Chief executive’s view: Brent Cheshire, Dong Energy

The UK is ideally placed to take advantage of its renewable resources – and the public thinks it should. It’s time to press home our technological leadership, creating revenue and jobs.

Public support for renewable energy has remained encouragingly high in the latest Department of Energy and Climate Change (Decc) survey of public attitudes, with four out of five people supporting the use of renewable technologies to provide the UK’s electricity, fuel and heat.

This is among the headlines in the annual survey published on 29 April, which also shows that support for renewables has remained remarkably consistent over the past three years.

And that’s great news at a time when we need renewable technologies – like wind and solar power – to play their vital role in the UK’s transformation to low-carbon generation.

The time for talking is over. Things now need to change – and fast. A fifth of our current generating capacity will be lost as power stations are retired by 2020, and as much as half of our capacity will be gone a decade later.

The UK is bound by the Climate Change Act 2008, the world’s first legally binding climate change target. The aim is to reduce the UK’s greenhouse gas emissions by at least 80 per cent (from the 1990 baseline) by 2050. And the energy industry has a big role to play.

Moving to a more energy-efficient, low-carbon economy will help the country meet this target. It will also make the UK less reliant on imported fossil fuels and less exposed to higher energy prices in the future as the UK offshore exploration and production sector declines.

This is a time when we need our energy industry to be innovating, attracting investment and firing on all cylinders, and the Electricity Act 2013 set the framework for market reform to facilitate this.

Renewables are not the whole solution to the UK energy challenge, but they can play a very significant role.

We are going to need a diverse mix of generation to future-proof our energy supplies, but to meet climate change targets we need to ensure that we favour low-carbon generation by maximising the role that renewable technologies such as wind and solar power will play.

And the good news is that the UK renewable industry is maturing rapidly and we will be well placed to meet our target of providing 30 per cent of the nation’s electricity by 2020.

My own company, Dong Energy, is the global leader in offshore wind development and we are playing a growing role in helping to turn the target into a reality. We are proud of the fact that we have already committed ourselves to investments of more than £5 billion in the UK where today we employ more than 500 people.

The UK has the longest coastline of any country in Europe and the highest wind speeds, so this is a renewable resource that plays to our strengths. A study by Ernst and Young last year ranked the UK the top country in the world for investing in offshore wind.

Last month the government announced financial support for eight renewable projects that, by 2020, could provide up to £12 billion of private sector investment and support 8,500 jobs. They could also add a further 4.5GW of low-carbon electricity to Britain’s energy mix.

Dong Energy was extremely pleased to secure three of the five Financial Investment Decision Enabling (FIDE) contracts awarded by Decc to offshore wind projects. By awarding these contracts, the government has given more certainty to both consumers and companies that want to invest in new energy generation projects in the UK.

The FIDE contracts provide support for the first 15 years of the operation of a project, but not the substantial development or construction costs.

Subject to European Commission state aid approval and our own board’s investment decision, the contracts will underpin the operation of three windfarms capable of supplying the electricity needs of around two million homes.

And I am in no way ducking the fact that right now the cost of electricity produced from offshore windfarms, at around €150/MWh, is too high – hence the requirement for a subsidy for offshore wind. We have a challenge to overcome.

That’s why the industry is working hard to drive down costs. At Dong Energy we are committed to reducing costs by 35-40 per cent for projects that get the go-ahead in 2020. When we achieve that target of producing electricity at around €100/MWh, we will be competitive with other forms of energy generation.

We are leading the UK offshore industry, developing some of the world’s largest windfarms to achieve the scale we need to allow us to place bigger orders with suppliers who can develop bigger, more efficient wind turbines. We can standardise components and construction techniques, helping us drive down costs yet further. From 2020 onwards, offshore wind should be close to competing without subsidy.

At a time when energy security is so often in the news, there has never been a better time to exploit home-grown renewable resources such as offshore wind.

We have a real opportunity to press home the UK’s world leadership in the technology, to build and support the UK supply chain, and create direct and indirect jobs.