PIU says ‘go for green’

but keeps the nuclear option open

The Cabinet Offices Performance and Innovation Unit published the result of its long awaited review on energy policy in January. There had been a lot of speculation about what it would say - some predicted that it might sanction the construction of 10 new nuclear plants. However, setting the scene, Brian Wilson, the energy minister, who chaired the PIU reviews advisory group, cautioned the nuclear industry not to expect too much from the PIU review. In Dec., he told a conference sponsored by the British Nuclear Industry Forum and the British Nuclear Energy Society that the government could only "create the context" for the industry to propose new plants. He added that, even supposing ‘the PIU recommended acceptance of the nuclear industry's entire shopping list, it would not guarantee the building of a single new nuclear station’.

In the event, the PIU simply left the option open for nuclear companies to come forward with funding proposals if they so wished. It was not moved by the argument that more than three-quarters of nuclear capacity, 9GW, is due to close by 2020. ‘The electricity industry has had to cope with this scale of replacement and can do so again. A wide range of technologies is available: gas-fired stations; renewable power; CHP; coal-fired stations; energy from waste resources; coal mine methane’.

The PIU said ‘there is no current case for public support for the existing generation of nuclear technology’ but added ‘there are, however, good grounds for taking a positive stance to keeping the nuclear option open.’

Following this last line up, the PIU suggested that new nuclear projects should be allowed to benefit from the new market based ‘carbon credit’ type systems. However, they didn’t, as some had expected, suggest exemption from the Climate Change Levy, possibly since this would only yield 0.43p/kWh, whereas, in its submission to the PIU, British Energy had asked for a 1p/kWh subsidy. BE has estimated that CCL exemption would only be worth £2 m a year, and said that it would require other public subsidies and financial changes before it would invest in a new nuclear plant. The nuclear industry had made clear that it regarded the review as make-or-break time. "It is no exaggeration to say that British Nuclear Fuels and nuclear power are at the cross- roads", said BNFL’s chairman, Hugh Collum, last year. "Ahead of us lies either a long managed decline or a period of renewed growth." So the review does not sound too good news for them, certainly not in the short term, with the PIU talking about new cheaper reactors not being ready for15-20 years.

It is however very good news for renewables. The FT (13/12/01), commenting on the leaked draft, complained that the PIU was "timid in failing to put nuclear on a par with renewable energy", but the PIU certainly were not timid about pushing renewables to the fore. The headline commitment is the proposal that the UK aim to obtain 20% of its electricity from renewables by 2020. Strong commitments are also made to Combined Heat and Power and to energy efficiency, with targets for the latter being a 20% cut in demand by 2010 and a further 20% by 2020.

Some critics have been nervous about the high expectations for what renewables might be able to do, with for example Malcolm Grimston from the Royal Institute of International Affairs telling New Scientist that it was important not to repeat the ‘overselling’ mistake made by the nuclear industry 30 years ago. But set against that, over in Brussels, in Dec., the vice-president of the European Wind Energy Association, told an offshore wind energy conference in Brussels, that up to two-thirds of Europe’s electricity needs could come from this technology by 2020. He dubbed the development of major offshore wind energy parks as "the biggest energy revolution since the internal combustion engine".

What was perhaps more of a problem was the PIU’s conviction that the UK didn’t need to worry about an over-dependence on gas, since there was plenty of it, and security of supply was not an issue for the foreseeable future. Gas pipe lines are vulnerable things- even without terrorists. For example, a drunk with a rifle evidently recently disabled the Trans Alaska Pipeline!

What the PIU says

The Independent on Sunday (Dec 16th) claimed that the leaked draft ‘appears to have been heavily modified by officials in its final stages, to soften its approach on nuclear power and to make its emphasis less green’. Certainly some of the more colourful language seems to have disappeared. For example, the leaked (Dec.10th) version depicted nuclear as a technology with "an uncertain role", since "concerns about radioactive waste, accidents, terrorism and proliferation may limit or preclude its use".

However, although it leaves the door open to nuclear, and argued that it was not wise for the UK to unilaterally commit to the target of a 60% cut in carbon emissions, as had been proposed by the Royal Commission on Environmental Pollution, the final published version still feels quite radical. It calls for rapid expansion of renewables, suggesting that the offshore wind potential was 100TWh, the PV solar potential 200TWh and wave and tidal a massive 700MW (if that’s not a typing error for 70TWh, it’s twice total current UK electricity consumption!). It quotes prices for on land wind of 1.5-2.5p/kWh, offshore wind 2-3p/kWh and wave and tidal 4-8p/kWh, and suggests that the extra cost of dealing with intermittent sources would be only 0.1p/kWh up to a 10% national contribution and 0.2p for 20%. Even with a 45% national contribution from intermittent sources, the extra cost would only be around 0.3p/kWh.

