|New & Renewable Energy: Prospects for the 21st Century|
The Royal Society of Edinburgh is pleased to respond to the Department of Trade and Industry’s consultation on new and renewable energy. The RSE is Scotland’s premier Learned Society, comprising Fellows elected on the basis of their distinction, from the full range of academic disciplines, and from industry, commerce and the professions. This response has been compiled with the assistance of a number of Fellows with direct experience of energy issues.
Renewable energy has the promise of a useful contribution to energy supply reserves and the environment, and Scotland is fortunate in having a lot of the resources of wind, wave, tidal hydro-electric and even solar energy. Development must, however, occur with proper attention to the technical, economic and operational constraints associated with increases in penetration of such technology. The building of new hydro plant is already limited, largely because of difficulties in obtaining planning permission and it appears that large land-based wind farms are likely to experience similar problems. The present 2% of electricity in the UK generated from renewables is largely from the medium to large size hydroelectric plants, many of which are in Scotland. Given that present levels of hydroelectric generation took decades to install, doubts must exist over the possibility of installing more than double that capacity in other renewable energy forms in less than a decade. Any renewable energy programme must take account of such issues and must be developed within a realistic set of boundary conditions. Care should also be taken not to exclude any of the potential renewable energy technologies from the programme.Most renewables will be connected to the electricity network at distribution level voltages, so-called "embedded generation". The distribution network was not originally designed to handle such injection of energy and redesign and strengthening of distribution network will need to be undertaken. Large sums of money will have to be spent on this activity and on the development of a control and operational strategy which can cope with this new arrangement of the supply network.
With the legally binding Kyoto targets for reducing the levels of emission of greenhouse gases, it is welcome that the consultation document recognises the role that renewables can play as part of a portfolio of measures to achieve the targets. In terms of a reduction of level of CO2 from electricity generation, it is difficult to envisage how the UK can meet Kyoto targets without the building of new nuclear power stations, especially when account is taken of the plant which is presently scheduled for closure.
Turning to other energy sectors, there are at present few proven and commercially viable methods of reducing CO2 production in transport and heating, which are large producers of CO2. Competing claims for resources, including improving energy efficiency in the home and workplace, minimising the environmental effect of the use of fossil fuels by improved technologies, reducing CO2 production in transport, and combined heat and power should also, therefore, be properly evaluated, and work supported in these areas.
The specific issues identified in the consultation document are addressed below:
Section 2: Why Support Renewables
"There are strong energy policy arguments for supporting renewable energy as a component of our overall energy system. In particular, renewable energies offer diversity and security as well as sustainability and other environmental benefits." (Paras. 14-22)
The arguments expressed in the consultation paper are largely to be applauded in that renewable energy components do contribute to fuel diversity and bring the environmental benefit of reduced emission of greenhouse gases. However, it should be recognised that renewables themselves bring environmental costs, as detailed in the consultation’s supporting analysis. There are also substantial energy costs for the construction and maintenance of large numbers of generators feeding local supplies.
As is rightly pointed out, renewables should form part of a portfolio of measures. In terms of the other measures suggested for mitigating any possible contributory factor to climate change, fuel switching has achieved CO2 reductions of around 7.5%, mainly by switching from coal to gas. Such opportunities for replacement are now limited and further significant reductions in gaseous emissions by this method unlikely. Combined heat and power systems may ultimately produce more efficient use of fuel, but currently present certain significant operational difficulties. Energy efficiency, however, offers the greatest opportunities for reduction in gaseous emissions without any adverse impact from energy development.
In terms of renewable energy’s economic sustainability, there is still some way to go. The present system of supported research and manufacture, coupled with the Non-Fossil Fuel Obligation (NFFO) and, in Scotland with the Scottish Renewables Obligation (SRO), is a highly subsidised regime with no apparent comparison with, for example, energy efficiency measures.
