WhichGreen figures reveal scale of new build crisis in renewables

01 March 2009

The annual WhichGreen figures, released today by green energy company, Ecotricity, reveal that Britain’s failure to invest in green energy will leave the government’s 2020 emissions targets in tatters. Based on WhichGreen 2008 investment figures, Britain will fail to meet even half of the EU’s 2020 renewable energy target (with a shortfall of 55%¹).

Fig 1. Shows £ investment per customer over the last five years.

For the first time, the WhichGreen figures exposes the investment pattern of the Big 6 over the past five years; a pattern that starkly demonstrates the cycle of underinvestment which threatens to derail the UK governments drive to meet it’s own and EU renewable energy targets.

The figures highlight how the ‘burden of risk’ of growing the renewable energy sector is falling to the few whilst the Big 6 are allowed, by the government, to continue to place shareholder return before investment in new forms of renewable energy in the UK. The investment record of green independent Ecotricity demonstrates an average investment per year of more than 10 times the level required to meet their obligation under the Governments RO scheme (estimated at £302) and 16 times more than the nearest competitor per customer per year.

Dale Vince, eco pioneer and founder of Ecotricity, comments:

“It is a scandal that the average investment in new build by The Big Six over the past five years does not even amount to £30 per customer. This £30 is roughly what it would take for each company to meet its bare minimum legal obligation to grow renewables by about 1% per year.

While the Big Six are performing badly, more surprising perhaps is the lack of investment by two green independent companies, with a zero investment in the last five years they are contributing nothing to the urgent need for new build.

By contrast Ecotricity has invested an average of over £450 per customer a year over the last five years.” WhichGreen shows how the five year average investment figures are significantly below what is necessary for new build by the industry if the UK is going to meet its 2020 obligations, and well below the bare minimum legal requirement of approximately £30 per customer per year².

• In 2008, nearly 880 MW of new capacity was installed in the UK by the Big 6 and independents
• EU renewable energy target is 15%. The Renewables Advisory Board suggests that wind should provide us with a minimum of 31000 MW by 2020
• 2008 investment levels will generate less than half of the target (13,849 MW) - which equates to a 55% shortfall

OFGEM Green Guidelines will discourage building of new green energy

What’s more OFGEM’s new accreditation scheme for green tariffs, issued on 4 February 2009, is likely to make matters worse. Ecotricity will not sign up to OFGEM’s new ‘Green Guidelines’ as it predicts they will make green tariffs more confusing and expensive for consumers and will do nothing to encourage energy companies to build new renewable energy.

Vince explains why OFGEM’s Green Guidelines will spell disaster for the industry:

“The UK currently gets less than 5% of its electricity from renewable sources. We need to increase this ten fold – 50% in the next 20 years. Green tariffs and consumer choice of green tariffs – people power - could play a crucial role helping us reach these targets. But OFGEM has sidelined the role of the consumer in one fell swoop by excluding the building of real green electricity from their definition of so-called ‘green tariffs’. Progress will be sacrificed as these guidelines exclude what we all need from a green tariff which is new green build – the increase of renewable energy in Britain.”

“Green electricity tariffs should be about the creation of new green electricity, first and foremost. In the green guidelines OFGEM are accrediting everything you can imagine except the thing that really counts – new green electricity. Of course we believe in planting trees, protecting wildlife and cutting carbon, all of these things have an important role to play – but not in green tariffs!”

Ecotricity is an independent social enterprise with a mission to fight climate change and it is because of this it is prepared to take on the ‘risk’ involved in building new renewable energy. It is in this position because it is a ‘not for profit’ company without shareholders and backers to answer to who, in the mainstream energy market, expect a guaranteed level of return on their investment.

Ecotricity campaigns to encourage people to vote with their electricity bills - turning bills into windmills – demonstrating the power that consumers have to build and invest in new renewable energy.

Dale continues, “We need a Green Revolution for Britain - a radical new approach by government and industry to invest in building renewable energy in the UK. We are the windiest island with the best resources to generate new green electricity but if the government does not do more to enforce real investment by the utilities industry in renewables, this nation will be without the vital infrastructure that will power our future.”

Ecotricity has invested £50 million so far (or more than £450 per customer per year) in building new sources of green energy, accounting for over 8% of wind turbines in England. Ecotricity has 15 operational wind parks with a total of 51 turbines and 52 MW capacity, serving 30,000 homes, saving more than 100,000 tonnes of CO2 per year. It also has 24 MW under construction and 50 MW in the planning process, and will submit a further 100MW into planning by April 2009.

-ends-

For more information, comment or interviews, please contact:
Jo Marino – 07932 403555 - jomarino@thespringconsultancy.com
Elaine Brass – 07951 989588 - elainebrass@thespringconsultancy.com

Fig 2: Shows 2008 £ investment per customer and total investment

Methodology – Which Green is produced by Ecotricity and sent to suppliers for verification. The £ per Customer is based on each supplier's total expenditure on building new renewable energy capacity in 2008 divided by the average number of customers in 2008. Expenditure was sourced from suppliers or calculated based upon the Ofgem commission date for each renewable generator with a capacity of over 50 kW in 2008 and multiplied by the average investment expenditure per MWh for that form of renewable generation (Source: Ofgem; BWEA; Enviros 2005).

¹ Source: Based upon levels of wind power required to meet the 15% renewables target recommended by The Renewables Advisory Board, 2020 Vision. June 2008.

² This figure is estimated from the proportion of an average customers annual electricity usage accounted for by a 1% rise in the Renewables Obligation (0.044MWH) linked to the cost of a wind turbine required to produce that renewable electricity (~£1.5M per MW installed capacity) and assumes a load factor for the wind turbine of 28%