21. The Royal Commission on Environmental Pollution
advised that the use of renewable energy resources would play
a key role in reducing the production of greenhouse gases and
that increased use of renewable energy should be a non-negotiable
element of future energy policy.
In fact, successive Governments have supported the development
of renewable energy technology for more than 25 years. Although
renewable sources and waste incineration currently contribute
only 2.8% of the country's electricity requirements,
the present Government is committed to a target of 10% of UK electricity
supplies from renewable sources, excluding non-biodegradable waste,
by 2010, "provided the costs to consumers are acceptable".
22. Unlike other forms of generation discussed so
far, most renewable power plants are small-scale. The creation
of a large number of small-scale plants, possibly replacing fewer,
bigger power stations, will have repercussions for the electricity
transmission and distribution networks. The issues raised by such
a development are dealt with in Section III of this Report.
23. A critical feature of most renewables is that
they are energy sources and not fuels. The difference lies in
availability. Fuels are always available for use when required,
albeit at a price determined by the market. Energy sources are
usually intermittent, but are free.
24. The Government's Renewables Obligation, which
will have effect during the period 2002-2027, will require electricity
supply companies to purchase a proportion of their electricity
from renewable energy sources. It is inevitable that the Obligation
will result in upward pressure on energy prices. Some suppliers
are already offering domestic consumers the opportunity to help
pay for the Obligation through acceptance of a 'green tariff'
for their electricity supply. The Government estimates that the
Obligation will create a market worth £750 million for the
renewables sector by 2010, assuming that its 10% target is reached.
The Government has also claimed that it will spend £260 million
over the next three years on the development of renewable energy
£50 million of this expenditure will come from the National
Lottery New Opportunities Fund to support the development of energy
crops/biomass power generation (at least £33 million), offshore
wind power development (£10 million) and small scale biomass
heating (£3 million). The Government itself will contribute
£39 million for offshore wind power projects, £29 million
for support of energy crops through the England Rural Development
Programme, £10 million for photo-voltaic roofs and £55
million from its research and development budget for a range of
renewable technologies and resources. Another £100 million
will be allocated in the light of the PIU's recommendations.
The Government expects these measures, together with the Climate
Change Levy on fossil fuels and legislation to protect the viability
of projects started under the previous Non Fossil Fuel Obligations,
to create a market worth £1 billion by 2010.