Renew On Line (UK) 49

4. Security of Supply Energy Security

Prof. Sir Hermann Bondi and Prof. Ian Fells raised the issue of energy security once again recently in a letter to the Times in which they argued that “A decade or two ago there was in this country a comfortable excess of  generating capacity over peak demand, but this margin has been allowed to be eroded almost to vanishing point”. 

This was picked up in a House of Lords debate on Jan 28th, led off by Lord Tombs, who asked how much new generating capacity (excluding wind power) the government expect to be commissioned during  2004, 2005 and 2006.  He was told that, according to data from National Grid Transco on the possible non-renewable future power stations in England and Wales that have the necessary legal consents, around 1.7 gigawatts of new capacity could be commissioned in 2004; 0.8GW in 2005; and 1.7GW in 2006.

Lord Tombs felt that that ‘the margins are inadequate’   and Lord Ezra asked how the generation gap could be filled longer term ‘in view of the fact that there is a reluctance to introduce sufficient new gas-fired plant, that the contribution from renewables is likely to be limited and that the Government have deferred their decision on new nuclear plant?’ 

Responding for the government, Lord Davies pointed to the 20% by 2020 target for renewables, but said that ‘if that target looked as if it were not realisable for any reason, it would be necessary to review the process and the programme whereby, for example, nuclear production is being run down’. But Lord Tombs was plainly not convinced that we could rely on achieving the renewable target: ‘it has the status of a letter written to  Father Christmas.’

Subsequently, in response to a Parliamentary Question in Feb. asking about the impact of large-scale wind farm development on energy security, Energy Minister Stephen Timms commented ‘Existing electricity trading arrangements incentivises market participants to deliver secure supplies and to manage the effects of  intermittent generation, along with other risks, in so doing. Our  proposals for BETTA will ensure that market participants in all parts of Great Britain face a uniform set of trading arrangements.  Analysis carried out as part of the White Paper process shows that the  electricity system could cope with an increasing reliance on renewable generation, including wind. The White Paper analysis also highlights that as the proportion of intermittent generation increases, so does the  cost of maintaining stable supplies. These costs need to be managed and new ways found to minimise them. We are already funding research into this through the DTI’s Renewable Energy programme and the EPSRC  SUPERGEN programme. In addition, as part of our current capital grant programme we allocated in 2002 an  additional £4m to facilitate the demonstration of new control, storage and metering technologies.  DTI and Ofgem will continue to monitor electricity security issues through the Joint Electricity Security of Supply working group.’

OFGEM say no to transmission bonus

Having been unable to introduce a special charge for long distance transmission in BETTA, the new British Electricity Trading and Transmission Arrangements, Ofgem, the energy regulator, seem to have gone on the offensive. Its  Chairman, Sir John Mogg, has opposed the Government’s proposal to consider amending the Energy Bill to allow subsidies to be given to renewable generators located in remote parts of Scotland. He said: “To amend the Energy Bill in this way is unnecessary and misguided. It would mean that renewable generators will pay less to transmit their electricity than traditional generators. A great deal is already being done to encourage renewable generation. The Renewables Obligation alone is worth around £45 extra for every megawatt hour of electricity produced. This is providing additional financial support of at least £485m to the renewables industry this year alone.”

He added “There is no evidence that further investment in renewable sources of electricity would result from a further subsidy of this sort. Indeed, as a result, some Scottish renewables would receive a subsidy that other renewable generators- even in Scotland and elsewhere in the UK- would not. If the Government proceeds in this way it will represent an unwelcome move away from the principles of cost-reflective charging for transmitting generation. Cost reflective charging is one of the cornerstones of the electricity generation market. The Government’s ideas sit uncomfortably with the new European Electricity Directive which aims to promote competitive energy markets. Competitive markets have brought great benefits to consumers and will continue to ensure that environmental goals are achieved in the most efficient way possible. For competition to flourish companies need a stable regulatory environment without Government interference and should be able to compete on a level playing field. As the independent regulator, we made this clear to Government over many months. It is regrettable, even if the consequential cost increases are small, that GB customers will be faced by another upward pressure on their fuel bills.”

In his statement to the House of Lords on 12th Feb., Lord Davies of Oldham had said: “As part of the consultation on transmission charges issued in August, the Government raised the question of whether special dispensation was needed for renewable generators in peripheral areas with high renewable potential, which would otherwise be affected by the highest transmission charges, in order that the Government’s renewable targets are met. We are prepared to look at discretion being exercised in this respect. We are not in the position to have the agreed solution on this yet. But we are working towards the objective that there needs to be an exception for this group of renewables. It is for that reason that we are agreeing to consider the principle of taking a power to give renewables in specified areas some dispensation to protect them from the high transmission charges.”

This issue won’t go away. Do we subsidise long distance transmission of green power  or can we rely on local generation ? More in Renew 150.

 BBC puts the lights out

BBC TV’s ‘If’ documentary and follow up Newsnight discussion in March put the energy security issue centre stage.  Their scenario, set in the cold winter of 2010, had a terrorist attack on a Russian gas plant cutting off gas supplies to the UK. With the UK by then being heavily reliant on gas for electricty generation, a catastrophic breakdown followed- aided by most  of the wind farms being becalmed. The remaining coal and nuclear plants could not cope. The message was that the competitive market meant that we were operating at the margin of security with many plants having been mothballed as not economically viable and not enough available for emergency back up.  We also have no gas storage reserves- unlike Germany who keeps several weeks supply in hand. The other obvious solution was- stop aiming for the lowest possible prices. Then we could start getting more renewables on line (e.g. wave and tidal) and price increases should stimulate energy conservation. But will the government risk pushing prices up? It’s maybe easier  for them to hope that a crisis like this never happens- or that Alegeria will come to our aid if it does!

* The Royal Academy of Engineering published a report coinciding  with the BBC docudrama which concluded that onshore wind generation was the cheapest renewable, but with back up, ‘it costs two and a half times as much as gas or nuclear’.   More in Renew 150

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