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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 876 - iii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE WELSH AFFAIRS COMMITTEE
Tuesday 28 February 2006 DR MARK LEGERTON, DR JOHN McELROY, MR WILLIAM HELLER and MR ROGER JONES
MR ADRIAN BULL and MISS DOROTHY SEED Evidence heard in Public Questions 215 - 342
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Welsh Affairs Committee on Tuesday 28 February 2006 Members present Dr Hywel Francis, in the Chair David T C Davies Nia Griffith Mrs Siān C James Mr David Jones Jessica Morden Mark Williams ________________ Memoranda submitted by Falck Renewables Limited and RWE npower
Examination of Witnesses
Witnesses: Dr Mark Legerton, Development Manager for Wales, RWE npower, Dr John McElroy, Head of Environmental Strategy, RWE npower, Mr William Heller, Managing Director, Falck Renewables Limited and Mr Roger Jones, Asset Manager, Falck Renewables Limited, gave evidence. Q215 Chairman: Good morning, and welcome to the Welsh Affairs Committee. Could I ask you, first of all, to introduce yourselves, please? Mr Jones: I am Roger Jones from Falck Renewables, I am their asset manager, I look after the operation of the wind farms that Falck own. Mr Heller: I am William Heller, I am managing director of Falck Renewables. Dr Legerton: Good morning, I am Mark Legerton, the development manager for Wales from npower renewables. Dr McElroy: Good morning, I am John McElroy from the generation and renewables division within RWE npower where I am head of environmental strategy. Q216 Chairman: Could I ask you to raise your voices a little, do not be afraid to shout and project yourselves. Could I begin by asking you to provide some background about npower and Falck Renewables and remind us of the sites that you manage in Wales? Dr McElroy: If I can start for RWE npower, RWE npower is the largest electricity generator in Wales and we have interests in coal plants, in combined heat and power, in wind generation, hydro and biomass and we currently employ around 360 staff directly in our various facilities in Wales. We have been active in Wales for around 100 years with the hydro business and we currently have about 1700 megawatts of capacity. We are currently investing about £150 million in our coal-fired plant at Aberthaw where we are fitting Flue Gas Desulphurisation equipment and also making significant efficiency improvements to the plant, and we are also planning to invest in a new combined cycle gas turbine plant at Pembroke which is around 2000 megawatts of capacity. For us, obviously, with these inshore developments both in fossil capacity and also in renewables, the whole planning process in Wales is quite important to us going forward. The alternative is that we pursue options elsewhere and certainly we see Wales as important in the energy mix in the UK going forward and we want to see Wales contribute to security of supply, to diversity and to the environmental objectives of having a sustainable energy future. Q217 Chairman: You are going to give us all the evidence and we will not need to ask any questions, so could you just pause there for a moment and could we ask Falck Renewables to talk to us about your sites? Mr Heller: Falck Renewables is exclusively a wind company. We are headquartered in London, we operate in the UK, Italy, Spain and France, we currently have 160 megawatts either operating or in construction, and we have the largest onshore wind farm in Wales which is Cefn Croes, which is also our largest wind farm. In addition to that we have another 290 megawatts of consented projects in the United Kingdom and in Italy and have a development pipeline of over 400 megawatts in Europe. Q218 Chairman: Thank you for that. What percentage of Wales' and the UK's electricity is currently generated from wind? Dr Legerton: I can answer for Wales, perhaps, that there is about 315 megawatts of wind capacity in Wales, and if one assumes that that operates with a 27% capacity factor, that should generate something around 744 gigawatt hours a year. If one assumes that about 40 terrawatt hours are generated in Wales by all sources each year, that represents 1.86% of what is generated and I believe in Wales the energy consumption is approximately half the generation, so you can double that up to something like 3.6% for the percentage of the consumption in Wales that is generated by wind power. Q219 Chairman: How much is it envisaged that this will have to increase in Wales and the UK in order to meet the 2010 renewable energy targets? Dr Legerton: Starting again with Wales, the Assembly has already identified that there is about 1.4 terawatt hours coming from renewables at present within Wales and clearly the target for 2010 is four terawatt hours, so there are 2.6 terawatt hours to be made up. What has been worked out is that that would equate to about 1000 megawatts of additional capacity, and clearly the Assembly expects about 800 megawatts of that capacity to come from onshore wind. You can scale that up for the UK as a whole when looking at a 10% target for the UK. Q220 Chairman: This is a question again for npower, in paragraph 16 of your written evidence you say that wind energy has the "potential for putting Wales in a leading position in the UK market." Would