climate for UK renewables

The Queen’s Speech announced that there will be an Energy Bill in the upcoming Parliamentary

session. Below is a statement published by a number of organisations who are committed to a

low carbon economy.

We welcome the Energy Bill and the need to move to a secure and decarbonised electricity

system. However, we remain concerned about proposals expected in the forthcoming draft Bill to

change the supporting framework for low carbon technologies to “Contracts for Difference”

(“CfDs”). We believe therefore that the Government is right to go through Pre-legislative scrutiny

in formulating the final legislation: taking the time now to get it right will save time later.

Despite our continued efforts to help Government design a “CfD” capable of supporting major

renewable energy financing, we believe the mechanism as currently envisage remains flawed and

has the following unintended consequences:

· Complexity –The mechanism is extremely complicated, introducing new risks and

uncertainty, as well as diverging from other well understood European support mechanisms.

This discourages generators, financial institutions and the associated supply chain

from investing in the UK energy market.

· Cost – Consumers will pay for the new risks and costs introduced by this mechanism through

their energy bills. Energy suppliers (big and small) will have to manage these liabilities on

consumers’ behalf, deterring new entrants from the retail market and reducing existing

players’ ability to finance necessary investments. These costs and risks have not been

sufficiently modelled by the Government and are likely to be significant.

· Transparency – Within the new mechanism, it is unclear that information on the exact levels

of subsidy received will be as accessible as under existing mechanisms. These costs must

be transparent so that consumers know what they are paying for.

· Legality – The “CfD” wraps up subsidy for nuclear and renewables in the same package.

Subsidising nuclear (a mature technology) will almost certainly result in the package being

blocked or delayed by the European Commission under State Aid rules. This uncertainty

deters renewable investors and threatens the build up of supply chains and jobs in the

UK.

The Government has always stated that if a “CfD” proved unworkable, it would develop other

options. One of these, the “Premium Feed in Tariff”, resembles tried-and-tested support schemes

for renewables in place in Europe. The Government needs to ensure it has robust and workable

solutions for renewables, at least outlined as options in its forthcoming Bill, to enable the delivery

of a simple and effective scheme. Progressing a viable “Plan B” would not slow down the pace of

reform, but would ensure that the reform could be implemented quickly, maintaining project and

supply chain investment.

Additional support schemes should then be defined for carbon capture and storage, and for

nuclear, as necessary and appropriate.

Download a PDF of the statement

Statement on Low Carbon Support 090512

Nov 2010

Today, Fred.Olsen Renewables (FOR) announced that following a strategic review of its portfolio of onshore and offshore wind farm sites its main focus would be on onshore wind farm development.

Nick Emery, Managing Director of the company’s UK operations said:

“Fred.Olsen Renewables has undertaken a thorough and complete review of all of our potential wind farm developments. As an independent power producer we have concluded that the most efficient use of our development resource is in our onshore portfolios, where historically we have had considerable success. Crystal Rig Wind Farms I and II, for example, provide almost 10% of Scotland’s operational wind capacity.”

As part of the review Fred.Olsen Renewables will continue to progress the offshore 220 turbine Codling Wind Park in Irish Waters which received consent from the Irish Government in 2005. However, the company will end its development activity at the Forth Array offshore project in Scottish Territorial Waters. This project was awarded an Exclusivity Agreement by The Crown Estate in 2009.

Nick Emery continued:

“FOR sees a clear future for offshore wind and believe it will make an important contribution to the recently announced Scottish Governments’ renewable targets as part of the UK commitment to 2020. Our decision to step back from the Forth Array project is a consequence of our intention to concentrate our investment in those projects we feel we can best deliver in the short to medium term. Plans will now include additional investment in our Scottish onshore development portfolio.”

Within the wider group of Fred.Olsen related companies which includes Windcarrier, Harland and Wolff, Natural Power and SeaRoc, there will be continued investment and growth into the services sector of the offshore market.

Contact details:

Alex Woodward
Media Relations, Fred.Olsen related companies Email : press@fredolsen.co.uk
Tel : +44 (0) 1531 650 757

Notes for Editors:
Fred.Olsen Renewables (FOR) has been developing and operating wind farms since the mid 1990’s showing real commitment to the Scottish and UK renewable energy generation market. Its operational portfolio comprises Rothes (51MW), Pauls Hill (64MW) and Crystal Rig (200MW) giving a generating capacity of 315MW. Consented onshore projects are Mid Hill (75MW), Windy Standard II (37.5MW) and Rothes II (40MW) with a large offshore project in Irish waters, Codling Bank (up to 1GW). FOR is a wholly owned subsidiary of Bonheur ASA and Ganger Rolf ASA, both listed on the Oslo Stock Exchange, with FOR being responsible for the development of renewable energy generation activities. See www.fredolsen-renewables.com for more information.