The PIU suggest a target of obtaining 20% of UK electricity from renewables by 2020, adding another 39TWh to what should have been installed under the Renewables Obligation by 2010. Indeed, if the proposal for reducing energy demand by 20% by 2010 and a further 20% by 2020 were successful, it suggested that the renewable contribution might be much more than 20% by 2020. It accepted that the renewable target would be challenging, involving the installation of 1-2GW p.a. after 2010, but noted that Germany had installed 1.5GW of windplant in 1999 and 1.6GW in 2000 and looked like surpassing that in 2001.

In terms of implementation support, the PIU suggested that, when the Renewables Obligation was reviewed, as planned, in 2006/7, consideration should be given to further support for renewables to help achieve this target. The RO might add £12 p.a. to the cost of electricity, while the new 20% target might add £15 p.a. after 2010 (5-6%), but that could, in effect, be wiped out by the £20 p.a. saving that would result from the energy efficiency programme - led by DEFRA.

Meanwhile, it backed the recommendation from the Chief Scientific Advisor, who submitted a parallel report (see later) that R&D on renewables be increased to be in-line with the nearest EU rival country. In terms of which technical options to focus on, it argued rather tortuously that ‘maximizing deployment of cheaper technologies could contribute more to short term carbon emission reductions, but at the expense of having fewer options for the longer term. Opening up a wider range of options, including some deployment for each of them, suggests higher costs for present generation. It also means- given limits to acceptable total programme cost- less short term contributions to carbon emission reductions. In practice, neither extreme (cautious or highly ambitious) seems desirable; by 2020 policy needs to aim both for significant deployment of the cheaper renewables, but should not neglect the development of a wider range of future alternatives.’

Keeping options open and flexible is certainly a key concept in the PIU report. Thus a key principle is ‘the promotion of technological innovation to create and keep open options to meet future challenges; and to maintain flexibility in the face of uncertainty; and the need to avoid locking prematurely into options that may prove costly in future’.

That’s evidently the main reason they are fairly cautious about nuclear power- with its long lead in times. They did not want to lock in to a large nuclear programme, certainly not at present. Instead, they want to keep this open as an option, in case renewables, energy conservation and CHP do not deliver sufficiently in the future. They note that the proposals put to them by the nuclear industry were for a large 10GW programme of new build, but argue that ‘the desire for flexibility points to a preference for supporting a range of possibilities, rather than a large and relatively inflexible programme of investment such as is being proposed by the nuclear industry.’ Replying directly to the nuclear lobby’s call to ‘replace nuclear with nuclear’ the PIU say that ‘there is no requirement, in system terms, to replace any particular generation technology with the same type of generation’.

They were also clear that nuclear remained an expensive option, with the projected cost by 2020 being quoted as 2.5-4p/kWh (industry / PIU analysis) or 3-4p/kWh (PIU estimate). However, it might improve with new technology, although they saw that as 10-15 years away. Then there was the problem of public acceptability. This, they said, in slightly patronising terms, ‘can’t be taken for granted’. It ‘may or may not constitute a serious problem’ but ‘may improve if there is a more obvious need for the technology’. Given this sort of comment it is hardly surprising that some of the responses from the environmental lobby were less than flattering. Groups like Friends of the Earth had already indicated a commitment to fight any hint of backsliding on nuclear by the Labour government- which after all does have a policy of ‘diminishing reliance’ on nuclear.

Greenpeace chastised the PIU for not shutting the door to nuclear, and were clearly unhappy with the role played by the Energy Minister, Brian Wilson, who is well known to to be pro-nuclear. Wilson commented ‘The report is not about renewable versus nuclear, it is about balance and promoting innovation in new technologies. It stresses the potential for renewables and energy efficiency but also argues that the options of new investment in nuclear power and cleaner coal should be kept open’.

SERA, Labours own green lobby group, said they were ‘disappointed that the Energy Minister will not put the final nail in the nuclear industry coffin, despite clear analysis from the Cabinet Office Energy Review that a combination of energy efficiency, CHP and renewables can address Britain’s energy security problems and deliver the major reductions in greenhouse gas emissions’. They added ‘We are very concerned that all mention of the risks of reactor accidents and nuclear proliferation seem to have been deleted from the report at a late stage’.

So the battle lines are drawn on this issue- as well as some others. For example, SERA also argued that ‘the target of 20% renewable electricity by 2020 is overly cautious given our rich resources of wind, wave and tidal power. Indeed the analysis in the Review itself could easily back up a 30% renewables target if there was sufficient political will’.

