Creating Sustainable Futures

21 March 2003

Speech Given By UK Energy Minister Brian Wilson at Renewables Conference in Stornoway on 21 March 2003

Can I first congratulate Comhairle nan Eilean Siar and all its partners in the Western Isles Alternative and Renewable Partnership on putting together such an excellent and constructive event. It is a pity that the Commissioner, who is also Vice-President of the Commission, had to pull out at the very last moment. It was very much against her own wishes and efforts, but l think everyone understands that the current circumstances are exceptional.

We meet just a few weeks after publication of the White Paper on Energy which attempted to chart a course for the United Kingdom's energy mix over the next 50 years. The White Paper grasped the nettle of carbon reduction, in order to combat global warming, as one of the great challenges of the 21st century. There is no point in paying lip-service to that imperative. We have to do something about it and that is why energy efficiency and renewable energy featured so prominently in our plans. We will, over the next few years, acquire a better understanding of what they are actually going to deliver. But the absolute certainty is that we have to spend that time promoting practical measures which are going to give them a real chance.

Here in the Western Isles, we are surrounded by some of the best renewable energy resources in Europe - the prevailing winds and the power of the ocean. This has long been recognised but little acted upon. It is a subject to which I am not a newcomer. Thirty years ago, when the old diesel power stations in Stornoway and South Uist were in need of reinforcement to meet growing demand, I argued that this offered an opportunity to make the Western Isles a testing ground for renewable energy, which could have been phased in as diesel was phased out. There was no from that idea from the then North of Scotland Hydro Electric Board which had long since shaken off its radical origins and was firmly wedded to more conventional engineering solutions; in this case, pylons through Skye and a cable across to Harris.

I can't help reflecting on how much further forward, both locally and nationally, if the renewables option had been taken seriously at that time. But while events moved on, the wind and the waves are still with us and, today, we are looking at something much more ambitious than what was regarded as a marginal and slightly eccentric proposition these 30 years ago. We are contemplating the real possibility that these islands could become a power house on the periphery, making a serious and environmentally sustainable contribution to the energy needs of the whole nation. That is a prize worth pursuing. And I commend those within this community who have recognised the scale of the opportunity and its economic implications for places which have suffered in the past from the sane peripherality. I remember the late Donald Dewar being in my wife's parents home for the first time, the last croft house in one of the last villages before America, perched on the edge of the Atlantic. "You're very remote here," said Donald. Joni's mother replied with genuine puzzlement: "Remote from what?" Which I have always thought was a great answer. Certainly not remote from decent human values. And, more relevantly today, not remote from wind, from waves, from tides but at their epicentre.

The windpower projects already proposed for Lewis could see more than 1000 megawatts of electricity being generated, contributing one per cent of the United Kingdom's electricity requirement. But nothing of that scale is straightforward. In spite of the massive goodwill which these projects enjoy locally, there are major challenges still to be overcome. I cannot emphasise strongly enough the point that there is no point in generating power - indeed, there is no prospect of that happening - unless we can ensure as part of the same package that it is capable of being carried to the markets which require it. Infrastructure is all. The existing electricity grid was built as a great public undertaking to match the resources of a coal and steel economy. We no longer see such projects as great public undertakings. Markets and regulators must pronounce while the state offers no more than guidance and helping hands. But I certainly believe that there lies therein a massive test of the current system. Is it capable of the investment, the technical solutions and - just as important - the largeness of mind to re-wire Britain in order to adapt to the age of renewables and of distributed generation. For the sake of this place, and for many others, the answers must be yes, yes, yes.

And the White Paper is quite clear on this point. The regulatory system must facilitate our aspirations for renewables and not place impediments in its way. I have no doubt that the private sector has the will to invest in renewables generation - we have plenty evidence of that on this island alone - but they also have the right to expect that the regulatory framework will deliver the necessary investment to extend and upgrade the grid, as a great national obligation. The focus of lobbying in support of renewable energy, and particularly from places like this, must move from specific projects or technologies to infrastructure because that, I believe, is the key. And forthcoming legislation to create a Britain-wide electricity market, setting out new trading and transmission arrangements, provides us in Government with an opportunity to take that philosophy forward.

Here on Lewis, we are already seeing the huge potential that exists for turning environmental virtue into economic benefit. To put it bluntly, our commitment to renewable energy can create a very substantial number of jobs and we all want a fair number of them to be here. The technology and the manufacturing has to come from somewhere. So this billion pound a year market which we are developing through the Renewables Obligation and other instruments will either pay to suck in imports or else it will become the home base for our own supply chain which can then go out and help to supply the world.