you say in practice this would benefit the people and the communities of Wales? I know that is a very large question, but could you give us some practical examples of how we could benefit? Dr Legerton: Wind energy is an opportunity for communities where wind farms are sited and there is a lot of general acceptance that wind energy has a very positive role to play in our energy needs going forward, but your question relates, quite rightly, to what do local communities get out of it. Developers are made very much aware of the need to consult closely and work with local communities to bring very direct and local benefits to the communities working around wind farms, and certainly the Assembly has not been shy in making that point very clear when expressing its planning guidelines through TAN8 and also through the Forestry Commission where there is a lot of activity expected in the future. One of their three criteria on how they will assess the tenders which come into them is what are the local community benefits that will arise from those projects, so there is a great deal of attention and pressure put on developers to make sure that those local benefits do arise. Q221 Nia Griffith: Can I ask if any of our witnesses have got involvement in micro-generation, that form of community involvement with wind power? Dr McElroy: Within our retail business we are looking at opportunities for micro-generation. I have to say that at the moment it is pretty early days in many respects because those technologies are fairly expensive, and in many respects the consumer interest is not there. A major issue going forward is how we raise consumer interest in micro-generation technologies; we believe that they are part of the overall package in terms of addressing the energy needs going forward and it is certainly our intention to play our part in that. Q222 Mark Williams: Notwithstanding that I respect what you have said about community involvement and consultation with local communities, how do you as companies respond argument-wise, not in terms of the procedures involved, to the perception that parts of Wales in particular are now looking over-saturated with wind farms of varying sizes? Dr Legerton: The approach taken in TAN8 is to some extent acknowledging that there is going to be a concentration on wind farms in particular areas, and I guess it is a degree of judgment and a point of view whether you consider that an over-saturation or not, but it is a clear policy direction of the Assembly to concentrate large-scale wind farms in seven areas throughout Wales. There are two sides to that, I guess, in that some areas are going to be left relatively free from wind farm development and others are, by necessity, going to see a concentration of wind farm development. I do not think there is any way of getting round that, it is then up to developers to try and site the sites as carefully and as sensitively as they can within those areas to minimise the impacts on local communities. Q223 Chairman: This is a hypothetical question: if the scale of the opposition is such in many of those areas would you envisage a situation where people would say the environmental cost is not that great so why do we not actually begin to think about campaigning to locate wind turbines in Areas of Outstanding Natural Beauty or National Parks or even on Ministry of Defence land, or is that an unfair question? Dr Legerton: I do not think it is unfair; it is the role of the planning system to direct development to the most appropriate locations and, speaking personally, I think it is right that there are some parts of the United Kingdom which are protected from development such as National Parks and Areas of Outstanding Natural Beauty. Q224 Chairman: Why do you think that should be? Dr Legerton: It is important to reserve some of the United Kingdom as areas which are less developed, be it from wind farms or any other form of development, because people do benefit from having the locations to get away to, to benefit from the more peaceful and tranquil areas of the countryside, I do myself. Chairman: We will come back to that later on. Jessica Morden. Q225 Jessica Morden: How is wind energy superior to other forms of renewable energy? Dr McElroy: I would say that like all forms of energy, renewable technologies each have pros and cons. I would say at this stage, if you are looking at the support mechanisms for renewable energy in the UK, obviously a key element in terms of wind technology is its price in terms of being compatible with the mechanisms and also its stage of development. Lots of other renewable technologies are still at early stages of their development and need pump-priming, so it is a mix of attributes which results in a particular technology being favoured at the moment; that is not to say that other technologies cannot and will not emerge over the next decade or so, and we would be keen to see that happen. Q226 Jessica Morden: Is there anything that you would like to add to that? Mr Heller: Yes, at present wind power, particularly on the west coast of the United Kingdom, is a very attractive resource. If we compare it to the fact that it is early days in new technologies such as wave, wave technology is a very attractive future development but it is probably three times as expensive to build as wind