Walesbusiness.org

"The industry is only following what the Government said it wanted"

ENERGY issues are high on the political agenda whether for the reasons of climate change, securing future supply or in tackling fuel poverty. Electricity is one form of energy and its production is set to soar over the next decades in particular from renewable sources, as we reduce our dependence on energy from carbon emitting fossil fuels. The Low Carbon Revolution Statement of the Welsh Government sets out their ambition for low carbon energy in Wales.

In terms of renewable electricity, which is one the most immediate ways to reduce emissions, very high targets were established including generating twice the amount of electricity that Wales currently consume through renewable sources alone in the next 15 years.

As a result of this expansion in renewable energy, which is driven by UK and Welsh Government targets, high levels of financial investments are expected which will in turn present considerable economic opportunities. The wind energy sector is the most mature, commercially feasible, and economic of all the renewable technologies that are currently available. A recent survey into the sector showed that it already contributes nearly £160 million in total expenditure to the Welsh economy and that it directly employs around 1000 people.

Estimated growth in wind energy could see turnover increase to £1 billion by 2020 equivalent to around 2% of our GDP. Looking at the broader family of renewables and low carbon technologies, the Welsh Government thinks there is a potential for £50 billion worth of investments over the next 10-15 years with others modelling an annual £2 billion investment over the next 20 years. These investment forecasts sound exiting for our economy but the challenge is of course to ensure that firstly they become a reality rather than a missed opportunity, and secondly that as much of the  turnover as possible is retained up and down the Welsh supply chain resulting in mass employment and higher wealth.

It is not a surprise that the Welsh Government and economists want to make the most of the coming low carbon revolution. The Labour Assembly election manifesto declared that this was going to be the ‘Energy Decade’. Following the election, First Minister Carwyn Jones took responsibility for major energy facilities in addition to his Delivery Unit recognising the importance of the industry and the need to provide leadership to get the job done.  He gave a very positive address to a RenewableUK Cymru conference in Cardiff in May saying that renewables would lead the growth in energy investment and that his new government would take a strategic, joined-up approach in pursuing its energy and economic aspirations.

The First Minister also took a firm stance against the opposition to the growth of renewables in particular large onshore wind farms. During the same week in May there had been a very large protest outside the Senedd against the proposals to upgrade transmission grid line connected to wind farms in mid Wales. Whilst acknowledging that the concerns of people had to be listened to, he encouraged conference delegates by declaring that he wouldn’t be governed by protest.

Populist pressure relating to the mid Wales grid issue must have become overwhelming. An unexpected Friday afternoon statement given by the First Minister only three weeks after the conference shocked the industry as it confused the limits of onshore wind expansion and also brought into question the government’s support for strengthening grid lines. It took some weeks and months to get clarity on these issues and some of the work, in particular relating to the grid, continues. The industry’s confidence has been severely shaken as a consequence of that statement and has led to important industry players, having already invested millions into potential projects, seriously question the viability of pursuing their corporate interests in Wales.

The Government could rightly argue that issues such as how much electricity should be generated from wind farms in mid Wales; how that electricity should be transmitted to the National Grid; and where the powers should lie in determining such developments, are all crucial questions. However, it doesn’t help for such issues to be dumped unexpectedly and incoherently on the door of an industry which is only following the renewable energy targets, strategic location, and planning guidance that has been set by the Government in the first place.

The industry is only following what the Government said it wanted – which includes the areas to locate large scale wind farms. In terms of future investment, if Wales is really going to cash in on the large expansion of offshore wind and especially the up-and-coming wave and tidal marine technologies, then confidence and interest must be gained by delivering on the technologies that are ready and waiting to be deployed now. Clarity and consistency are important issue to retain trust – otherwise, with a worldwide growing renewables industry, investors can afford to look elsewhere.

Re-establishing trust is crucial if Wales is going to reach its renewable energy targets and also profit from doing so. This goes three ways – between government and industry; between government and the communities affected by wind farms and /or grid lines; and also between the industry and the same communities. For government and the industry to reach their goals then they must bring the people with them. That may mean more consultation, looking at less intrusive options, as well as exploring ways to ensure that the communities involved receive fair compensation through community benefits and economic involvement as a result of hosting energy developments.

On the other hand it is important for all who aspire for a low carbon future to realise and acknowledge that renewable energy developments are not impact-free – there will be a change in land use, there will be an effect on the scenery, and there will be traffic disruption during the construction phase. Any and all kinds of infrastructure developments from a new bypass to a new school have an environmental and social impact – they may also have an economic one.

Some people will never accept the need to respond to the dangers of climate change and security of energy supply. There will be those who deny the need to move towards a low carbon world and there will be those who will remain fundamentally opposed to new infrastructure such as wind turbines and grid lines. However, I believe that the vast majority of people across Wales do understand the wider issues surrounding renewable energy and would support its development as long as they feel that concerns and sensitivities have been responded to genuinely and that they all have a stake in the investment. The energy industry and governments must work hard to win the trust and support of the people, to show them the need and benefits of a low carbon revolution.