Furthermore, in time, as a leader in this sector, the UKis likely to benefit from exports to the global economy.CONCLUSIONThe need to maintain and potentially increase overallgeneration capacity, and to significantly increase thelevel of renewable generation, creates a very strongcase for offshore wind playing a major role in the UK'senergy mix over the next decade. It will replace thecapacity which the UK is losing. As a proventechnology that can be deployed on a large scale,offshore wind will be a key component to the UKmeeting its targets for reduced CO2 emissions by2020. Offshore wind is a low-carbon technology thatcan be deployed on a sufficiently large scale within thenext ten years - the new generation of nuclear stationsare likely to have a longer lead time with little newcapacity expected to be operational before the early2020s. And not least it is an indigenous resource,contributing to energy security.Achieving the promise still presents a single key issue:delivering to time. Efficient markets that are free toperform will deliver the programme to achievemaximum economic benefit to the market.Unfortunately, that does not necessarily coincide withthe public imperative to deliver to the timescales at anacceptable cost. To square this circle, there is a clearneed for a new public- private partnership model whichaligns the public imperative and the private sectorneeds. It is a compelling story to consider such aproposition, and there would appear to be, at least inthe UK, a willingness to contemplate what this couldlook like. Contrary to the outdated believes of twentiethcentury free market economics, such positiveintervention by the Government is being welcomed bythe private sector as an opportunity to place risks in thehands of those who are more able to manage them.It can only be a truism that the delivery of the UK'senergy and power needs to the timescales availablewhile protecting the way of life that the country isaccustomed to can only come from new ways ofthinking. Believing in that breeds confidence in thepublic, in industry and in investors. And confidence isunderlined by the fact that failure is not an option. ntechnology, commodities, the ebbs and flows ofcapital, long-term planning and execution horizons,and defined lives of assets (usually 20-25 years),which are shorter than investments in other sectors.While the investment amounts targeted for UKoffshore wind are large, they are well within thecapability of international markets. The global energysector invests US$80 to US$120 billion every year -and a large proportion of this is in some exoticjurisdictions. This global capability has been wellestablished for over 25 years, and in large partdeveloped from and deployed from the UK.There is a perception of "above normal" risk withoffshore wind, and "new" associated with the industry,where costs and risk of failure in each stage ofplanning, development, procurement, constructionand operation are unknown. New technology, which isyet to be proven, is considered to be required and leadsto investment in infrastructure such as ports, ships,and equipment manufacture.In balance, there is a perception of "below normal"returns from the sector. The current economic climate,including the weakness of the Sterling, has added toupfront capital costs - reducing further returns thatinvestors might expect from these investments.Capital costs have gone up from £2.6m/MW to around£3.2m/MW, and returns on equity are assessedbetween 8 and 10 per cent per annum. The UK tariffregime - while much improved from inception in 2002- contains a higher level of uncertainty than isperceived with other regulatory incentive programmes.In practise, and despite these overarching issues,industry has responded very positively. Utilities, energycompanies and other investors have already invested inUS$3.0 billion in the off-shore wind sector andcommitted a further US$5 billion to near termprojects. This can be partially explained by a numberof perceptions by the sector. There is wide acceptancethat the UK Government will continue to make thesector a priority and help in reducing risks andincreasing return. A large measure of the commitmentthat is being made in the Off-Shore wind sector isbased on the cost and risk reduction that is expected toaccrue from the cumulative "learning" impact as aresult of early deployment of infrastructure and supplychain between 2010-2015. The UK is at the forefrontof development, a key driver for industry is thatexperience gathered in the UK will in time be rolled outglobally. And while investors are credible and theircommitment strong, they are obligated to beopportunistic in the uptake of investments dependingon how attractive these sectors turn out to be.There is a pioneering element relating to theimplementation of off-shore wind which should berecognised. However, there is prior experience both inthe UK (and globally) in implementing such a sector.RENEWABLE ENERGY081Above: Director of MarineEstate, the Crown Estate,Rob HastingsBIOGRAPHYRob Hastings is The Crown Estate's Director of theMarine Estate. His career has included working in theOffshore Oil and Gas industry, followed by six yearsdeveloping and managing projects and businesses inthe UK wind energy industry, including as a directorof Shell Wind Energy Limited and a Director of theBritish Wind Energy Association. Rob is a member ofthe UK Government's Renewable Advisory Board(RAB) chaired by the Minister of Energy.
he UK's CRC Energy Efficiency Scheme is now in effect, impacting 20,000 of the largest public and private sectororganisations. With its regulatoryrequirements forcing businesses to report on theirenergy consumption and carbon emissions, it is vitalthat the right software systems are in place to ensurecompliance. The CRC Energy Efficiency Scheme (formerly knownas the Carbon Reduction Commitment) is a mandatorycarbon emissions trading scheme in the UK. It appliesto any organisation consuming more than 6,000MWhper year of electricity - equivalent to an annualelectricity bill of about £500,000 - and is designed tohighlight and drive down energy use by big business.The scheme, which came into effect in April 2010, isa regulatory incentive to, firstly, raise awareness aboutenergy consumption and environmental implications,and, secondly, improve energy efficiency across theseorganisations. Unsurprisingly, the ultimate intention ofthe scheme is to help meet the UK's target of cuttinggreenhouse gas emissions by at least 80 per cent by 2050.Qualification for CRC is based solely on electricityconsumption, but once in the scheme, companies willneed to measure and report on emissions fromelectricity, gas and static fuel consumption. There are two key aspects to the CRC Energy EfficiencyScheme:. Measuring and monitoring the CO2 emissions of theUK's larger energy users; and. Reducing emissions using a financial incentive - byimposing a cost on CO2 emissions.Each year, all qualifying organisations must report ontheir energy consumption levels and resultant carbonemissions so that it can be determined whether theseare inappropriately high, and whether enough is beingdone by these organisations to reduce emissions. Qualifying organisations are also required to purchaseallowances from Government for each tonne of carbonthey believe they will emit for each annual reportingyear (excluding the first year in the introductoryphase).The first year of reporting is already underway, fromApril 2010, with the first sales of allowances to be heldin April 2011. During the introductory phase, allcarbon emission allowances will be sold at a fixed priceof £12 per tonne of CO2. From April 2013, allowanceswill be auctioned by the government, with feweravailable each year. Proceeds from the sale of allowances will bedistributed back among the organisations within thescheme, based on their progress with emissions. Abonus or penalty will be applied based on the extent towhich companies have reduced their emissions - ornot - compared with other participating organisations. Essentially, the scheme fines those who do not takeproactive measures to cut carbon.The CRC is a serious initiative, with seriousimplications for organisations that fail to cooperate.These range from escalating fines for registration andreporting delays (starting from £5,000) and penaltiesof £40 for each tonne of CO2 incorrectly reported(applied wherever there is a margin of error greaterthan 5 per cent), to imprisonment of up to three yearsfor deliberate omissions or manipulation of the data.Right: To help reducecarbon emissions ITequipment that uses lessenergy consumption is away forward THE SOFTWARE IMPLICATIONS OF THE CRC ENERGY EFFICIENCY SCHEME082INFORMATION TECHNOLOGYMARK THOMPSON, MANAGING DIRECTOR, COA SOLUTIONS T" "THE ULTIMATEINTENTION OF THESCHEME IS TOHELP MEET THEUK'S TARGET OF CUTTINGGREENHOUSE GASEMISSIONS BY ATLEAST 80 PERCENT BY 2050 ?