Friday, November 1, 2013

Time for Plan B

The UK now gets over 11% of its electricity from renewables (indeed in the last quarter it went up to 15%), including from around 10GW of wind capacity and 2.4 GW of solar PV. And it could continue to expand rapidly. National Grid’s 2013 edition of their ‘future energy scenarios’ has renewables supplying 34% of total energy by 2035 in their ‘Gone green’ scenario, with 60GW of wind, gas
heating almost totally replaced by electric heat pumps and around 17GW of domestic PV installed.   

Wind  is certainly seen as likely to get big. DECC’s new ‘high wind’ scenario has 39GW of offshore wind by 2030, though DECC stresses that it’s scenarios are not targets- markets will decide on the mix!  And DECC now say PV solar might reach 10GW or even 20GW by 2020…

Certainly, a cross-party think tank Policy Connect says that renewables like wind and PV might have to take on even more of a role. It says the government must develop in effect a renewables-focused ‘Plan B’ in case nuclear and Carbon Capture and Storage do not deliver as much as hoped. The report says The Government expects that nuclear power is likely to provide the majority of additional low carbon electricity between 2020 and 2030. However, should costs or deliverability prevent this from happening, more low carbon electricity from renewables or fossil fuels with carbon capture and storage will be needed to meet carbon objectives.’ It claims that should nuclear, fossil fuels with CCS fail to deliver, ‘renewables could provide between 45 and 55% of total [electricity] generation by 2030’. That includes 10% from biomass.

The report calls on ministers to begin work with industry and academia to identify suitable "no and low regrets" investments and develop policies to encourage these options more . As it stands at present, the report warns that a lack of certainty over the policy environment post 2020 will make it harder to mobilise the necessary investment in renewables and that investment opportunities ‘could be missed, delayed or more expensive if there is insufficient confidence about long term demand for key technologies, such as offshore wind.’ It says ‘work by Government to help incentivise these investments would increase the likelihood that technology cost reductions are achieved and help mitigate against high costs if new nuclear or carbon capture and storage development fail or are delayed’.

The report says that the initial extra cost could be more than offset by energy efficiency savings, and, longer term, investing more in renewables would help avoid bill increases driven by fossil fuels.

Well it may now be time to put this plan into action. The long drawn out negotiations with EDF over the proposed new EPR nuclear replant at Hinkley have delivered a very high cost package, including an offer of an extra £10bn in  investment risk reducing loan guarantees and a high level of long term (35 year) revenue support via the Contracts for a Difference system. And some funding from China. For future UK reactors, efforts are being made to get even more backing from foreign sources, including (once again) China (despite even more misgivings about handing over control over the development and management of  key infrastructure to  oversea powers), Japan (for upgraded versions of the Fukushima type of Boiling Water Reactor), and even Russia (for their VVER design, which is said to be vastly safer that than the Chernobyl design).

Inward investment may have its merits, but the UK’s attempt to get private funding for new nuclear from overseas, by offering juicy subsidies to be paid for by UK taxpayers and consumers, is sounding increasingly desperate, with any pretence that this is about competitive markets having been abandoned. Asked in parliament in September whether, prior to entering into negotiations with a single company for a new nuclear plant at Hinkley, DECC had invited tenders or expressions of interest from other companies, as required under Article 8 of EC Directive 2009/72, Energy Minister Michael Fallon said: ‘We do not consider that the potential investment contract for Hinkley Point C falls within the scope of Article 8. The investment contract, if agreed, is designed to be a market-based intervention to provide price stability for nuclear generation during the transition to a low carbon economy’.  The interventionist approach, what some have called ‘administrative pricing’,  though dressed up as all being about free markets, has gone so far that there has even been calls to go it alone completely- and state fund new nuclear projects.

The Engineer, wryly, said that in fact, with mostly state owned EDF, and now China, running the show, that had already happened: ‘we’ve now arrived at a situation where our nuclear sector is nationalised, just not by us.  Perhaps the ultimate irony is that with the emergence of China as a UK nuclear player, we now appear to be destined to entrust large chunks of our future energy infrastructure to an autocratic communist regime’. 
And all this for new very expensive and as yet mostly untried technology. It is true that some ABWRs have been built in Japan and elsewhere, although some have performed very poorly, but there are as yet no Westinghouse AP 1000’s running anywhere and the delays and cost over-runs faced by the French and Finnish EPRs have become increasingly surreal.  In the USA, where, for good or ill, market discipline may have more power, old plants are being closed early, plans for new plants abandoned and  EDF have finally concluded that there is  ‘no room for nuclear to expand in the U.S. at this time’ and it would instead focus there on renewables. Maybe the UK should do the same. And redeploy some of massive effort it has put into trying to push nuclear ahead to an accelerated renewables programme.  After all the UK does have the EU best offshore wind, wave and tidal resources and the (marine) engineering expertise to develop them. Surely that’s far better than importing French, US, Japanese or even Russian nuclear technology?  Or are we now the only country in the western EU where they can be dumped, with UK consumers and taxpayers picking up the ever expanding bill ? Renewables won’t be cheap, at least initially, but I know what I’d rather pay for!

For more, see my new book on Renewables.

No comments:

Post a Comment