Good morning. It is a great pleasure for me to be here today to address you at the 2013 Ocean Energy Europe conference.
I am delighted that the EU Ocean Energy Association chose the UK to host the conference for the first time ever outside of Brussels.
This illustrates the strong role that the UK has been playing and continues to play in supporting the development of ocean energy.
But before I go further, let me stress the 3 key points I want to talk to you today:
Firstly, I want to re-affirm the UK Government’s genuine, long-term commitment to ocean energy. As a direct result of this commitment and of the extensive support framework we have put in place, great advances have been made in developing the sector, here in the UK.
Secondly, we must not forget that Europe is in a global race for the development of ocean energy. As with all such races, others will challenge our leadership. But winning this race will bring global rewards and open world-wide future opportunities to the sector.
Thirdly, but perhaps most importantly, staying in the race and winning it will require strong partnerships. Collaboration is absolutely essential in getting the sector to move forward to the next stage of its development. Collaboration between Governments. Collaboration across Europe. But mostly, collaboration across the industry.
The UK’s commitment
Let me begin by talking in more detail about the commitment of the UK to the sector.
Some of you will have heard me speak before of my strong belief in the future of this sector. And I am not the only one! The Coalition Government pledged to support marine energy when we came to power.
We have consistently delivered on this pledge.
We have ensured the developers of first arrays in the UK receive sufficient public sector funding to de-risk their projects.
We have done this firstly by making up to £20m of direct capital grant funding available through the Marine Energy Array Demonstrator (MEAD). Subject to State Aid and successful final investment decision, the MEAD will fund two innovative tidal stream projects in the UK.
Secondly we have de-risked the arrays by deliberately prioritising ocean energy in the first call for proposals of the EU New Entrant Reserve 300. As a result of our effort a further two tidal array projects – both Scottish-based – have been awarded NER300 funding. We have continued to work very closely with the European Commission and the Scottish Government so that these two projects can progress to demonstrate the sector’s future potential.
We have also ensured that these pre-commercial arrays and the others that will follow receive the appropriate level of revenue support to make them economically viable….
…by more than doubling the level of revenue support under the Renewable Obligations.
…and by proposing a significantly high strike price for wave and tidal stream under the Electricity Market Reform.
But the Government also acts at the earlier stages of innovation to ensure technology advances and associated cost reduction goes hand in hand with the deployment of the first arrays.
The UK Research Councils’ Energy Programme took a delegation of leading UK academics to Beijing in October to explore areas of cooperation with China in Grand Challenges for Marine Energy. They will decide the scope of a £1.5M joint call for research proposals between EPSRC and the Chinese Ministry of Science and Technology (MoST) to be launched in early 2014.
The recently launched Offshore Renewable Energy Catapult intends to launch a Marine Farm Accelerator programme as one of its pilot programmes, to bring the industry together in solving common challenges in deploying arrays.
In particular, I am delighted to announce today that the Technology Strategy Board is to invest £7m to accelerate the development of innovative infrastructure technologies for offshore renewables, including wave and tidal stream. The successful collaborative R&D projects will help reduce the cost of electricity generation. The Engineering and Physical Sciences Research Council will provide up to a further £0.5m to fund academic partners in projects focused on High Voltage Direct Current technologies.
This is a great example of the type of investment that this Government has been making in the marine sector over the years. And we have provided much more, for example:
Through the Research Councils who have provided a £6m grant for the FloWave test tank, a national facility of international importance, which will soon open, here, at the University of Edinburgh.
Through the ETI portfolio of marine projects, many of which are based in Scotland. These include:
- The £1.4m Wave Energy Converter project, using Scottish-based developer, Pelamis.
- The Tidal Energy Converter project, using Atlantis devices to look at achieving significant reduction of the cost of energy, through the MeyGen project in the Pentland Firth;
- The ReDAPT project, which has enabled the Alstom TGL device, to achieve its maximum rated output of 1MW and to generate over 10MWh of electricity, in actual operating conditions in Orkney.
The UK Government has also, to date, invested over £28m in our world class testing facilities at EMEC, WaveHub, NaRec and FabTest. We are proud to welcome devices from across Europe and soon from across the globe at these centres.