for about the same yield. That will improve over time, but at present wind is the most economic by quite a distance over virtually every other renewable source. Q227 Jessica Morden: Are there special conditions that make the Welsh coast and wild lands particularly favourable to both onshore and offshore wind? Dr Legerton: Starting with offshore wind, there is clearly a good wind resource off the Welsh coast compared to perhaps the east coast and there are also relatively good opportunities for grid connection, particularly in North Wales and, again, in North Wales there are no particularly significant environmental issues. On the east coast of the UK you historically have more military activity looking eastwards towards the old Soviet Union from the Cold War so there is a preponderance of military radar on the east coast which we do not have so much in the west, and there are less navigation issues perhaps on the west coast rather than in the English Channel and the North Sea. Having said all that, it is true to say that only three out of the original 18 round one offshore sites were within Welsh waters and only one of the 15 round two sites are in Welsh waters, so despite all that there is a fairly even spread of offshore wind energy around the UK. A lot of similar arguments apply to onshore; it is wind resource, also combined with relatively sparse populations in areas which have that good wind resource, so it is possible to site wind farms of a reasonable size a good distance away from nearby residents, which you do not get in some other parts of the country. Q228 Jessica Morden: Can you explain how exactly does wind energy contribute to a reduction in carbon emissions? Dr McElroy: If I could pick up on that point, ultimately wind energy is carbon-free at the point of generation so the issue in terms of the carbon benefits depend on what it is displacing in the energy mix at that point in time, and that obviously depends on fuel prices in the market, whether gas is at the margin or coal is at the margin, so in terms of carbon benefit it will vary with time. If we are talking about coal-fired generation you are talking about roughly 0.9 tonnes per megawatt hour whereas it is around 0.4 for CCGT. Q229 David Davies: Just a short question, is it not fair to say that wind energy will only contribute to carbon emissions if it replaces a carbon-emitting technology? In other words, if you looked at other energy-producing technologies which do not produce carbon but they have other disadvantages, wind energy has no advantage over them in that sense. It does not actually reduce carbon emissions, it merely allows you to reduce other forms of energy production. Dr McElroy: I agree with you to a certain extent, but at the end of the day the question you have to ask is what would be generating the electricity if the wind was not there. Whilst, obviously, nuclear runs at base load, the wind output is variable, so the issue is what in fact is wind actually displacing in the system at the time? Q230 Mark Williams: Thank you, that leads on very nicely to my next question. What are the daily targets for energy generation at Cefn Croes and North Hoyle and, perhaps more fundamental to the debate, are those targets being met? Mr Jones: If I could talk about Cefn Croes, in terms of daily targets you cannot look at a daily target because in terms of the load factor at the site it is more windy generally in the winter than it is in the summer, so the profile is generally that we expect more output in the winter than in the summer. In terms of a load factor, we would expect a load factor between around 32% and 36% at Cefn Croes, but we have not had a full year's output yet because the scheme only came on line last April. If you look at the load factor through the winter from October to February, the load factor was 35.8% and in February, for example, until the 26th of the month the load factor was 41%, so it shows that we are having the output during the winter period. Q231 Mark Williams: Is that meeting the initial expectations? Mr Jones: It is. Q232 Mark Williams: I know that various interested groups in the local community have suggested that Cefn Croes is operating at about 24% of capacity, but you would question those figures on the basis of what you are saying. Mr Jones: Yes. Dr Legerton: It is a similar answer for North Hoyle really. We do not have daily budget figures, we do have monthly budget figures and, just as for Cefn Croes, they vary throughout the seasons with midwinter months producing approximately twice the summer months. Averaged over the year, the load factor for North Hoyle has been 35% when measured from November 1994 to November 1995, which are the last available confirmed figures, and that does meet the expectations which we had for the project when it was built. Q233 Mark Williams: Following on from that, these are interesting figures. I think there is a perception, certainly in terms of Cefn Croes, that the loss of forestry and the oxidation of the peat bogs - I was grateful to have a visit to Cefn Croes a few weeks ago, I got there eventually - and carbon emissions in production, thinking of the vast road going up there and not least in the foundations of the turbines themselves, if we were to think in terms of the energy pay back period, the energy consumed