Perhaps predictably, Tony Blair saw it all in international terms "It is striking that both security of supply and climate change issues are truly international. The UK cannot therefore only act through domestic policies, but must address these issues via international policies and agreement, particularly through EU market liberalisation and the Kyoto agreements".

Ah well, maybe it will all be sorted by the new Sustainable Energy Policy Unit the PIU says should be set up.

We will look at the Scenarios the PIU used in Renew 137. Meanwhile you can read the report in PDF at www.piu.gov.uk/2002/energy/report/index.htm

The Feature in Renew 136 looks at SERA’s submission to the PIU and we also look David Milborrows submission comparing the cost of nuclear power and renewables in the Technology section.

PIU: What next?

Now we have the PIU report, what happens next? It was a report to the government, and there is to be a period of public consultation followed by a White paper in response from the government in Oct.

Meanwhile, the Commons Environmental Audit Select Committee, which began an inquiry on Renewables at the start of 2001 and published written evidence received in May 2001, may carry the ball a bit further forward. The Committee is now taking further evidence, ‘in the light of the PIU review’ and is focussing on the impact of recent developments in energy policy such as the New Electricity Trading Arrangements and the Renewables Obligation; current policies to support renewables (including R&D and capital grants) and the likelihood of meeting Government targets in this area; the extent to which current developments reflect joined-up working between the parties involved (Government departments, Ofgem etc.). The House of Commons Select Committee on Trade and Industry has also looked at energy security and has some interesting ideas, and the DTI has yet to confirm the details of the Renewables Obligation, although, a draft legislative ‘order’ has been produced.

Some might see all this as just stalling for time and it certainly is frustrating. But at least it does keep pushing the renewables up the political agenda, and there is clearly value in having a wide ranging public debate over the PIU’s proposals. However, the real issue is what happens when big decisions finally have to be made? Or will the PIU report be just another tome buried under bureaucracy and trapped in a consultative dead end?

DTI on R&D

As we noted in Renew 135, the Department of Trade and Industry added its own last minute element to the PIU review with a contribution (added as an appendix) by the Chief Scientific Advisor looking at the overall allocations for Research, Development and Demonstration for energy - drawing on comments from, amongst others, the Carbon Trust, Imperial College, EST and OU EERU. The government currently allocates around £50m to RD&D on energy. The DTI review indicated that this should be expanded further and outlined what it saw as the key RD&D options within that programme - wave and tidal current systems, PV solar (especially polymers) and hydrogen storage related technology, plus energy efficiency and sequestration techniques. But they also wanted more work on nuclear waste and containment materials for fusion.

More Wave & Tidal Support

Backing this recommendation up, the DTI has allocated £1.1m to help develop the Stingray tidal current device, and is also supporting Wavegens work on a series of shore-line wave devices in the Western Isles. More in Renew 137.

• The PIU has also published a report on Resource Productivity, which we’ll review in Renew 137. It can be downloaded from the PIU web site.

..and funds for PV Plant

The Oxford based INTERSOLAR GROUP has been given government backing to build Europe’s largest Solar Photovoltaic factory - the Department of Trade and Industry has awarded them nearly £500,00. Intersolar hopes to develop a factory that will be able to produce solar cells at a cost of about 70p per watt, but the project will take two years of research and will cost an initial £1.2m. Philip Wolfe, chairman of Intersolar, told the Times: "Solar has been an expensive alternative to traditional energy sources, but Europe has a commitment to the expansion of renewable energy sources. By producing thin film cells at higher volume, Intersolar Group will significantly change the solar proposition.’

Intersolar already has a production plant in Bridgend, S. Wales, but the location of the new site has not yet been disclosed. See the Technology sectionof Renew 136 for more on PV.

...and Biomass

The DTI is giving a £2.9m grant to support a £7.3m project involving Alstom Power UK Ltd and First Renewables Ltd. aiming to develop advanced combustion technology for the generation of electricity from energy crops and other fuels from farming and forestry. It is seen as a follow up the ARBRE wood-chip gasification project. Energy crops are hoped to provide fuel for up to 1GW of new plant by 2010 but the high-efficiency gasification and turbine technology needs more development work.

plus Help for fuel poor

The UK will spend £15 m on pilot power and renewable energy schemes to help low-income households heat their homes better in winter. As part of the government's fuel poverty strategy to cut heating costs and ensure all poor households can afford to keep their homes sufficiently warm by 2010, the government will spend £10m on an energy-efficient combined heat and power project involving 6,000 households and £6ms on a scheme to use renewable energy to heat homes not linked to the gas grid. Other proposals include investigating the expansion of the gas network to rural areas and training more people to become gas fitters to install central heating systems. Source: Hansard, 29/11/0