EU officials agree higher renewable energy target; UK grid delays hold back economy

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Europe has hiked renewable energy targets to strengthen energy security, create jobs and accelerate emissions reductions. (Image: REUTERS/Bob Strong)

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EU officials agree to hike 2030 renewable energy target

European Union officials agreed on March 30 to set a target of 42.5% of gross energy consumption from renewable energy by 2030 with a potential top-up to 45%.

The provisional deal, clinched by European Parliament and Council negotiators, commits the 27 EU countries to accelerated renewable energy targets set out by the European Commission in order to end Europe's reliance on Russian oil and gas. The EU sourced 22% of its energy from renewable energy in 2020 and had previously set a target of 32% by 2030.

 Share of all energy from renewables in EU in 2020

                                (Click image to enlarge)

Source: Eurostat (European Commission)

The agreement, which must be approved by the EU Parliament and EU countries to become law, follows a flurry of EU interventions designed to accelerate renewable energy deployment and manufacturing.

EU renewable energy companies will be able to receive as much funding as U.S. green energy subsidies under a temporary loosening of state aid rules set out by the European Commission (EC) on March 9. The move aims to counter competition from the U.S. and China. President Biden's 2022 Inflation Reduction Act provides $369 billion of green subsidies, including tax credits that increase the profitability of U.S. wind and solar projects as well as new manufacturing facilities.

Until the end of 2025, EU member states will be able to provide funding to companies that matches the level offered in other locations, or sufficient funding to persuade the company to invest in Europe, the EC said. National governments will also be allowed to provide more types of support to renewable energy projects.

The EC has also proposed a new Net Zero Industry Act that sets a target of 40% of renewable energy components from EU factories by 2030 and domestic content rules in renewable energy tenders that favour EU products.

The rules form part of the EC's Green Deal Industrial Plan to mobilise state aid and EU funding for clean technology companies and accelerate the construction of new manufacturing facilities.

The EU has also agreed emergency regulations that speed up wind and solar permitting and laid out draft market reforms that aim to protect consumers against volatile wholesale prices and make it easier for all business customers to sign long-term power purchase agreements (PPAs) with generators.

UK grid delays 'significant brake' on economy, adviser warns

The UK must urgently upgrade its transmission grid to accommodate new renewable energy capacity as delays to grid connections are increasingly becoming the "rate-limiting factor" for offshore wind growth and a "significant brake" on wider economic activity, independent adviser Tim Pick said in a new report for the UK government.

The development of a new 54 billion-pound ($77.7 billion) grid expansion proposed by the National Grid must "proceed at pace, on almost a wartime footing given the growing impact of grid access constraints across the economy and the potential negative impact on investor confidence," Pick said in his report published on April 5.

The proposed holistic network design (HND) will reduce transmission costs by 5.5 billion pounds compared with radial links that offer less overall network capacity, National Grid said last year. The network operator is due to complete a review of the design later this year.

Appointed as the first UK offshore wind champion last year, Pick also said the remit of energy regulator Ofgem should be adapted to focus more on the UK's 2050 net zero target.

In a response letter, energy and climate minister Grant Shapps said the government would "consider the recommendations" in the report.

The UK aims to quadruple offshore wind capacity to 50 GW by 2030 and speed up onshore wind and solar build but developers fear delays in the permitting and grid connection phases. The government is reforming planning rules and grid connection regulation but developers want more specific targets and milestones to make stakeholders accountable.

Developers also want tax allowances and subsidy contracts that will compete with the U.S. and EU and mitigate inflation, fearing key sectors such as offshore wind could lose investors.

Last month, the government's Climate Change Committee (CCC) warned the UK must rapidly reform planning and regulations for renewable energy and publish a cohesive long-term strategy to achieve its goal of a decarbonised power system by 2035.

The government has not provided a "coherent strategy to achieve its goal, nor provided essential details on how it will encourage the necessary investment and infrastructure to be deployed over the next 12 years," the CCC said in a report published on March 9.

UK government commitments on nuclear and renewables are insufficient and a "rapid overhaul of the planning system and regulations is needed," Lord Deben, Chairman of the CCC, said.

                                             UK electricity generation by fuel type

                                                                   (Click image to enlarge)

Source: UK Department for Business, Energy and Industrial Strategy (BEIS), 2021.

The CCC urged the government to "clarify urgently and formalise the institutional responsibilities" of the recently-created future system operator (FSO), energy regulator Ofgem and government ministers, for the strategic planning and delivery of a net-zero power system.

"It is not clear where the responsibility lies for the design and operations of our modern energy system," Lord Deben said.

A UK strategy for decarbonising power was delayed when the government focused its efforts on protecting consumers against record high energy bills following Russia's invasion of Ukraine, the National Audit Office (NAO) said in a statement on March 1.

The energy ministry had planned to establish a clear pathway to decarbonisation by October 2022 but "scaled back its work" because it was "focusing attention on responses to record-high energy bills," the NAO said.

"The lack of a delivery plan risks diminishing the confidence of industry stakeholders, who have increasingly expressed concerns about how all the change and investment that is needed across the power sector will be brought together without a strategic vision," the audit office said.

"Similarly, the absence of a clear plan and the perception that there could be changes in government policies could deter external investors from providing funds for new infrastructure or lead them to increase the rates of return they require, ultimately increasing costs for energy consumers."

Maryland sets offshore wind target of 8.5 GW by 2035

The U.S. state of Maryland will aim to build 8.5 GW of offshore wind by 2035 to achieve its target of 100% power from clean energy sources, state governor Wes Moore announced March 29.

Maryland has thus far awarded four offshore wind contracts for a total capacity of 2 GW through two tender rounds. Developer Orsted won 1 GW of contracts for its Skipjack Wind 1 & 2 projects while U.S. Wind won 1 GW contracts for its MarWind 1 and Momentum Wind projects.

The Maryland administration is currently establishing new lease areas and ways to strengthen its offshore wind supply chain, it said. President Biden has set a target of 30 GW of offshore wind by 2030, requiring a massive expansion of supply chain and vessel infrastructure along the East Coast.

Governor Moore's office highlighted a "key partnership" between U.S Wind and Tradepoint Atlantic to build an offshore wind manufacturing yard at Sparrows Point in Baltimore at the location of the former Bethlehem Steel plant.

Orsted has already committed to using Tradepoint Atlantic as a logistics hub to assemble steel turbine foundation parts produced by Maryland company Crystal Steel at its Eastern Shore complex.

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