in the production or the building up of that site - which is the largest site anywhere in the UK at the moment - at what point do we reach an energy pay back position? Are we there yet, have we some months to go, what is your feeling on that? Mr Jones: Looking at the research that the BWEA have done the pay back is seven to eight months. In terms of the peat area, which has been in the press, the publicity was that huge amounts of CO2 had been released; our calculation is that it is probably less than 2% of the benefit that the wind farm brings by avoiding CO2. Q234 Mark Williams: You mentioned seven to eight months and you were talking almost in theoretical terms there. In the case of Cefn Croes are we there at the moment, are we at that crunch period, the cut-off point? Mr Jones: I have not done the calculation in terms of looking at what the manufacturing contribution would be. Q235 Mark Williams: Would that be something you as a company would look into as a matter of course? I am thinking, quite frankly, in terms of the public relations of this as well; would you be looking into that, would you have the research capacity to do that sort of thing as a company? Mr Jones: We know that the BWEA have researched the issue and that is the outcome of the research that the BWEA have done. We have accepted that research. Q236 Mark Williams: What is the pay back time for North Hoyle? Dr Legerton: I am not sure, it is a similar answer really, that we have not done the precise figures for offshore wind farms. I cannot imagine any particular reasons why, given their slightly higher energy production, they would be any less than an onshore wind farm despite the cabling and foundation work that needs to go into them, but I suspect one balances back to the other. For onshore wind energy there has been a range of studies done over the years and they all come up with answers of less than a year and typically around six months, as we have just heard. Q237 Mark Williams: If you could get into the specifics of this debate I think you would be helping your case, whether everyone agrees with it or not. There is a public perception that there is a mismatch between output and production. Dr Legerton: That would be very useful. David Davies: My question has really been answered by your replies there, although I am interested that you offer visits to Members of Parliament. If that is an invitation you extend to anyone I would like to take you up on it myself as one of the more sceptical people in looking at that. The question I wanted to ask has been answered. Q238 Mrs James: Further to the question from my colleague from Ceredigion, there appears to be a considerable discrepancy in the information that I have read between capacity and output. It has been suggested in some of the things I have read that the actual costs are much higher than the current figures suggest. What were the costs per kilowatt of energy produced at Cefn Croes and North Hoyle in the past year in comparison to other forms of energy? Dr Legerton: The cost of energy of any project is dependent upon a whole host of factors but, mainly, how much it cost to build the project in the first place, how much energy it produces and what rate of return or interest, in effect, the investors want to have back on the money which you borrowed from them to build it in the first place. Without tying down those three factors, it is quite difficult to give a cost of energy for any particular project, but all projects that are built under renewable obligations will be limited to the amount of worth in their output by the price of conventional electricity, plus the benefits which they receive from the renewable obligation, so over time that is probably something around 7p per kilowatt hour. Any project being built today is probably producing for less than that and possibly on good sites with good wind resources it would be less still, I expect it would be. Q239 Mrs James: Are you frontloading costs in effect, so do you expect that cost to get correspondingly less as time goes on, when you actually pay off the debt to the bank and development costs are taken into consideration? Dr Legerton: Most of our costs are upfront when we build the wind farm, and then the operation and maintenance costs are fairly small-scale in comparison over the lifetime of the wind farm, so you could look at it that after a period of perhaps ten years we would have paid off the capital on the wind farm and the costs of producing that energy then are much reduced. There is more money in the project then from the value of electricity which can then be sold, assuming that the value of the electricity is comparable to what it is today. Mr Heller: Our project at Cefn Croes is a little bit different, we are under an old scheme, the Northo (?) scheme, so we have a fixed price that we are allowed to sell at which is 4.9p per kilowatt hour which is actually well below current wholesale market prices which last week were around £65 to £70. It is a bit of a unique project, it is the last of those very large Northo contracts that have been completed. Mrs James: Thank you. Q240 David Davies: You have mentioned a figure there of about 7p per kilowatt hour which is in line with what the Royal Academy of Engineering estimated as the production costs of wind power. They also