Lest I be accused of cherry picking, I am going to quote the entire final chapter of the report together with supporting paragraphs from the report.
CHAPTER 7: RECOMMENDATIONS AND CONCLUSIONS
232. We cannot consider renewable energy in isolation from the rest of the UK energy system and we support measures to include nuclear plants as an essential element of the UK's energy mix (paragraph 74).
(74. All the cost estimates showed that nuclear power was cheaper than renewable energy. The cost of nuclear power is little affected by the oil price, although the uncertainty over the cost of decommissioning and waste disposal is a unique risk for nuclear stations. Nuclear plants have very low emissions and are not affected by changes in the cost of carbon. We cannot consider renewable energy in isolation from the rest of the UK energy system and we support measures to include nuclear plants as an essential element of the UK's energy mix.)
233. The cost of electricity from onshore wind farms at good locations would only be comparable with that from fossil fuel generators when the prices of oil, gas and coal are very high or allowance is made for the price imposed for carbon emissions permits (effectively a tax). It is more expensive than nuclear generated power—base cost 7 pence per kWh, as opposed to around 4 pence per kWh for the other technologies. Offshore wind, biomass, wave and tidal power are even more expensive. And these estimates exclude the additional costs of integrating more renewable generation into Britain's electricity grid (paragraph 74).
234. Future developments depend upon many variable factors But it seems clear that the base costs of generation of electricity from onshore wind are likely to remain considerably higher than those of fossil or nuclear generation and that costs of generation of marine or solar renewable electricity are higher still (paragraph 85). We hope that the Energy Technologies Institute's work will yield technological advance and lower costs. The Government should consider, perhaps in collaboration with others, offering a substantial annual prize for the best technological contribution to renewable energy development (paragraph 93).
(93. We hope that the ETI's work will yield technological advance and lower costs. The Government should consider, perhaps in collaboration with others, offering a substantial annual prize for the best technological contribution to renewable energy development. An initiative on these lines might help set the scene for a wider effort by the Government to encourage and promote research across on a range of technologies aimed at finding new and cost-efficient ways to reduce carbon emissions. We return to this theme in Chapter 6.)
235. Although their declared purpose is to improve the environment, it is clear that renewable energy installations can also have adverse environmental impacts which the Government should bear in mind as it weighs the benefits and costs of expansion of renewable generation (paragraph 96).
236. Fluctuations in wind speed lead to short term changes in electricity output from wind farms. Greater use of wind power and other intermittent renewable sources therefore requires more backup generation capacity to respond very quickly to, for example, reductions in the output of wind turbines when the wind drops. But the technical challenges and costs of backup generation on a scale large enough to balance an electricity system with a high proportion of intermittent renewable generation are still uncertain. Whereas the highest share of intermittent renewable electricity now being generated in Europe is 15% in Denmark, the UK is expected to reach a share of some 30%-40%. We recommend that the Government should ensure that further work is carried out to clarify the costs and encourage development of technical solutions to deal with intermittency (paragraph 104).
237. The need to part-load conventional plant to balance the fluctuations in wind output does not have a significant impact on the net carbon savings from wind generation (paragraph 105).
(105. Running a conventional plant at part load to provide spinning reserve reduces efficiency which leads to higher emissions per unit of electricity actually generated at that plant. Some commentators, such as Campbell Dunford of the Renewable Energy Foundation, argue that this might have offset the CO2 savings from renewable generation in Denmark. Denmark's carbon emissions per kWh generated have fluctuated from year to year, although the trend is steeply downwards, as set out in Appendix 7. Calculations based on the loss of efficiency from running a power station at part load, and the amount of extra reserve required, also suggest that the extra carbon emissions in the UK from additional spinning reserve would be very small in comparison to the savings from renewable generation. The Government has estimated the net saving from raising the share of renewable electricity to 32% to be about 45-50 million tonnes of carbon dioxide—about 8-9% of total CO2 emissions—after taking account of the cost of part-loading plant.[39] The need to part-load conventional plant to balance the fluctuations in wind output does not have a significant impact on the net carbon savings from wind generation.)
238. If some 30 GW of additional (Ev Q 487) renewable capacity were required to meet the EU's 2020 target for the UK a further 14-19 GW of new fossil fuel and nuclear capacity will still be needed to replace plants due to close and meet new demand. The total new installed electricity generating capacity required by 2020 would thus be roughly double the level needed if renewable generation were not expanded (paragraph 111). Investment in renewable generation capacity will therefore largely be in addition to, rather than a replacement for, the massive investment in fossil-fuel and nuclear plant required to replace the many power stations scheduled for closure by 2020. The scale and urgency of the investment required is formidable, as is the cost (paragraph 112).
