March 2nd, 2011 by HM Government Department of Energy and Climate Change
I am delighted to be here to address you today and would like to thank Maria McCaffery (Chief Executive RenewableUK) for the invitation to speak to you. Many of you in this room will already be aware that I have long been a champion for the potential of wave and tidal energy.
It seems to me quite bonkers that in this island nation of ours – surrounded by seas and ocean, with our great marine heritage and genius for advance engineering coupled with the threat of climate change and dwindling traditional domestic energy resources – we haven’t done more to exploit this abundant resource. This has to change.
I hosted a breakfast meeting on 2 March focused on how to secure the finance required to push this sector forward (whether from the public or private sector). It was clear from the discussions that people from across the sector – technology developers, utilities, industrial organisations or financiers –there is a real will to make marine energy work for Britain and to see Britain emerge as the real global leader in this exciting new industry.
Government Commitment To Marine Energy
I want to assure you that the Coalition is absolutely committed to harnessing the complete range of benefits which a successful marine renewables industry can bring to the UK – the development of the sector is explicitly written into the fabric of the Coalition Agreement.
In May last year the Prime Minister made an emphatic and personal commitment: “we will be the Greenest Government ever”. That is the central mission and shared priority of the coalition. There is no doubt: to meet the two degree challenge, we must decarbonise our economy. We must meet future energy demand in a sustainable way. And we must tackle the largest deficit and greatest debt ever amassed by one administration outside of wartime.
It is a challenging agenda and a difficult balance to strike. However, I am convinced that the marine energy sector has a valuable role to play on both sides of that equation.
Marine energy can certainly contribute to our renewable energy generation mix and help us meet our longer term carbon saving targets. But the benefits go beyond that to providing us with clean electricity which enhances our energy security and creating a new export industry, that has the potential to be a world leader.
Ambition and Vision
The challenge – and rewards – for us to grasp go far beyond simply generating more renewable energy or establishing a new energy technology. The Coalition government brings a new philosophy to marine energy. We can’t just look at it through the narrow prism of our 2020 renewables targets. We need to look at the whole opportunity. To work together to build a global industry in the UK which will create new jobs and growing economic opportunities both at home and globally.
Recent work by the International Energy Agency suggests that, even on a medium level scenario, around 60 gigawatts of marine energy could be deployed by 2050. Alongside our own ambitions for domestic deployment, this means there is an also attractive export prospect for the UK industry and an opportunity which is worth striving for.
The UK is well positioned to capture this international market. We have around 50% of the available European marine energy resource which means that we are already seen as a focus for early deployment. We have a strong R&D base, experience in a range of relevant industries (such as oil and gas, offshore wind and marine operations) and a strong share of device developers (around a quarter of all developers – including most of the world leaders).
Work is already being done to support marine energy – recently the Technology Strategy Board announced £2.5 million support to some of the sector’s leading companies and the Energy Technologies Institute issued a request for proposals to model tidal energy resources around the UK. I was also pleased that, this morning, the ETI announced that tidal developers and marine engineering companies could soon benefit from its next marine energy project, which it is expected to formally launch shortly.
I was pleased to see that a delegation from the Chilean government are attending the conference to learn about the UK’s marine energy advances and how they can best exploit their own marine resources. My officials spent sometime on 1 March 2011 talking to them about this. This interest from Chile, from China, South Korea and others shows that the news about the UK’s expertise is spreading across the globe.
But we will only achieve our aim if we work together towards common objectives. And I want to see Whitehall approaching this challenge differently; working in a more coordinated manner. No more silo decision making!
That’s why I launched the UK Marine Energy Programme at the beginning of the year and why I want to create dynamic new clusters in the sector through the establishment of a network of Marine Energy Parks around the UK.
Marine Energy Parks
It is clear that we need to bring greater focus to our marine efforts. I recently attended a meeting at No. 10, chaired by the Chancellor, with Eric Schmidt of Google. What really came out of that is a sense that we can learn a lot from the growth of other sectors that have their basis in innovation, such as IT. The clustering of companies in the Silicon Valley in the US was a key driver of innovation and growth because it fostered information sharing and competition which ultimately led to a reduction in investment risk.
I think that the marine sector could benefit from a similar model and I think Marine Energy Parks which draw together R&D, manufacturing and other sector expertise could achieve that.
There are a number of locations around the UK where this is already beginning to happen and the building blocks for future Marine Energy Parks are beginning to form – for example activity in and around the Pentland Firth in Scotland, off the coast of Anglesey and in the South West of England. I want to build on that existing activity in creating the Parks.
As I have made clear elsewhere I personally see the South West leading the way in developing marine energy. It clearly has the potential to be the first Marine Energy Park given its unique mix of renewable energy resource and home-grown academic, technical and industrial expertise in the marine energy sector. But I want the South West to host the first of several MEPs around our coast, each bringing different advantages and focus to bear on this multifaceted sector. Marine energy is something that should be rolled out right across the British Isles.
At the first meeting of the UK Marine Energy Programme Board held in Exeter in January I set a challenge to stakeholders both in the South West, and around the country, to come forward with ideas on how we can collectively create a Marine Energy Park that will be successful in attracting additional investment and help boost the UK’s offer on Marine Energy. I look forward to working with those stakeholders on their ideas.
I want the Parks to have a focus on all the elements which will help build a vibrant UK marine energy sector. Ultimately this includes manufacturing and fabrication but this will need to draw from and be supported by other elements. Innovation. R&D expertise. Supply chain development. Service and support industries…
Of course, the detailed design of the Parks will need to be driven by those on the ground who will build and operate them. They may be a single facility or operate with spokes feeding into a central hub which forms the physical focus for the Park.