estimate - and their estimates tally so far with the reality - that the cost of nuclear power is about 2.3p including decommissioning; how can you justify an energy source - if I can play devil's advocate - with all due respect, that is more than twice, nearly three times the price? Dr McElroy: You have to be very cautious about pence per kilowatt hour energy costs. At the end of the day, depending on the project life that you choose to take and the discount rate that you choose to apply you can come up with a very large number or a very small number. At the end of the day the only way to compare is to understand the capital cost structure and to understand the revenue cost structure, and that is both the fixed and variable costs. I am afraid that unless you have that information, it is very easy to mislead. Q241 David Davies: I do not, but the Royal Academy of Engineering, I would have thought, have done their sums fairly carefully. Dr McElroy: I would have to suggest that if nuclear power were 2.5p per kilowatt hour --- Q242 David Davies: 2.3p. Dr McElroy: Which is the number you suggested, then I am surprised that there is not more interest in building the technology at the moment. Q243 Mrs James: Much of that information would be commercially sensitive, I presume, anyway. Dr McElroy: Absolutely, yes. Q244 Mr Jones: We have touched briefly on this but Friends of the Earth suggest that recent proposals for the construction of wind farms could result in Wales obtaining as much as 27% of its electricity demand from about 2012; is that something that is consistent with your estimation of the position? Mr Heller: In terms of the 27% we believe it is achievable from variable sources, primarily from the wind farms, and the estimates are that that could probably supply approximately 20% without any significant increase in costs to the system in terms of absorbing variable sources, and then there are a whole host of other technologies coming along. The 27% is probably achievable; wind, with a significant investment is beyond 20% so we will probably keep it limited to 20% or below and the other sources can make up the rest. Q245 Mr Jones: I would like to raise with you the question of the intermittent nature of the wind which is self-evident. Is there, in your view, an upper safe limit that we should be looking at in terms of wind generation? The Government appears to be working on a figure of 26 gigawatts but there is other evidence which we have seen which tends to indicate, for example, that Germany and Denmark are suggesting 10 gigawatts. What are your views about these figures? Mr Heller: The DTI together with the Carbon Trust did a pretty expansive study on this and concluded that up to 20% their quote was "very modest associated costs" with adding that to the existing UK system, which is significantly more than we have and is well within the target, so the target of 2015 of 15% can be met at this very modest cost. Q246 Mr Jones: Yes, but how does that stack up with the German and the Danish evidence? Dr McElroy: You are talking about two things, you are talking about capacity and energy, and I think we have got to be careful that we do not confuse them. I think the other thing you have got to consider is the size of the electricity system in Denmark which is quite a lot smaller than in the UK and the size of the electricity system in Germany which is very much larger, so absolute numbers do not tell us a lot in themselves, you have to look at the percentage of supply in the system rather than the capacity. The numbers in that area suggest that certainly for the UK grid system 15% has a very minimal impact in terms of effect on the stability of the system. Q247 Mr Jones: I am interested in the intermittent point because, as I understand it, when the wind does not blow hard enough or it blows too hard the turbines simply do not generate electricity, so presumably there has to be a back-up to take over the load when the wind stops blowing; is that correct? Dr McElroy: Yes, there will have to be other capacity on the system and one of the issues in terms of the UK is what the level of diversity is in the energy mix going forward. Certainly, yes, there would have to be back-up capacity which at the moment would be coal, gas or oil. Q248 Mr Jones: Conventional sources of generation. Dr McElroy: Yes, conventional sources of generation. Q249 Mr Jones: Presumably it is the case therefore that these conventional power stations are still operating when the wind turbines are turning, is that right, so that they can back up the energy in times of need? Dr McElroy: That depends on how the plant is operating. A coal plant, for instance, or an oil plant can be brought up to meet system requirements pretty quickly, particularly if a coal plant is in a warm condition, but an oil plant can typically respond to needs in the market very quickly and that plant is not running all the time. That is obviously an issue for the National Grid to manage and make certain that that capacity is there when the system needs it. Q250 Mr Jones: Just so the Committee fully understands this, it is the case therefore that conventional power stations, coal-fired or whatever, are operating at the same time that the turbines are turning, so to that extent there is not a full saving of capacity by the turbines. Dr