Written Statement - Energy Wales Statement

ENERGY WALES STATEMENT

The First Minister in his Energy Wales Statements has identified the opportunity for Wales to harness its great energy potential to deliver a fairer and more prosperous Wales.

This Statement sets out how, in assuming portfolio responsibility for energy, I will continue the transition to a low carbon economy working with industry and other stakeholders - and recognising the need to create a stable, innovative, yet flexible environment for long term investment and employment creation.

The energy system in Wales and wider afield is on the threshold of great change driven by new energy, technology and low carbon energy transition objectives.  This change, in combination with the ever present affordability, efficiency and security of supply imperatives, offers huge opportunities and challenges that the Welsh Government is determined to meet.

With our long energy history, innovative universities, existing industrial heritage, energy infrastructure and abundant renewables resources on land and at sea, we are well placed to seize the opportunities generated by these exceptional changing forces.

Clarity and stability

I have taken advice from the Energy Wales Strategic Delivery Group, Energy and Environment Sector Panel and industry more widely. The overwhelming view is that energy is one of our most important economic imperatives, that the cost and security of energy continues to be key and that there is a need and opportunity to build upon the firm foundations embodied in the Energy Wales Statement issued in 2012.

Industry is seeking a stable and clear policy landscape in order to de-risk and facilitate energy investment. This need is compounded by the lack of clarity and stability at UK level. Despite repeated and consistent calls to UK Government, it is clear that Wales lacks parity with other parts of the UK on energy matters and the recent Budget announcement emphasises this.

It is also clear that the UK regulatory context is presenting real and immediate risks to the operation of business in Wales. Securing a robust Welsh position on matters such as energy costs, grid improvements, regulated markets, renewables developments, and energy intensive industry is vital if we are to instil the changes necessary for ongoing business sustainability.

In parallel and in the context of the St David’s Day announcement it is essential that Wales has a robust, joined-up position in place that not only shapes the agenda on new consenting powers but also drives all Welsh Government delivery and action on energy. This focused energy action must be progressed within an innovation framework that will enable a much smarter and efficient energy system in Wales.

The Vision for Energy

Our vision for energy is clear, we want to:

• safeguard and maximise the Welsh energy position through strong leadership across government;
• maximise the benefit to Wales of the transition to low carbon generation, for businesses, households and communities;
• maintain a business friendly and competitive environment for investment and affordable supply, and
• seek to secure parity and increased influence within the UK , and wider afield, for Wales and Welsh interests.

In practice this means building upon existing progress to secure a step change in delivering interventions, actions and policies that secure an “Energy Smart Wales” and maximise economic opportunities through both indigenous developments and attracting inward investments.  This will require an integrated and nimble approach to energy policy and energy developments across a number of key themes.

We want to see benefits maximised from resource efficient large-scale electricity generation and fuel supply. This means exploiting as many benefits as possible from all nuclear related investment in Wales which could have a total GVA contribution to the Welsh economy of £5.7Bn between 2013 and 2033. This also means maximising benefits from renewables, modernised coal and gas generation, profitable refineries, ports and LNG terminals. We want to see a diverse generation mix in Wales that produces affordable and secure supply.

There is a clear need and opportunity for businesses large and small to adopt more energy and resource efficiency programmes, with increased on site energy generation and growing an even stronger green products and services sector. We’re eager to see this action framed within the context of energy-smart homes, communities, towns and regions where we make best use of public assets that stimulate demonstrations of smart technologies and catalyse, where feasible, prolific distributed generation with local ownership.

Underpinning these energy ambitions is the urgent need to address electricity grid matters in Wales. Lack of grid capacity is stifling growth and in turn compromising the viability of businesses and communities across Wales. We therefore intend to challenge the current UK position both in terms of transmission and distribution and seek modernised and fit for purpose networks for Wales.

Similarly, it is clear that Wales, and the rest of the world, will not meet climate change mitigation objectives without world-class innovation and partnership based in universities and industry. We are determined to ensure that Welsh Government science and innovation policy and action reflects this so that low cost and low carbon energy solutions are secured.

Next Steps

Responding directly to the calls of business in Wales, I have established a new Energy Wales Unit that, in one team, focuses and consolidates Welsh Government energy policy and its effective and well co-ordinated delivery.

I am confident that creating this team signals to industry and stakeholders my intent to seize our energy opportunities by providing cross Government leadership and support.

Working with industry, the Unit will build upon existing progress to support growth in the Energy and Environment Sector including a specific focus on exploiting the enormous potential benefits from nuclear investments in Wales and on our borders. The Unit will also work with stakeholders to continue progressing the Green Growth agenda.

I have instructed the Unit, working across Government, to embark immediately on updating and developing energy policy to fully reflect Welsh ambitions and the entirety of the energy system including low carbon generation, infrastructure, demand reduction and the fossil fuel transition.

The team will now work with industry and representative bodies to define the core policy and delivery priorities that need to be driven hard to secure the Welsh position at the UK level and set the context for investment. This work will enable clarity on the range of skills, supply chain, business and R&D support needed to harness Wales’ energy potential.

Some of the core policy and delivery areas that I have asked the team to prioritise include marine energy (including demonstration zones and tidal range), grid, fossil fuels, onshore wind along with a low-carbon systems focus for our innovation support.

I will provide updates over the following months and will issue a Statement on progress by the Summer Recess, including what we will be doing across the Welsh Government to communicate the content and importance of this programme.