Good news for wave and tidal sector – but headwinds remain
15 Oct 12 - Martin McAdam, Chief Executive Officer
Last week's Scottish Low Carbon Investment Conference yielded
two very positive developments for the UK's nascent wave and tidal
sector - the announcement by Scotland's First Minister Alex Salmond
of the Renewable Energy Investment Fund, and the statement by UK
Secretary of State for Energy and Climate Change Ed Davey that a
short-life cross-governmental group would be set up to solve the
challenges in connecting Scotland's islands to the grid.
Together these measures address two of the major concerns
affecting the marine energy industry - attracting investment and
dealing with transmission charges to the islands.
While the details of how the Renewable Energy Investment Fund,
or REIF, will be structured have to be worked out over the coming
weeks, it is a welcome addition to helping finance this
As I have spoken about before, the marine industry requires
corporate equity to complete technology development and once there
is a degree of confidence in the technology a combination of
capital grants, project equity and debt will be required.
REIF has been pump-primed with £103 million and will provide a
facility to companies such as Aquamarine Power to move businesses
and technologies to the next stage of development.
Similarly Secretary of State Ed Davey, following his tour of
Shetland and Orkney, knows clearly what these islands, and the
Western Isles, require: a long term solution to the astronomical
charges to connect island generation to the National Grid. Whilst I
acknowledge the great progress being made by Ofgem and National
Grid in levelling off charges for mainland UK, I think DECC now
realise that some other form of intervention for the islands is
I also think we know the range of options on the table:
a. an alteration to National Grid's charging methodology;
b. using the current Energy Bill to deliver a solution to cap
c. working with the Scottish Government to deliver a
socio-economic intervention, say in the form of an island ROC, or
I personally feel a transmission charging problem should have a
transmission charging solution, but recognise that option 'c' might
be the simplest to implement. Whatever is proposed, the quicker the
result, and the more certainty the better.
Both these measures give ample evidence of the belief both the
UK and the Scottish Governments have in the marine energy sector.
But as anyone who attended the conference knows, headwinds
Ed Davey gave terrific confidence to all attendees that he
understands the benefits, and costs, of our renewable energy
revolution. Not just in terms of green energy targets, but for
jobs, economic stimulus and energy security.
But continued uncertainty over the future direction of
electricity market reform is contrary to what the sector requires.
Massive investment - literally billions of pounds - will be needed
in offshore wind, wave, tidal and new networks in the decade ahead,
and what investors in this sector require, more than anything else,
is stability and a long-term view.
Disagreements within government over support for renewables, and
an increasingly polarised, ill-informed and political debate over
our future energy needs, are the last thing we require.
The Scottish Low Carbon Investment Conference was very powerful
counterpoint to this and brought together big business, government
and level heads for a reasoned debate.
I think we all agreed that, with the right support, there is a
very positive future ahead. All eyes are now firmly on electricity
market reform to deliver what the UK clearly needs.