Analysis Of The Uk Renewable Energy Industry Environmental Sciences Essay

Analysis Of The Uk Renewable Energy Industry Environmental Sciences Essay Renewable energy is the energy generated from natural resources such as biomass, sunlight, wind, rain, tides, and geothermal heat, which are renewable, that is, naturally replenished(Wikipedia, 2010). Renewable energy technologies are essential contributors to energy supply portfolio, as they contribute to world energy security, reduce dependency on fossil fuels, and provide opportunities for mitigating greenhouse gases (IEA, 2007). Renewable energy is also considered by some to be a potentially significant contributor toward the economic development of rural areas, a means of reducing poverty through the creation of employment and improving the quality of lives (Mark et al, 2008). Renewable energy sources were very unpopular in the past decades because of their comparative cost disadvantage. With the exception of large hydropower, combustible biomass, and larger geothermal projects, the average cost of renewable energy are generally not competitive with the wholesale electricity an d fossil fuel prices(IEA, 2007). However, this decade has witnessed a tremendous development in renewable energy sector. The rising oil prices, issue of global warming , carbon gas emission, terrorism and political instability in many oil producing countries in the middle east are the major forces driving this development. The International Energy Agency estimates that nearly 50% of global electricity supplies will need to come from renewable energy sources in order to reduce carbon dioxide emission by 50% by 2050 and minimise significant, irreversible climate change impacts (IEA, 2008). During the five- years period from the end of 2004 -2009, worldwide renewable energy grew at the rates of 10-60% for many technologies (REN21, 2010). In 2008 for the first time, more renewable energy than convectional power capacity was added in both European Union and United States, demonstrating â€Å"a fundamental transition† of the world’s energy markets towards renewable (Eric et al, 2009). Renewable energy sector is growing at a very amazing rate in UK. Between 2003 and 2009 there was 138 per cent increase in power generation from renewables in the UK, but faster rates of growth were recorded in Northern Ireland (702 per cent), East Midlands (268 per cent), North East (211 per cent), Scotland (188 per cent), South East (146 per cent) and Yorkshire and the Humber (139 per cent) (DECC, 2010). Higher growth rate is expected in the next decade. This can be inferred from the fact that power generation from the UK’s oil and gas and nuclear reactors have been on a long-term downward trend and tend towards the end of their life span (Keynote, 2008). As a result, UK government has devised a comprehensive approach to support the development of the renewable energy sector through the UK renewable energy strategy 2009. Renewable energy in UK is supported through a range of measures. The renewable obligation Order requires electricity suppliers to purchase a spec ified amount of the electricity they supply from renewable sources (Keynote, 2010). Renewable Obligation Certificates (ROCs) are obtained to demonstrate that renewable sources have been used. The climate change levy is a fossil-fuel tax from which exemptions can be obtained by using certain renewable technologies. Capital grants are available for research and development for a wide range of renewable energy projects. Grants are also available for the cultivation of energy crops. Obviously, these are good incentives to stimulate investments in renewable energy. However, investors need assurance that these incentives and subsidies will be available over a larger part of the product life cycle and not just trap-in-incentives. This will enable renewable energy companies to build a more stable and viable strategic plan to take best advantage of the incentives.