(112. The intermittent nature of wind turbines and some other renewable generators means they can replace only a little of the capacity of fossil fuel and nuclear power plants, if security of supply is to be maintained. Investment in renewable generation capacity will therefore largely be in addition to, rather than a replacement for, the massive investment in fossil-fuel and nuclear plant required to replace the many power stations scheduled for closure by 2020. The scale and urgency of the investment required is formidable, as is the cost.)
239. A breakthrough in cost-effective electricity storage technology would help solve the problem of intermittency and remove a major stumbling block to wider use of renewable energy in the longer term. However, no evidence we received persuaded us that advances in storage technology would become available in time materially to affect the UK's generating requirements up to 2020. We recommend that the Government should as a matter of urgency encourage more research, development and demonstration in energy storage technologies (paragraph 117).
240. Our calculations suggest that the total extra annual cost of increasing the share of renewables in electricity generation from 6% to 34% in 2020 would be £6.8 billion or an extra 38%—the equivalent of an extra £80 a year for the average household. Emissions of carbon dioxide would be reduced by 52 million tonnes a year—in 2007, the UK's emissions were 544 million tonnes. This implies that the additional cost is about £130 per tonne of carbon dioxide emissions avoided (paragraph 128).
241. Ofgem is required to use competition wherever appropriate. We are concerned that the use of competitive tenders implies a piecemeal approach to building the networks of wires and cables required to connect offshore wind farms to the electricity grid, and that as a result the programme could become overly complex and costly. We recommend that Ofgem implements the new system in a way that allows a coordinated approach for organising grid connections to offshore wind farms (paragraph 131).
(131. We note that the regulator's statutory duties require the use of competition wherever appropriate, and therefore give it some discretion about the use of markets. Although competition is usually preferable, we are concerned that the use of competitive tenders implies a piecemeal approach to building the networks of wires and cables required to connect offshore wind farms to the electricity grid, and that as a result the programme could become overly complex and costly. We recommend that the regulator implements the new system in a way that allows a coordinated approach for organising grid connections to offshore wind farms.)
242. We welcome measures to organise better the queue of renewable generation projects awaiting connection to the electricity grid. They should reduce delays in connecting viable generation projects and push back schemes unlikely to get off the ground (paragraph 134).
(134. Ofgem and BERR have recently concluded a Transmission Access Review, which asked National Grid to take a more proactive approach to managing this queue, giving priority to projects that had received planning permission for their plant. Ofgem told us that National Grid is now taking a more robust approach to removing unviable or purely speculative projects (p 171). We welcome these measures to organise better the queue of renewable generation projects awaiting connection to the electricity grid. They should reduce delays in connecting viable generation projects and push back schemes unlikely to get off the ground.)
243. We consider that the current system of Transmission Use of System charges sends broadly appropriate signals of the costs of locating generators at different points on the system (paragraph 139).
(139. In the broader context, E.ON told us that charging for use of the transmission system should continue to reflect the costs to the system associated with generating from renewables and other generation at that location on the system. This would help ensure that these costs are taken into account in the decision where to site the project in the first place (p 108). But Scottish and Southern Energy, which has wind farms in remote parts of Scotland, argued against "the current perverse mechanism of regional charges". Ofgem has successfully defended a judicial review on the basis that "it was absolutely right that people who were at the extremities of the system should pay very high charges that reflected the economic costs of transmitting electricity a long way from where it is produced to where it is used" (Q 422). We agree with this position. We consider that the current system of Transmission Use of System charges sends broadly appropriate signals of the costs of locating generators at different points on the system.)
244. Greater interconnector capacity with the Continent would reduce, but not solve, the problems of intermittent renewable generation (paragraph 141).
(141. Greater inter-connectedness would allow Britain to tap renewable sources over a wider area which would reduce the problems with intermittency. For example, when the wind is blowing in Denmark but not Britain, electricity from Danish wind farms could then be imported. The wider the area of interconnectedness, the more likely it is that variations in wind patterns will cancel out, although the weather may sometimes be similar over even a wider area. For example, we received some evidence that low wind speeds in the UK could coincide with similar conditions in Germany, Ireland and even as far away as Spain.[46] Furthermore, it would not be economic to build enough interconnector capacity to solve our problems with intermittency, for wholesale electricity prices in the UK and on the Continent would then converge, whereas the interconnectors need different prices in the two markets to profit from trading between them. Greater interconnector capacity with the Continent would reduce, but not solve, the problems of intermittent renewable generation.)