The Technology Strategy Board are currently working up proposals on the new Technology Innovation Centres – these new bodies may have a role to play as one of the “spokes” of a Park. So could our marine energy testing centres like NaREC, EMEC or Wave Hub. New regional bodies such as the Local Enterprise Partnerships are also likely to be key players in building up a critical mass of local appetite and enthusiasm…
However, part of my challenge to you is to put the flesh on these bones and help us define just what a successful Marine Energy Park might look like. It has to be a collaborative partnership.
Measures to underpin Marine Energy Parks
I recognise that there is a lot to do to pave the way for Marine Energy Parks, which brings me back to the Marine Energy Programme.
For too long marine energy has languished as a “Cinderella industry” – never quite making it to the ball. The Coalition is determined to drive development forward and put in place the right policies which will be effective in making our vision a reality. The UK Marine Energy Programme will work with you to identify and shape those policies – and the Marine Energy Programme Board will provide the crucial link between Ministers and the sector. The messages I got from the first Programme Board were clear – firstly that we need to focus on getting the right levels of revenue for the sector to attract investment and secondly that investment in innovation to reduce risk is absolutely necessary.
We are already consulting on whether to offer generators a choice of ROCs or a new Feed-in-Tariff mechanism between introduction of the Electricity Markets Review legislation in 2013 or 14 and 2017. This will give marine generators access to this new form of FITs from the start, providing added certainty and a more stable revenue stream.
It will take a little while before the new FITs are in place and the marine sector needs confidence that appropriate support will be in place before that to ensure that longer-term investments are made. Clearly the longer-term future of the sector is tied up with the new FITs. But we will address this immediate issue through the review of the current Renewables Obligation.
We have already significantly speeded-up the RO review which is looking at ROC levels out to 2017. This means investors will have certainty over support a full year earlier than previously planned – with a Government response this Autumn and legislation in place from April 2012.
The evidence obtained from across the marine industry will feed into the decisions made on changes to the ROC levels and will help us to make informed decisions about the rates of support.
The Programme Board provided some fascinating insight into how we can get this right, with proposals to link a higher ROC banding level with a capacity limit. This has the twin benefits of providing a more generous incentive for investment within a finite cost envelope and encouraging developers to get their devices into the water as quickly as possible, and is something we will consider.
This brings me to technology funding and innovation.
The history of the Marine Renewables Deployment Fund is well known. It has failed to spend its allocation of the Environmental Transformation Fund since it was created in 2005 and will close at the end of this Financial Year, with no funding available beyond this.
Those budgets were allocated for this current Spending Review period and the Department has yet to make any innovation budget allocations for the coming financial periods.
I am determined to put in place a more effective way of supporting the development of marine energy which will lead to the right levels of investment and which will effectively push forward the sector. Of course, in a constrained fiscal environment the needs of the marine sector will need to be considered alongside the needs of other technologies in a more holistic approach. This will allow us to ensure we provide support where it is most needed and can have the most effect.
Before deciding what support we will provide to marine and to other important technologies I want to be sure we understand what the innovation needs truly are and how the government and the private sector can best act together to address them.
With the Minister of State for Universities and Science I co-chair the Low Carbon Innovation Group that brings together the key government bodies supporting low carbon innovation so we can ensure they are acting in concert. That group has been developing Technology Innovation Needs Assessments – “TINAs” – pooling their knowledge and developing a shared analysis of the innovation needs of a range of key low carbon technology families – such as Off-shore wind, Marine energy and Bio-energy. This will give us an indication of where the market failures are. I am hoping that the Marine Energy Programme working group on finance will be able to participate in the stakeholder workshop on the marine TINA.
Over the next few months my officials will be inviting a range of stakeholders to contribute to that analysis so we can ensure it’s a strong basis for decisions. My colleagues and I will weigh that evidence when deciding what support we can provide to which technologies. Decisions will be made in light of the outcome of that work. I expect to be saying more in a few months time.
Marine Energy Programme Board and Future Action
One of the things which struck me when I hosted the first Marine Energy Programme Board meeting was the genuine enthusiasm and commitment of all those who attended to make the Marine Energy Programme a success and Marine Energy Parks a reality.
I’m delighted that many stakeholders have already volunteered to be part of the Working Groups that will drive forward the work of the Programme. The groups will initially look at how we can access the support which this sector needs to move toward commercial deployment; making sure that planning and consenting work effectively for this sector; and how we can share information through a Marine Intelligence Network.
We will be keeping the size of those groups small and focused on creating solid proposals. I would encourage all of you to talk with each other – whether technology developers, utilities, industrial organisations, financiers – to ensure that those representing your sectors on the Groups and on the Board come with a consensus view of what needs to be done and how that can be achieved practically. This is a process where we will only get results back to the extent that we are willing to contribute!
I am looking forward to hearing back from those groups in a few months at the next Programme Board.
I am genuinely fired up about the potential which marine energy has to offer the UK in both carbon saving and economic terms and I am looking forward to working with you to realise that potential. The Coalition is committed to investing real money, more time, more energy and genuine political capital in making this happen.
I hope that the sector will put its shoulder to the wheel with us put in place the foundations for success through the UK Marine Energy Programme so together we can make the Marine Energy Parks vision a reality.
The time has come to get marine energy out of the shadows and into the sea.