expansion. This is especially true

given the fact that there are many

GWs of combined cycle gas turbines

also coming on line; including those

in planning there are enough CCGTs

to supply nearly 70% of UK electric-

ity at average load factors.

We hear a lot about shortages

of capacity, but the real problem

is that there is too much planned

capacity. The nuclear industry knows

full well that if renewables are not

reined in there will be a serious

shortage of space for its expansionist

aims.

Curbs on renewablesThe Government has already

announced it wants to curb the solar

PV programme (already quite small

by European standards), and Energy

Minister of State Charles Hendry

announced on 10 February a ‘new’

approach to onshore wind, whereby

“wind turbines should be positioned

where the wind resource is stron-

gest”. So, he said, “this year we are

bringing forward a full review of the

funding mechanism, so we can ensure

subsidies will not make it attrac-

tive to put windfarms in unsuitable

locations.”

Companies like Ecotricity, which

build windfarms on lowland and

brownfi eld industrial sites that are

of little conservation value, are

especially targets – mainly because,

it seems, they result in complaints

being made to Conservative MPs.

Instead, subsidies are likely to be

paid to nuclear power stations, whose

costs cannot be guaranteed to be any

less than the costs of energy from

even the so-called low windspeed

windfarm sites.

But perhaps the biggest (in capac-

ity terms) cut in the renewables

programme is likely to be in the

curbing – perhaps demolition is a

better description - of the off shore

wind power programme.

The Government, in its EMR

proposals, want to ‘auction’ contracts

to supply renewables so that the

contracts go to the lowest bidders,

in terms of price of electricity to be

paid.

This system failed miserably in the

1990s (under the ‘NFFO’) to develop

much renewable energy, because the

large majority of developers either

made uneconomic bids or failed to

achieve planning consent.

As RenewableUK has commented,

the Government proposals have no

contact with reality. Apart from the

problems with a revived NFFO style

system (not to be confused with a

conventional ‘fi xed’ standard Feed-in

Tariff ), this mechanism is completely

incompatible with the process under-

taken by The Crown Estate (TCE).

TCE has already issued leases to

developers; they cannot be ‘auctioned’

(or whatever) as is done in Denmark.

A nuclear-dominated future?

Renewable UK hopes that its

well-informed lobbying will pave

the way for a better system - for

funding onshore and off shore wind

power; and also wave and tidal

stream projects - than is implied by

the EMR proposals. The Scottish

Government hopes also to defend the

incentives for renewables, includ-

ing its own plans to support marine

renewables.

Maybe there is still some hope to

salvage something – but how much?

At the end of the day the renewable

cause is handicapped by the need to

fi t in with the needs of what is now

a politically-dominant nuclear power

lobby.

The Renewables Obligation will

continue until 2017, but after that

time it looks very much like nuclear

power will be funded to provide

the bulk of the ‘green energy revo-

lution’. This of course is a reverse

parody of the notion that renewables

are the future, and conventional fuels

should only be seen as a bridge to

that future.

No! Our energy leaders know bet-

ter. Windmills and other renewables

are a stopgap destined never to pro-

duce more than 15-20 per cent of our

electricity. Roll on the fast breeder

reactors!

blog: http://tinyurl.com/3tjfl 56

People have not realised that despite Government support for new nu-clear being heralded since 2006, it is only with the publication of the EMR that the funding, yes, the subsidies, that can make this actually happen,

seem likely to materialise.

About: David Toke is a prominent author, academic and renewable energy expert. His latest book is on ‘Ecological Modernisation and Renewable Energy’.

25March/April 2011 | Renewable Energy Focus

Comment

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