5. Energy Policy developments 

CAT’s ‘Zero Carbon’ plan 

The pioneering Centre for Alternative Technology in Wales has produced a radical new UK scenario,  Zero Carbon Britain, in which renewables supply ~100% of electricity by 2027, with wind, wave & pumped/battery storage playing major roles, and electric vehicles being widely used.  And primary energy use is cut  by 50%!   www.zerocarbonbritain.com

Godfrey Boyle from OU   EERU has also produced a scenario with offshore wind at 26% by 2024. More on both in Renew 170.

Renewable, CCS, nuclear ‘We can’t do all three’ 

‘If we attempt to promote both nuclear power and carbon capture we risk undermining early investment in carbon capture, and, in the long term, we risk crowding out renewables. New analysis for the Liberal Democrat parliamentary party shows exactly that: by 2050 the effect of allowing nuclear power to operate alongside carbon capture and renewables is to reduce the contribution of wind power and wave power. It will hardly affect the share of gas and coal carbon capture- largely because nuclear cannot compete economically in the role of flexibly balancing the electricity grid. That would not leave us significantly better off in terms of avoiding imported gas, but it would leave farther away a fully sustainable system.’  

David Howarth, Lib Dem spokesman on Energy, Independent May 23 2007 

Oxford on Security  

According to Lord (Chris) Patten of Barnes, chair of an Oxford University task force looking at how energy insecurity is affecting UK foreign policy and development assistance, ‘Britain’s energy policy just doesn’t stack up. It won’t deliver security. It won’t deliver on our commitments on climate change.’  He added ‘The government’s latest energy review underlines that the UK has a set of energy policies that don’t stack up’. The groups report, ‘Energy, Politics and Poverty’ says UK policy is a hotchpotch of measures that is unlikely to deliver the government’s vision. It says that we need new low carbon capacity, but warns that ‘current UK performance in energy investment is slow, cautious and out of step with the urgency of the problem’ e.g. ‘if there were to be no nuclear rebuild, then a large scale investment in alternative low carbon technologies would be needed’.

Security of supply is seen as central. At the EU level, the report calls on UK government to push more vigorously for ‘completion of the physical European grid for gas and electricity with common carrier obligations for all EU states, ensuring that individual European states do not seek to guarantee energy security for themselves at the expense of others’ and to reform the EU Emission Trading Scheme, to deliver the EU’s new target of a 20% emission cut by 2020. It also wants ‘completion of the single market for energy, including unbundling of networks and enforcement of existing competition law against national champions’ and ‘improved EU arrangements for sharing storage in times of crisis’. And it wants ‘more support for energy R&D focused on viable technologies especially renewables, and carbon capture & sequestration, for which publicly funded demonstration projects are a matter of priority to be able to reach the ambitious targets set by the EU’, plus ‘EU minimum standards for energy efficiency’.

In terms of the UK, in addition to substantial investment in  Carbon Capture and Storage ‘as a matter of urgency’, it calls for ‘increased investment in renewable energy related R&D, with national application of the targets recently set by the EU’ and more backing for energy efficiency ‘through government support for R&D and/or through regulatory reform’.

Calls for more R&D seem a little odd: it’s not R&D that’s needed so much as deployment of known technologies- and help for those struggling to get to the market  But it does at least make a clear case for a decision on nuclear: ‘if nuclear capacity is to be replaced, act now to ensure standardisation of technology, support for planning applications, and clarity over treatment of nuclear in climate change targets and policy. If nuclear is not to be replaced, commence a massive investment in low-carbon alternatives such as renewables.’

In terms of climate change and global development, the  UK ‘should work to put adaptation at the heart of global development assistance programming, ensuring that aid and climate change policies seriously appraise and respond to existing risks and changes in environment, water supply, and agriculture, in the poorest countries of the world. Britain and the EU should take the lead in developing the capacity of countries in sub-Saharan Africa to carry out the meteorological monitoring needed to anticipate threats posed by climate change.’  

See: www.globaleconomicgovernance.org/  

UKERC on risk  

The UK Energy Research Centre’s report: ‘Investing in Electricity Generation: the role of costs, incentives and risks’, says generation costs (£/kWh) are not the only issue: a lack of attention to investor risk could threaten ambitious policy goals related to climate change and energy security. It argues that ‘policy must be designed with the investment risks, not just technology costs, in mind. This is not because concern with costs is wrong but because costs are only one part of the equation.’  UKERC say that cost per unit of output ‘are used to provide a ‘ballpark’ guide to the levels of support needed (if any) to encourage uptake of different technologies. They can also help to indicate the cost of meeting public policy objectives such as reducing CO2 emissions, and whether there is a rationale for such support.’

However, they claim that ‘While cost estimates can help indicate whether support is warranted, cost alone is not always a good guide to how to intervene. This is because the private companies making the investments will take into account a range of factors that are not captured well, or at all, in levelised cost data. Investment is driven by expected returns, which are assessed in the light of a range of risks related to both costs and revenues. Revenue risks are not captured in estimates of cost or assessments of cost related risks.’

RO v REFIT 

Crucially, the UKERC says, policy design can affect revenue risks e.g. ‘fixed price tariffs (such as the German ‘feed in tariffs’) and market based schemes (such as the UK Renewables Obligation) differ in terms of risk allocation. The former passes risks through to consumers, since prices are fixed. The latter exposes developers to price risk.’ They suggest that ‘Fixed price tariff schemes may be most appropriate for initial roll out of emerging technologies; those that are demonstrated, but are yet to be used on a large scale, are subject to considerable technology risk and have yet to benefit from extensive ‘learning by using’ e.g. offshore wind, also possibly carbon capture,’ while ‘market based schemes are generally most suited to creating large markets for well proven technologies, or to incentivise least cost means for near-term carbon reduction e.g. onshore wind and a range of fuel switching/efficiency improvements made attractive by the EU Emissions Trading Scheme’. They note that ‘“One size fits all” pricing in the ROC market has created a strong incentive for mature and lower cost technologies, and does not foster uptake of new or more expensive technologies. Some see a “gap in economics” for offshore wind, which in turn is raising questions about both the attainment of the 2010 goal, and the need for additional support or modification to ensure a diversified portfolio.’