245. Harnessing renewable sources of heat is often cheaper than for electricity generation and offers a larger target area, as heat accounts for double the final energy demand of electricity. There is no intermittency problem with renewable heat. We recommend that the Government should lay at least as much emphasis on encouraging the development and use of renewable heat as on renewable electricity generation (paragraph 163).
(Paragraph 245 simply repeated paragraph 163.)
246. We share the concerns raised in the Gallagher Review about existing biofuels. Steps should be taken towards developing second generation bio-fuels as soon as possible. Until the costs of carbon emissions reduction through biofuels come down we recommend that the Government should not seek to increase further the use of biofuels (paragraph 173).
(Paragraph 246 simply repeated paragraph 173.)
247. It is clear that, although the cost of the technology for carbon capture and storage (if and when it becomes a practical possibility) is inevitably highly speculative, it will always be more expensive than large-scale carbon-based energy without CCS (paragraph 177).
(177. It is clear that, although the cost of the technology for carbon capture and storage (if and when it becomes a practical possibility) is inevitably highly speculative, it will always be more expensive than large-scale carbon-based energy without CCS. Retrofitting the technology to stations not designed for it might be particularly expensive, but would be necessary to have a significant impact on the very large volume of emissions from existing plant.)
248. It seems clear there would be little investment in renewable energy without substantial Government support and that a 15% target would not be met without it (paragraph 183).
(Paragraph 248 simply repeated paragraph 183.)
249. We note the evidence that the cost per kWh of renewable electricity supported by the Renewables Obligation has been significantly higher than the amounts paid via feed-in tariffs abroad, and that much of the excess has been due to other differences in the environment for renewable generation, particularly in the planning system. However, given investors' need for a predictable framework, it seems right to retain the Renewables Obligation, if it is desired to continue increasing generation of electricity from renewable sources (paragraph 189).
(189. We note the evidence that the cost per kWh of renewable electricity supported by the Renewables Obligation has been significantly higher than the amounts paid via feed-in tariffs abroad, and that much of the excess has been due to other differences in the environment for renewable generation, particularly in the planning system. The renewables support mechanisms have already gone through a number of changes including the banding of the Renewables Obligation to give different levels of support to different forms of electricity generation. Introducing feed-in tariffs at this stage for large-scale generation[56] would create more uncertainty and risk deterring investment in the sector. Given investors' need for a predictable framework, it seems right to retain the Renewables Obligation, if it is desired to continue increasing generation of electricity from renewable sources.)
250. We are not persuaded that the wish of concerned citizens to make their own contribution to emissions reduction is an adequate justification for a public subsidy for micro-generation (paragraph 198).
(198. The Government supports micro-generation for reasons other than economics. Former energy minister Malcolm Wicks said: "If we were just focusing on the economics, we probably would not want to look seriously at micro-generation [but] many concerned citizens are asking how they can personally make a difference" (Q 503). We are not persuaded that the wish of concerned citizens to make their own contribution to emissions reduction is an adequate justification for a public subsidy to micro-generation.)
251. The returns from micro-generated electricity look too small and uneconomic for the Government to support. But the gains from households using micro-generated heat look much more promising. Government policy should focus instead on households generating renewable heat and on schemes that use renewable heat on a larger scale, such as those covering a housing development, or group of public buildings (paragraph 204).
(Paragraph 251 simply repeated paragraph 204.)
252. On the evidence submitted to us, renewable electricity is clearly more expensive than fossil fuel-fired and nuclear generation and leads to higher energy bills for consumers and businesses. We estimate that a household which consumes the average amount of electricity will have to pay in 2020 about £80 extra a year. The Government will need to take higher costs on board in framing its policies towards fuel poverty, noting the high correlation between fuel poverty and poorly-insulated homes (paragraph 208).
253. We call on the Government to look afresh at the UK's research effort into renewables and to consider what more might be done, in a global context, to promote more, and more focussed, research across a range of technologies leading to new, effective and economical ways to reduce carbon emissions (paragraph 213).