"In the short term renewables may need support to help achieve the necessary economies of scale, technological development and investor confidence. In the longer term, non-fossil sources may form an increasingly larger proportion of our electricity and energy systems and those of expanding economies, at competitive prices." (Paras. 23-25)
Through NFFO and SRO there is in place a pragmatic mechanism to effect the introduction of renewable sources, and one with an impressive year-on-year reduction of electricity generating costs for new technologies. In considering the cost of renewables, however, there should be consideration of their often intrinsically discontinuous nature, with the concomitant need for back-up from conventional sources. A good case can be made for a ‘capacity charge’ to reflect the cost of providing standby capacity especially as the contribution of renewables grows beyond the present marginal figure. Further complicating matters are the imminent changes to the trading arrangements for electricity in the UK: it is to be hoped that the viability of renewables will not be adversely affected.
In terms of further support for renewables, it would seem wrong and a distortion of the economics if the additional costs of such support were to be recovered from only one class of electricity customer, the business user. Most European countries have taken the opposing view over the years, that cheaper electricity to industry will encourage manufacturing and benefit the whole of the economy.
"Furthermore, renewable technologies need to be considered individually as they have different environmental impacts and are at different stages of development." (Para. 26)
It is clearly worthwhile pursuing the various sources of 'clean' energy, although how much resource should be devoted to each of them has to be considered carefully. Wind, wave, tidal and solar can provide only a small proportion of the UK's energy needs in the foreseeable future (although wave power may be able to make a significantly large contribution in the long term). The environmental aspects of large-scale wind farms will always cause concern when located on land. Off-shore wind or wave installations will also require shore base support facilities as well as a fleet of tugs and support vessels of a quite different order to that employed in the North Sea industry, for a very much smaller return in energy terms. Hydroelectric power is well established and understood. It is clean, running costs are low but so far as the United Kingdom is concerned the present 2% contribution it makes to the grid can only rise modestly. There are environmental constraints to constructing new lakes and lochs.
Although not classed as a "renewable", nuclear power has no gaseous emissions in operation and represents the largest source of clean power (in carbon emission terms) that the UK possesses. Since one of the major drivers in the development of renewable energy is a requirement to reduce CO2 emissions from the production of electricity then the means are already to hand in the further exploitation of our tried and proven nuclear power station technology. In Scotland the generation of primary electricity by large gas-cooled nuclear reactors is already well established and has proved to be successful, reliable and efficient.
Technologies exist for the disposal of high level and intermediate nuclear waste but the decision as to which to apply should be subjected to international agreement and will be influenced by international opinion. Public perception is very critical of the various schemes which have been proposed for the disposal of the longer-lived fission products and transuranics produced in the reprocessing of spent nuclear fuel. An acceptable solution is needed sooner rather than later, and reference should be made to the recent report of a sub-committee of the House of Lords Science and Technology Committee on the Management of Nuclear Waste. It should also be noted that the structure adopted for the privatised generating companies is not ideal for new nuclear plant development, with its high capital and long pay back lifetimes, and without drastic restructuring some collaborative or cost and risk sharing mechanisms would be required.
Section 3: Form of Support
"The Government is reviewing how the planning system can contribute to the development of renewable energy. There is a potential market for ‘green electricity’, that needs to be encouraged, including addressing any obstacles there may be to consumer acceptance of ‘green electricity’. It is also important that renewable electricity should pay a fair price for its use of the distribution system." (Paras. 32-41)
While the number of contracts awarded under the NFFO Orders 1-5 and the Scottish Renewable Order (SRO) 1 has been high, the implementation rate has been disappointingly low. Initially, small hydro projects did not go ahead because of difficulties with planning permission. The indications are now that, in England and Wales, wind energy projects are encountering similar difficulties in obtaining planning permission on-shore and most proposals are now for off-shore devices. In Scotland, planning authorities still seem prepared to grant permission for wind energy and recently a 30MW site in Kintyre was given the go-ahead. The future of large-scale wind energy exploitation must, however, be viewed with some caution.
Consideration of the operation of a system, which is being asked to absorb a large fraction of embedded renewable energy generation, is of critical importance. If operational procedures cannot be developed, or those presently in place modified, it will prove exceedingly difficult to accommodate significant proportions of renewable energy especially of the type, and at the level, suggested by the paper. The critical issues are the development of a pricing structure which reflects fairly the demands which different types of generation place on the network and an operational regime which can accommodate non-firm time-varying generation which in many cases demands large amounts of reactive power.
