With the sudden interest in all things environmental, it’s easy to forget that renewable energy has actually been around for ages. However, until around twenty years ago there was no formal recognition of the sector, and the few renewable projects that did exist - mainly hydro and landfill gas projects – had to rely on selling their electricity to the local electricity company on whatever terms they could wheedle out of them.

 

Things really kicked off with the privatisation of electricity, in 1989. Realising that nuclear power was too risky and expensive for private owners, the Thatcher government retained nuclear stations in state ownership and introduced a levy on fossil fuel power stations, to enable nuclear power to compete in the new market. The electricity utilities were required to buy an certain amount of non-fossil fuel electricity each year - the Non Fossil Fuel Obligation (NFFO). Naturally, most of this was met from nuclear stations but renewable schemes also got in on the act.

 

In 2001, the government began to recognise concerns about climate change, and responded by introducing the Climate Change Levy, a form of tax on the use of energy in industry, with the costs offset by cuts in National Insurance Contributions. There was also extra financial support to promote energy efficiency and renewable energy schemes, and to stimulate investment in new technologies. Around the same time, the EU introduced its Renewables Directive, which set an overall EU target of 12% (22% of electricity) from renewables by 2010, and required individual nations to set targets consistent with this figure.

 

The NFFO has recently been replaced by the Renewables Obligation (RO), which created a more market-driven mechanism, with tradeable certificates. These have increased the profitability of renewable energy generation, and since its introduction the RO has helped to stimulate growth in renewable electricity generation. By 2005, renewable energy schemes accounted for around 17GWh of electricity, about 4% of the UK demand – an increase of 20% on the previous year.

 

 

 

Structure of the industry

 

The concept of renewable energy is very much an umbrella term, covering a wide range of very different types of fuel - solar, wind, tidal, hydro, geothermal. The fuel type each throws up different challenges and opportunities which dictate to a large degree the kind of company and type of approach they adopt.

 

Some renewable sources are fully commercialised and are able to compete with conventional power plant on price and reliability, while others are in lesser stages of development. In the UK wind, hydro and biomass dominate. Wind turbines and wind-farms both - onshore and offshore - are the most recognisable form of renewable energy in the UK, and a major contributer to our energy needs, while hydro-electricity, although less significant than it used to be, remains the most important renewable technology in output terms. Biofuels is a broad term which includes the combustion of biomass and wastes, gas from landfill sites and digestion processes. The co-firing of biomass with fossil fuels in conventional stations is a major source of renewable energy.

 

Renewable sources which are less commercially developed in the UK include wave and tidal power - a huge potential around the UK's shores, with the Bristol Channel scheme alone able to supply up to 6% of our power needs. However, development of such schmes have huge environmental impacts and would need very careful consideration against alternatives.

 

Solar power, including both active solar heating and photovoltaics, has been relatively slow to develop in the UK, compared to other countries, such as Germany. However, it has the potential to make a massive contribution. The last recognised renewable source is geothermal aquifers, a major source of power in Iceland, but with little development potential (as yet) in the UK.

 

Manufacturers, project development companies, fuel suppliers, power retailers, O&M contractors and service providers all play a role in the renewables industry, which has more than 450 companies operating within the UK, employing about 8000 people at present.

 

Despite its rapid recent growth, the industry is still relatively immature. Organisations vary hugely, both in size and degree of specialism. At the large end are equipment manufactures, electric utilities and international energy companies who are involved in considerable R&D investment on new fuel sources. At the other extreme are start-up companies specialising in a single fuel system or service, often driven by a dedicated individual with a strong vision.

 

 

 

The Future

 

Since 2000, the UK government's renewables policy has basically relied on tweaking the RO scheme (see above) to set different prices for different fuel sources, and reviewing planning guidelines to accomodate the need for more renewable schemes.

 

There are many observers, however, who feel that this doesn't go far enough, and that the UK is in danger of missing out on a chance to establish a leading position in renewable technologies.

 

The Renewables Obligation, like the NFFO before it, is designed to drive down prices by ensuring that only the most efficient schemes go ahead. This stands in marked contrast to other countries, which require consumers to pay more in order to establish a significant number of schemes. They argue that economies of scale will help reduce costs and enable their industries to compete in the new technologies. Germany, for example, through its system of direct support, has ten times our wind power capacity and 200 times as much solar power. There is now a real danger that the UK will miss out on its EU renewables targets because it has not done enough to support new schemes.

 

In 2006, the Government launched its Energy Review, aimed at looking at new ways of reducing carbon dioxide emissions and improved energy security. This led, amongst other things, to proposals for a programme of new nuclear power stations. These proposals are highly controversial and whether or not they go ahead, political pressures will ensure that renewable energy continues to grow.

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