(213. The Committee heard that a much greater research and development effort is needed on renewables and other measures to cut carbon emissions. Professor Paul Ekins of King's College London argued for the equivalent of twin Manhattan projects—the scientific research programme which developed the atomic bomb. One would enhance energy efficiency, the other promote energy supply technologies including renewables. In his view, countries need to work together on this research. He said: "It is terribly important that we get globally the biggest bang for our buck and have properly coordinated basic scientific research." (Q 16). We draw attention (Paragraph 117) to the need for a greater research effort on electricity storage. We heard of research in areas ranging from floating marine turbines to solar thermal arrays in deserts. A substantial annual prize for research for the best technological contribution to renewable energy development, as recommended in paragraph 93, would symbolise the importance of applied research in the field. We call on the Government to look afresh at the UK's research effort into renewables and to consider what more might be done, in a global context, to promote more, and more focussed, research across a range of technologies leading to new, effective and economical ways to reduce carbon emissions.)
254. We recognise that power companies need a streamlined planning system to approve or reject projects more quickly. But local and national concerns about environmental degradation must also be addressed. It is important to ensure that the planning system adequately assesses the costs to local communities and the balance between national priorities and local decision-making. The Government should also examine how far local communities share in the economic benefits created by wind farm deployment and other renewable projects (paragraph 220).
255. We endorse the Government's objective of ensuring a secure, reliable and affordable supply of energy (paragraph 225).
256. The Government is right in stating that a portfolio of policies is needed to achieve this objective, if we are also to bring about reduced carbon emissions. Against a background of developing technologies and uncertain costs, the Government will need to give a firm lead, with clear priorities and realistic objectives, while maintaining the stable framework needed by investors in the context of the long lead times needed by many energy projects (paragraph 226).
(226. The Government is right in stating that a portfolio of policies is needed to achieve this objective, if we are also to bring about reduced carbon emissions. Renewable energy has a part to play, as does nuclear power, the only other currently existing source of low-carbon energy. Investment in conventional power (preferably equipped with CCS, if and when it becomes available) will also be needed, together with improvements in energy efficiency. Against a background of developing technologies and uncertain costs, the Government will need to give a firm lead, with clear priorities and realistic objectives, while maintaining the stable framework needed by investors in the context of the long lead times needed by many energy projects.)
257. We recognise that the Government has committed the UK to contribute to the EU target of 20% renewable energy by 2020 and that a target of 15% for this country is envisaged. But the bulk of the evidence presented to us casts doubt whether, under current policies and with current resources, it will be feasible to increase the share of renewable energy so much in the UK over the time available. This is especially so, as most of the growth is expected to occur in power generation, which represents only a fifth of the UK's energy use, and that this growth will be largely in addition to the substantial replacement programme of old conventional and nuclear plant that has to take place over the same time period (paragraph 228).
258. We are also concerned that determination to meet the target may lead to an over-emphasis on promoting short-term options, simply because they are available, rather than because they offer the most effective and economical means of reducing carbon dioxide emissions over the longer term (paragraph 229).
259. We have a particular concern over the prospective role of wind generated and other intermittent sources of electricity in the UK, in the absence of a break-through in electricity storage technology or the integration of the UK grid with that of continental Europe. Wind generation offers the most readily available short-term enhancement in renewable electricity and its base cost is relatively cheap. Yet the evidence presented to us implies that the full costs of wind generation (allowing for intermittency, back-up conventional plant and grid connection), although declining over time, remain significantly higher than those of conventional or nuclear generation (even before allowing for support costs and the environmental impacts of wind farms). Furthermore, the evidence suggests that the capacity credit of wind power (its probable power output at the time of need) is very low; so it cannot be relied upon to meet peak demand. Thus wind generation needs to be viewed largely as additional capacity to that which will need to be provided, in any event, by more reliable means (paragraph 230).
260. We consider that the Government, if it pursues a renewable energy target in addition to its targets for reducing carbon dioxide emissions across the board, should prioritise the development and promotion of the other effective and economic options, both to bring down carbon dioxide emissions and to achieve security of electricity supply. It will be important to ensure that incentives to promote those renewables which offer only intermittent supply do not divert attention from, and deter investment in, other low-carbon generation options and thereby risk power shortages. So far as reliability is concerned, the best options amongst renewable sources of generation are tidal barrage and biomass, which are problematic for other reasons, and hydro power, which is not, but is already near the limit of its potential in the UK. The most reliable low-carbon alternative to renewables is nuclear power (together with conventional fossil fuel generation with carbon capture and storage, if and when that becomes available) (paragraph 231).
Posts
No comments:
Post a Comment