Of course REFIT does have its problems. ‘Development of “low quality” wind sites that attain commercial viability because of the feed-in tariff, has occurred. Although financiers prefer the clear price structure, there is a concern that if the output is too low (e.g. 15% capacity factor) this will not be sustainable for the sector in the long term- raising the prospect of public or political pressure for change due to unacceptable cost.’  But in terms of the total on-land wind capacity, Germany has done very much better than the UK- and also in terms of net costs/kW and even per kWh. And, UKERC suggest, that’s also true when you compare the UK & Danish offshore wind programmes: ‘the price paid for offshore wind output in Denmark, under which large wind farms are operating successfully, is around 50% of the cost per MWh estimated for UK offshore wind,’ where many projects are stalled, due in part to the varying market-determined ROC prices.  

‘Coal better than wind’  

Clean coal is cheaper than wind, according to a report from Mitsui Babcock on ‘Clean Coal Technology and the Energy Review’.  It claims capital cost of £200 to £860 per kilowatt for clean coal, compared to £630 to £740 per kW for onshore wind, with electricity costs of 4.8 to 5.3 pence per kWh, as well as two years for planning and another two years for construction, with medium risk for intermittent power. The report says that offshore wind needs £780 to £920 per kW for capital costs, and 6.3 to 7.2 p/kWh. It also needs two years for planning and two years for construction, but is rated as high risk. It concludes ‘Fitting clean coal technology to the UK’s 16 power plants would cost an estimated £6 bn. In comparison, 2,000 wind turbines are being put up in the UK over the next six years at a cost of £9 bn. Clean coal technology is the only short term solution to environmental, economic and security of supply challenges with a vital role as a long term solution within a diverse energy portfolio.’  It adds ‘Government must also invest in nuclear power to replace existing plants. Nuclear energy is climate friendly, a complement to Clean Coal and essential to securing a diverse energy portfolio. Carbon-abated fossil fuels (including CCS) can complement end-use energy efficiency, renewables, nuclear and fuel-switching to reduce carbon dioxide emissions. Clean coal delivers cheaper electricity than gas or renewables.’

Of course the use of carbon capture and storage has still to be proven on a large scale- and for the long term. When he launched the new Energy White paper, which backed CCS, Alistair Darling said the government was in talks with a ‘half a dozen’ companies about CCS. He said it would ‘take time’ to set up a CCS system but Britain was at the ‘forefront’ of developing such technology. However he added that he was reluctant to say ‘let’s abandon nuclear’ because CCS ‘may never work’ or be available. 

Certainly it doesn’t bode well that BP has decided to pull out of the plan to build a pioneering £330m gas-fired CCS power plant in Peterhead, Scotland, which was to be linked to the Miller field. Evidently BP felt there was not enough government support. The new Energy White paper noted that the 2007 Budget had announced a competition to demonstrate commercial scale CCS on power generation in the UK, in Nov. 2007, with the aim of having the demonstration operating early in the next decade.  

REF backs tidal v wind  

The Renewable Energy Foundation have been backing tidal current technology- as better than wind power. Dr John Constable, from REF, told the NE Journal (June 9th):

“Wind energy does have a role, but things have been done back to front. Tidal technology is overwhelmingly superior. While we are at least five years off utilising it large-scale, for commercial means, it is set to become highly valuable.” 

Speaking at a press launch of NaRECs new Tidal test centre,  he added “We are beginning to see sanity dawning in the world of renewable energy”.

The Journal also quoted Northumberland farmer Andrew Joicey, a member of Save Our Unspoilt Landscape (Soul) group: “It’s very pleasing to hear we are now getting to the stage of properly testing the tidal resource. Harnessing the power of the tides is going to be far more significant in contributing resources than the power of the wind.”

• The reality may be somewhat different. For example, the Renewable Energy Association commissioned a review of the potential of renewable energy in preparation for the energy review in 2006.  It put the total long term ‘economic’ potential at 49-81% of 2004 electricity sales, with offshore wind offering around 25% of the renewable total. Interestingly biomass was not far behind  and wave was put at around 14%. But Tidal came out at under 4%. That may be pessimistic- the theoretical tidal current resource is put as up to 18%, but then as the REA report noted, the theoretical wind resource, offshore included, is several times UK electricity needs.

• www.r-e-a.net/article_default_view.fcm?section=1&articleid=1852

New Scenarios: wind leads

 The CAT’s new Zero Carbon Britain energy scenario (see earlier) has a massive amount of wind power- 474TWh.  Less dramatic, but also suggesting that wind can play a major role, is the ‘no nuclear or carbon sequestration’ scenario in the new MARKAL modelling report by the UK Energy Research Centre:  www.ukerc.ac.uk/content/view/406/604  

 Bye Bye DTI...

 Following Gordon Brown’s ascendancy as PM, the Department for  Trade and Industry is now replaced in part by a new Department for Business, Enterprise & Regulatory Reform (DBERR) headed  by John Hutton MP. It still includes energy, with Malcolm Wicks back as Energy Minister, but the DTI’s old Science and Innovation support activities now fall under the new Department of Innovation, Universities and Skills (DIUS).  Hilary Benn is the new Secretary of  State for Environment, Food & Rural Affairs- but otherwise DEFRA  is unchanged.  For more see www.pm.gov.uk/output/Page2988.asp