The incoming Conservative government pledged in its manifesto to 'halt the spread of onshore windfarms' and has been true to its word. Onshore wind projects are in the process of being removed from the regime for authorising nationally significant infrastructure projects (NSIPs), and for smaller onshore wind projects, new guidance has meant that hardly any planning applications have been granted since the election. Most if not all forthcoming onshore wind projects have been abandoned.
Until the election, indeed until August 2015, the picture for large renewable energy projects getting development consent had been a good one. All applications for onshore and offshore wind NSIPs had been granted, as had the first application for a tidal energy project, in Swansea. Then in September, the Navitus Bay project for an offshore windfarm near the Bournemouth coast was refused consent, purportedly because of its visual impact on the Jurassic Coast World Heritage Site (the same issue plaguing onshore projects). Then the only live onshore wind application, for the Mynydd y Gwynt project in Wales was refused in November. Two projects for applications a long way offshore are still in progress.
There are obvious deterrents to getting consent for onshore wind projects, but what about other renewable energy schemes? There is no equivalent hurdle at the planning stage, although Wales may be a special case. The threshold for using the national infrastructure regime there is to be raised from a 50MW minimum to 350MW, which will cut out most renewable energy, meaning it will fall back on planning permissions and the new Welsh regime for 'developments of national significance'. Whether this becomes an incentive or a disincentive remains to be seen.
Other than onshore wind, it is really issues beyond planning that are holding up projects. A combination of uncertainty and the early removal of incentives and discounts is having a negative effect on projects being built, even if they have received planning consent. According to our research, only one electricity generation project authorised under the Planning Act 2008 is in operation, an extension to the existing Kentish Flats offshore windfarm of just 15 turbines.
More generally, although the lack of renewable energy projects coming forward will not cause an 'energy crunch' (where supply does not meet demand) on its own, it is a contributing factor to a more general shortage of new generation capacity, which without further government intervention is indeed likely to cause a crunch. This is matched by a number of ageing power stations having to be switched off because their operators are choosing not to convert them to cleaner sources, or they are simply reaching the end of their lives. The government has pledged to close all existing coal-fired power stations by 2025, but the small print says that this is only if enough gas-fired generation has been brought on line to take its place. So, existing generation being reduced, coupled with new generation not being switched on, equals a serious shortage on the supply side.
On the demand side, although this has temporarily been suppressed due to the recession, demand is set to soar when transport and heat, the main non-electricity consumers of energy, convert more and more to using electricity. If electric cars ever take off, there will be mass charging of them at night, which may match a drop in demand for other uses, but the overall picture is set to grow. The government is under an obligation for 15% of all energy consumption, not just electricity, to come from renewable sources by 2020, and the Secretary of State for Energy and Climate Change has privately admitted that this may not happen. One way for it to happen is for a greater share of energy consumption to come from electricity, since it has the highest proportion of the three using renewable sources, but that means an increase in demand for power.
In one attempt to deal with this, the government has asked the newly-formed National Infrastructure Commission to consider how the UK can increase its supply of electricity without necessarily building more generation, since (although not stated by the government) this cannot be guaranteed under the present circumstances. The sources for this will be a combination of more interconnectors from other countries, demand management and more use of electricity storage. The latter is done primarily through pumping water uphill during the night and allowing it to generate hydroelectricity during the day, although there have been some recent interesting scientific developments relating to the holy grail of large-scale storage of electricity. Demand management is also interesting – all those electric car chargers don’t care when during the night their cars are charged, so a smart system could spread this throughout the night, for example. The NIC is due to report on this by the budget on 16 March.
So an energy crunch may be coming, not simply due to renewable energy disincentives, but it could be headed off in a combination of ways. Firstly, by driving down demand through improving the country’s energy efficiency. This might be achieved by encouraging the use of energy efficient measures such as smart meters. The government may also increase incentives to develop and build new generation, which would preferably be low carbon. Further, they could also spread the peaks of energy usage through storage projects and smart networks, increase interconnectors with other countries and, as a last resort, keep old plants going for longer than planned.
ABOUT THE AUTHOR
Angus Walker is Partner and Head of the Government & Infrastructure team at Bircham Dyson Bell.
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Bircham Dyson Bell https://www.bdb-law.co.uk/