So, a very comprehensive framework of support, spanning the full range of the innovation chain.
But beyond financial support, we are also delivering our pledge to the sector by working closely with the industry through the Marine Energy Programme Board (MEPB for short), which I chair.
The MEPB has been instrumental in providing evidence for many of the financial instruments I have mentioned above. It is also currently working to remove a number of key non-financial barriers:
For example looking at streamlining the licensing and consenting process across the UK….
… setting the scene to establish a supply chain strategy for the sector…
…. providing key evidence to underpin the analysis of the grid connections issues in the Scottish Islands and offering options for mitigation.
The global race and its rewards
So as you can see, our commitment is extensive and has been unwavering, despite a tough economic and fiscal climate.
This has allowed the UK to be at the forefront of developing the sector and to support a thriving European Ocean Energy industry.
But make no mistake, others across the globe are keen to take their share of the future growth, job and low-carbon rewards that ocean energy can bring globally.
By 2050, for 27GW installed capacity, wave and tidal stream technologies could save, in the UK alone, 61Mt of CO2, valued at £1.1bn - and much more across Europe.
The total global market for ocean energy could be worth as much as £40bn per annum by 2050. A prize attractive to anyone!
I’ve mentioned that EMEC will soon be welcoming devices from across the globe. The fact is here – others across the world are rapidly developing their ocean energy capability and looking towards Europe as a market for their products.
These countries bring with them exciting new technology but also strong competition to a Europe-grown ocean energy industry. To stay in the race will require closer than ever collaboration.
Collaboration is essential
I am in no doubt that what we have achieved has been possible because of our collaboration with others, within and outside of the UK.
I am also in no doubt that, as part of UK, the cost of supporting and developing the sector is best shared on the broad shoulders of the UK, rather than on the narrower tax base of Scotland alone. This, I strongly believe, doesn’t apply solely to ocean energy but to low-carbon energy of all types
So, collaboration is key. Collaboration within the UK but also collaboration across Europe. And the EU-OEA has been a key player to this pan-European collaboration
Here again, I can be proud of what the UK is doing to support the development of the sector across Europe and what we, working together, have collectively achieved
I am very pleased that my Department continues to work closely with the EU-OEA; our Scottish Government colleagues; and a range of like-minded Member States. Together we are raising the profile of ocean energy and achieving continuing EU level support in partnership with the European Commission.
Following the publication of our Ocean energy joint vision paper, which was presented to the EU Energy Council in 2011, we have continued to make progress together in making the case for ocean energy funding and development
And the messages seem to be getting across.
I am encouraged to see collaboration and Joint Programmes becoming established under the EU’s Strategic Energy Technology Plan (SET Plan for short) and its European Energy Research Alliance.
We helped to lobby for approval of the SI Ocean project to be financially supported by the Commission’s Intelligent Energy Europe programme.
In addition, we have the recently announced Ocean ERA-Net, led by Scottish Enterprise, that has 9 Member States agreeing to work together to explore the possibilities for joint activities and development programmes in this area.
We also now see ocean energy included in the EU’s new research, development and demonstration funding Programme, Horizon 2020.
This is along with plans for further joint actions between Member States being discussed in the context of the SET Plan Steering Group, as part of a wider initiative launched by my Officials in DECC.
This is all highly encouraging. And I am determined that the UK should continue to play a positive and proactive role in continuing to develop these initiatives further.
These have the potential to significantly complement and leverage our respective National programmes and ambitions. And these can ensure that we, collectively, see an accelerated and cost effective development of this sector as quickly as possible.
We have seen great examples of Governments and industry working together to achieve a common goal. The progress of the sector we owe to this type of collaboration. But we cannot afford to rest now.
Now is the time to act. Now is the time that we, the pioneers, show the world what can be done. Show the world how blue energy, as it is called across Europe, can lead to blue growth and be part of a strong vibrant blue economy.
Now is the time for bold steps - for the large OEMs, the innovative developers and the utility investors to get behind our first European projects and get this exciting new sector going.
I believe that working together, within the UK and across Europe, Governments and industry, together, we can make this pioneering European industry lead the way globally.