Speech

Speech to RenewableUK

Edward Davey addresses the RenewableUK conference in Manchester.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Rt Hon Edward Davey

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.

Published 12 November 2014