City region benefits from Nationally Significant Renewable Infrastructure
By Jonathan Riggall, Equity Director – Energy and Environment
The Government is celebrating a national success story in offshore wind, with the recent rounds of financial contract awards made to a number of developers. The market price has dropped and is now touted as being 50% cheaper than nuclear, putting it on par with the subsidies that support new gas generation plant.
The Government’s success was backing the right horse in renewable generation. Successive subsidy regimes and planning regulation has created the security for European energy companies such as RWE, Centrica, Eon and Dong Energy to invest in the UK and generate revenues from long term power generation.
At the Clean Break Summit, held in Grimsby this September, another missing link in this major infrastructure investment story was brought into focus. Local benefit from nationally significant renewable energy investment.
Local benefit from national need?
Perhaps you’ve never visited Grimsby? It’s a place that as a child and teenager I’ve visited often, with grandparents who rented land to farm outside Cleethorpes and the occasional visit to the mecca of coastal football grounds Blundell Park.
That said, I hadn’t though been back to Grimsby since 2005 and whilst I knew the economic landscape had changed, I wasn’t expecting what I found. In the 1980s and 90s, Grimsby Road, linking the town with Cleethorpes, was an active and functioning market place. It was lined with pubs, restaurants, entertainment and shops.
Last week I discovered an entirely different street. Shops, restaurants, arcades gone. A place where the lack of local money has meant that even the pubs have been boarded up. The only places open: a bizarre mix of furniture and second hand shops and tattoo and other parlours.
50 miles east of Grimsby, European energy companies are quite literally sinking billions of pounds into offshore wind energy that will power economic prosperity and growth.
At the Clean Break Summit, the new Member of Parliament for Great Grimsby, Melanie Onn, impassionedly spoke about how this investment supports local supply chains. Wind farm service ships use Grimsby Port, local catering companies provide services to project offices, with one of the companies recently sponsoring a 10km road race.
Ms Onn also noted that the majority of the financial benefit from the Humber’s offshore investment bypasses the town. Whereas 50 years ago the energy sector created jobs across northern cities in associated professions such as coal mining, energy intensive industries and brown power, this new fleet of generation technical doesn’t really have the same scale of supply chain or associated local economic benefits.
Grimsby though has opportunity in spades, and there is a political foundation for this from Greater Grimsby’s MP and the Humber LEP capacity in pulling investors together.
A colleague of mine, Andrew Clarke, fervently describes the need for infrastructure investment to regenerate as requiring a coalition for change: the investment in infrastructure focusing on the needs of the place it is investing through.
This requires investors to consider the economic benefit beyond their asset of interest, providing Corporate Governance or dare I say it ‘Corporate Responsibility’ beyond profit margins to the towns they work through.
Central Government also have a role to play here in creating an infrastructure framework that allows local authorities to benefit financially for supporting the National Power need.
Rewarding Authorities delivering the national need
Infrastructure capacity trading at a local level is not a new concept in the UK.
The Waste and Emissions Trading Act 2003 sector, for example, established such a fiscal infrastructure capacity trading mechanism for landfill capacity between local authorities known as the Landfill Allowance Trading Scheme (LATS).
Essentially where Local Authorities are unwilling to or constrained from allowing renewable development to progress they should contribute financially to Local Authorities that are allowing renewable capacity to be developed which underpins the UK’s national power capacity.
Ultimately, without these forward thinking Local Authorities that are enabling decarbonisation of our grid, national low carbon economic growth cannot occur.
Alternative approaches for extracting renewable energy infrastructure investment
Even at the Clean Break Summit there was constant reminder of the disparity between the intermittency of some renewable energy generation such as wind and solar compared to the constant National power demand. Increasingly energy storage (especially battery) is being hailed as the savour of this gap.
The UK is reliant on an international battery market primarily manufactured in Asia to deliver the scale of storage we need.
The UK though, with its access to European markets, ports for mineral ore imports, and power security would make an internationally secure place to become the European centre for large scale battery manufacture and European distribution.
In particular, this could potentially be a significant economic success for a port town, with available low cost land, at the edge of major intermittency from offshore renewables, with a large available labour pool, direct access to zero carbon electricity and the political backing of a forward thinking Minister and Local Enterprise Partnership.
Somewhere like Grimsby?