Recently, with the placing of orders for the first offshore wind farms, the scale of the opportunity began to manifest itself. The presence of Vestas Celtic is already beginning to transform the long-beleaguered economy of Kintyre. Vestas Celtic have now won a £75 million contract to carry out all of the offshore work on the Scroby Sands windfarm, off the coast of East Anglia, for Powergen Renewables. I am pleased to announce today that, as a direct result of this development, Vestas Celtic and Cambrian Engineering are at an advanced stage of negotiations for the first major offshore contract to come to the Arnish fabrication yard. The contract will be worth around £4 million for the building of piles destined for the Scroby Sands development. This is the supply chain we want to build. Last week, I announced approval for two more offshore windfarms off the coast of Cumbria and in the Thames Estuary. If we keep the projects coming, the supply chain will grow and the jobs will be sustained in places like Macrihanish and Arnish.

I pay tribute to the Highlands and Islands Enterprise network for having invested so heavily in all of this; first to ensure that Vestas came to Kintyre and then to ensure the re-opening of Arnish, where £7 million is currently being spent on the first phase of redevelopment and where Cambrian are signed up as the first tenants. Cambrian have already won the tower contract for the Fred Olsen Crystal Rig windfarm. They are scheduled to being operations at Arnish in mid-May and so there is now these two substantial orders before the doors are even open. This an outcome and a prospect which many people have worked towards. But important as these orders are, it should never be forgotten that the real raison d'etre for re-opening of Arnish lies in the major local projects which have the wholehearted support of this conference and this community. Detailed environmental studies are currently well underway.

I am also convinced that, if we are going to meet our target of 10% of the United Kingdom's electricity from renewables by 2010, we are also going to have to bring more technologies up to full commercialisation. That is why I am so keen on wave and tidal. I have been keen on them for a very long time, so I am particularly pleased to be in a position now to support the people who are capable of making it happen of giving the United Kingdom world leadership in these technologies. Earlier this year, I was able to confirm an award of £2.3 million to Wavegen to develop a cluster of near-to-shore stations off the Western Isles, building on the principles which are successfully implemented at Portnahaven on Islay, which is as far as I know the only wave power station operating commercially anywhere in the world. I am pleased to say that this work is going well and that the first of these machines will be under construction later this year, hopefully at Arnish. I am also pleased to announce that the DTI will put £1.2 million into the pot to assist HIE with the construction of the Marine Energy Test Centre in Orkney. But I want to do a lot more.

So I am announcing today a further £7 million of support for wave and tidal
energy, subject to EU approval under the rules on state funding, to keep the
momentum going and to ensure that we can both help to fund research and
development but also so that we are in a position, when current funding runs out next year, to offer capital grants in this crucial process of achieving commercial implementation. £2 million will be earmarked specifically for R and D.

Just as important, I am absolutely delighted to welcome a partnership which is being announced today by two of the Scottish companies which I admire most - Scottish and Southern Electricity and Weir of Cathcart - to invest primarily in wave and tidal. These are, by any standard, very serious players and I have no doubt that the expertise they can bring to bear will help to create a world-class, world-supplying wave and tidal industry in the United Kingdom. That is my clear-cut ambition.

For the time being, the biggest new contributor to our renewables target is going to be offshore wind.

We have identified areas round the UK coast where conditions are particularly favourable and it makes sense to concentrate early developments in these zones.

However, we are also looking further afield to waters beyond the 12 miIe limit and will shortly bring forward licensing proposals for that regime.

I am particularly anxious to build on the undoubted synergies which exist with the North Sea oil and gas industries.

Challenges which may appear insuperable to the rest of us are all in a days work for companies which are used to taking oil and gas out of the world's most hostile maritime environments.

This is why I am so positively inclined towards Talisman's plan to utilize existing oil and gas infrastructure to create a 1 gigawatt wind farm in the Moray Firth. I can announce that the DTI is supporting Talisman with its early studies which will, I hope, lead to a demonstrator project is 2004, possibly with EU support.

We need big hits in renewables both onshore and offshore, and this is one project which offers that tantalising prospect.

There is a lot going on. There is a lot to do and these are exciting times. But I want to finish by reinforcing the global developmental aspect of renewable energy. Within these islands, the arrival of electricity is well within living memory. Nothing did more to transform living standards and expectations. There are a couple of billion people in the world still without electricity. Many of them will never be reached by national grids. Most of them could be reached by renewables and distributed generation. And for them, as for us, lives would be transformed. There would be light to learn by. Power to run hospitals. Agriculture would be transformed. Small, mechanised businesses would become feasible. Communications would be transformed. There as here, energy is the great cross-cutting tool of economic development and that is a great challenge beyond, but not irrelevant to, the Western Isles.