Technology, Media and Telecoms
This article is part of our collection on Agriculture
Renewable power generation is set to take off in Wales.
Last updated: 10 Sep 2020 6 min read
Wales could generate 100% of its electricity from renewable sources by 2035, say experts. However, the key is not just generation but innovation, distribution, local ownership schemes and joined-up thinking from industry and government.
These were the themes from a NatWest webinar, which brought together think tank and business representatives to discuss how Wales can improve its energy efficiency.
“We’ve no shortage of renewable energy schemes,” said Ashley Rogers, commercial director of the North Wales Mersey Dee Business Council. “But it’s how local businesses and communities benefit. We don’t want to become an energy factory for the rest of the UK.”
So how green are Wales’s valleys? According to a report by the Welsh Assembly, there are more than 55,000 renewable electricity projects in the country, which generated 7.4TWh, around a quarter of Wales’s generation, in 2018. Around two thirds came from wind farms (half of it offshore), with solar, biomass combined heat and power (CHP) and hydropower generating most of the rest.
“The argument for the case for the renewable, for the low-carbon economy, has already been won,” Nathan Welch, MD of Cardiff-based sustainable power developer Octo Energy, said at the round-table discussion, hosted by NatWest business growth enabler Gemma Collins.
He added: “The green economy is going to be a success story. But it has to address some key challenges.”
Those challenges go far beyond power generation itself, agreed the panel, who highlighted four priorities to enable Wales to become self-sufficient.
“It’s important that if communities are hosting a large generational facility, they see a benefit from it,” said Andy Regan, policy, projects and external affairs manager at the Institute of Welsh Affairs. “Previous projects have been scuppered by people who don’t necessarily want a wind farm in their area. If they feel all the profit is going out of Wales, they’re less receptive.”
The majority of community schemes start with people wanting to “do their bit”, with ownership a secondary part of the equation, said Rogers. “But there are schemes where there is a local tariff for local people, who get electricity cheaper.”
Building in power storage could also benefit communities further.
“One of the key challenges around renewables as a contributor to the grid is intermittency,” added Regan. “The future is about managing and operating the network to balance supply and demand at a regional and local level. If you’re a community project that can quickly deploy energy you collected yesterday when it was windy, and you can supply it very quickly on demand to the system operator, you will be getting contracts on the basis of flexibility, not just power. That’s how local small-scale energy projects will be making their money.”
“We need to look at areas where Wales could have a comparative advantage in technology,” said Regan. “Ideally, I’d like to see Welsh firms providing tech for other countries around the world.”
“The knowledge economy in the renewable industry in Wales can punch above its weight. Wales is a natural resource economy, and we should be playing to our strengths” Nathan Welch, MD, Octo Energy
Wales is home to a number of innovative renewable technologies, such as Morlais, a marine energy project that harnesses the power of the sea in 35 square kilometres of seabed near Holy Island, Anglesey. With a capacity to generate 240MW, it may become one of the world’s largest tidal stream energy sites.
“With investment in R&D,” said Rogers, “you have power generation, manufacture, export, inward investment into jobs and benefits to local skills and the local economy. It’s imperative there is support for the innovative, trialling new technologies. It’s not just solar and wind, it’s a combination of tidal, solar, wind, marine – all of this, plus some nuclear. Unless we do all of that, we’re going to be missing key parts of the equation.”
Three years ago, the UK government closed the Renewables Obligation (RO) subsidy scheme, which since 2002 had supported new renewable electricity generators with a capacity larger than 5MW. “That decision had a huge impact on the development cycle of projects,” said Welch, “and it’s taken until 2019/20 for those types of projects to come back into the pipeline."
Commitment from the Welsh and UK governments, he added, is vital to the future of renewable energy. “The key stakeholder in this conversation is the government. We don’t need subsidies: what we need is certainty. The renewable industry changes at a rapid pace, but one area where the government can stabilise things is to recognise their role as potential offtaker and that it has a role in the market. It doesn’t have to offer subsidies in the traditional route but potentially offering floors on pricing, smoothing out power price strategies. Uncertainty is what drives equity and debt funders away – and without them, all the projects we know are achievable become that much harder to fund.”
Which means Wales’s realisation of its renewable energy goals might also depend on the relationship between the Senedd and Westminster, said Rogers. “The energy industry is very complex – the interplay between the Welsh and UK governments, and developers. In terms of innovation, there is potentially more money, for example, in the growth deal for north Wales for infrastructure for Morlais. But there’s no energy paper, no decision from UK government on that, so how do we make that practical and workable from a price-per-KW perspective? We’ve got absolutely no shortage of projects, but it does need certainty from UK and Welsh government about how we subsidise the innovative technologies. Otherwise it’s not going to happen.”
Certainty may come from the devolution of powers from London to Cardiff, and then to Welsh regions. “Local authorities have a role to play in bringing up demand,” said Rogers. “Link, for instance, Welsh government getting the power for bus franchises, which then links to electrified buses, which increases demand for hydrogen generation. If the Welsh or UK government can give us some capital and we can retro-fit our vehicles and we have power for bus franchises, suddenly you’re decarbonising public transport, supporting new renewable energy generation technology in Wales and improving air quality.”
Regan envisages the Welsh government will want local authorities to take a bigger role in energy planning. “Energy touches on so many local authority goals, so I think we will see a clearer strategy probably emerging at a local level,” he said.
“The way forward is not, as has happened, one developer bidding for permission for one product, but government and the industry setting a framework with a strategic authority choosing the sites, then opening a competitive process.”
The panel maintained that a coherent approach to generation, innovation, distribution and funding would help Wales meet its 100% renewable energy target. “The knowledge economy in the renewable industry in Wales can punch above its weight,” added Welch. “Wales is a natural resource economy and we should be playing to our strengths. There is no shortage of corporate partners who will take Welsh government up on that challenge and be keen to work with the top-class minds we’ve got in this part of the world.”
You can watch the webinar and catch up on all the other Royal Welsh Show special events here.