"There also remains a necessity for an ongoing Government research and development support programme…". (Paras. 45-46)
The technology base in the energy industry has been weakened by privatisation, with company-funded R&D now reduced to comparatively low level. Given the reluctance for private energy companies to invest in high-risk renewable energy research, the Government must take the lead. Government funding for research and development in this area, however, has been lower than optimum. Some focusing of research activity is necessary and the results of this consultation process could produce information which could usefully feed into the current round of Foresight to identify key priorities.
There is considerable scope for the export of ideas and technologies in these fields, and Scottish industry and the Scottish science base has particular strengths in these technologies. However, if action is not taken now to invest in renewable and fossil fuel energy R&D, Europe will have to buy its technology from Japan and the USA. The expectation of developed countries of a reliable electricity supply is not necessarily mirrored in undeveloped countries, where even uncertain supply may be an improvement for small, distant, communities. On a social basis, a case can be made for the use of renewables in such communities and it may well be that a market exists for renewable energy plant and equipment which could be developed to the benefit of the UK.
"The mechanisms for supporting renewables would need to change given electricity market developments, particularly the introduction of a competitive supply market, the separation of distribution and supply activities and the review of electricity trading arrangements". (Paras. 50-51)
It is important that a rigorous approach be adopted to the costing and valuation of renewable energy. Recognition should be given to the non-firm character of 'renewable' generation and the higher costs that it imposes on the conventional generation to provide this additional flexibility. The new pool trading arrangements are therefore welcome in embracing payments for flexibility (and presumably also for offering firm power). If the economics are not to continue to be distorted, this point should also be recognised in the true value of renewable energy and the levels of subsidy, rather than as at present only in part divulged via the NFFO fund with the remainder hidden in the costs of the electricity producers and their charges to customers.
"The nature of any new renewable energy obligation would need to be carefully designed to ensure that it stimulated timely investment in new renewable electricity generating capacity at minimum cost to the electricity consumer. This could be achieved by placing obligations to purchase renewable electricity either on suppliers or distributors. The obligation could be technologically neutral or include a mechanism to bring forward specific, longer-term technologies. Under either approach it would be important to ensure that the cost of renewable electricity was minimised." (Paras. 52-58)
In considering new approaches in a specific Scottish context, the "reference price" setting mechanism (defined as the marginal cost of production at Longannet Power Station) seems somewhat arbitrary, and a more robust mechanism would be essential.
Section 4: Policy Options for the Future
"continuing support for renewables can help achieve future UK policy aims. An appropriate and robust strategy would be necessary to ensure a continuously growing contribution from renewables. There is, however, uncertainty about the costs of supporting renewables, and the extent to which they would develop without specific support;" (Para. 62)
The strategy of enabling an increase in the level of renewables generation into the electricity network is a reasonable one.
"a variety of detailed aims could be considered. The overall objectives should be to ensure that the momentum of renewables development is continued, confidence in the industry is maintained, and development of renewables continues to meet our longer term objectives;" (Para. 63)
"the cost of an obligation mechanism designed to reach a 10 per cent target is uncertain, …, but it could be mitigated by ensuring renewable generators pay a fair price for connection to the local electricity distribution system. A more reasonable estimate of the cost of any such mechanism could be made once the various other pieces of the jigsaw … are in place and the costs are better understood and reflected in prices;" (Para. 65-70)
The critical issues are the development of a pricing structure which reflects fairly the demands which different types of generation place on the network, and an operational regime that can accommodate non-firm time-varying generation which in many cases demands large amounts of reactive power.
"… the overall climate change programme will be designed as a balanced overall package. The place of renewables needs to be considered carefully within this wider context to ensure a coherent overall approach. Renewables have an important role to play as a longer-term measure. The achievement of diversity and sustainability argue in favour of keeping up the momentum of a successful renewables programme;" (Para. 72)
Renewables should form part of a portfolio including improving energy efficiency in the home and workplace (which is a devolved area for the Scottish Parliament), minimizing the environmental effect of the use of fossil fuels by improved technologies and combined heat and power.
"regional approaches or targets to ensure the progress of sustainable projects." (Para. 71)
The distribution and potential for renewable energy generation varies distinctly across the UK and therefore regional approaches and considerations must be taken. The special circumstances of Scotland need especial sympathetic consideration.
Further information is available from the Research Officer, Dr Marc Rands