Legerton: If I could just add to this, if you get to large installed capacities of wind on the system, perhaps 13,000 to 15,000 megawatts - perhaps 10% of UK supply - then there is an additional requirement for back-up, but that back-up is quite small compared to the wind which is then available, so it has been estimated to be about 700 megawatts. The extra back-up required, therefore, is a very small part of the additional capacity which you are bringing on from wind and hence a very small part of the carbon emissions which you are offsetting. Certainly, today, with the relatively low penetrations of wind energy, the requirements for additional back-up are next to negligible and it is only when we get to sizeable percentages that it becomes anything that is at all measurable, and even then it is a very small percentage of what has been displaced. Q251 Mr Jones: I was not actually talking in terms of extra value, I was talking in terms of conventional power stations that are running whilst the wind is blowing. Dr Legerton: I think you have hit the nail on the head there. Q252 Mr Jones: Is it indeed the case that those power stations are still running whilst the wind is turning the turbines? Dr Legerton: Those power stations are running anyway because we need back-up for a whole host of situations which can arise such as Sizewell B tripping out, a sudden rise in demand for electricity, so that back-up capacity is there whether we have wind or not. Wind can draw on that, just the same as a fault in a nuclear power station or a sudden demand for domestic electricity. Q253 Mr Jones: That back-up capacity is not reduced by the presence of the wind turbines. Dr Legerton: It is not reduced by the presence of the wind turbines. Mr Heller: Sorry, it is significantly reduced in terms that those coal plants will be on line but maybe operating at 5% or 7% capacity factor, so they are not running flat out, they are running at a very low level. If they were to be needed they can basically be warm and gear up, so these things will operate at less than 10% capacity factor and they will be generating small amounts of electricity for the network, and are available if they were required. Q254 Mr Jones: But that is the position anyway, is it not? Mr Heller: That is the way the system works anyhow. Q255 David Davies: As I understand what you are saying, the amount of wind energy going into the system at the moment is so small and irrelevant that it does not particularly need a back-up system, but if it increases to the sorts of levels which are being suggested then it will need a back-up system and, presumably, managing the grid is about managing peak demands, but peak demands are not always going to come at a time when the wind happens to be blowing at the right speed, so there is bound to be a need for additional generators to be built and they will have to be running. Presumably if they are running at 5% to 7% of their capacity then that in itself is not particularly efficient. Dr Legerton: If you have the time, a visit to the National Grid headquarters in Wokingham would be a very valuable exercise for you, as I am sure they can explain the management of quite a complex grid system a lot better than I would hope to do. Going back to where we were, the additional back-up capacity required for the UK being supplied by 10% of wind energy is only a few hundred megawatts and the cost implications of that are measured in fractions of pence per kilowatt hour, so it is not the issue which it is sometimes made out to be. I recommend a conversation with or a trip to the National Grid Company who will be able to give you the full works. Q256 Nia Griffith: If we can move on now to planning issues, in giving evidence to the Committee here the DTI referred to two different ways of getting planning applications approved, and we would really like to know what your comment is on the system where you go through the DTI or you go through the Welsh Assembly. What has been your experience up to date? Dr Legerton: Onshore or offshore or both, because they are different? Q257 Nia Griffith: If you can comment on both, that would be very helpful. Dr Legerton: Onshore, if a project is less than 50 megawatts, it goes through the local authority and above 50 megawatts it goes to the DTI under section 36 of the Electricity Act. The planning regulations and guidance which the project is being assessed against are the same in both cases, they are the same planning policies which the DTI will take into account as the local authority will do, and if the local authority do not support the project it would go to a public inquiry in any event, so it is very important to us, even for a section 36 project, to work with the local authority in trying to convince them of the merits of the project. In reality, there is very little difference in terms of the work we have to do to try and work with local people, irrespective of which route we go down. Of course, when you go offshore the Town and Country Planning Act does not apply and, whilst you still have the section 36 route for offshore projects, you also have the Transport and Works Act which is the other alternative, but I think it is becoming more and more common practice for developers to use the section 36 route, particularly given some modifications which have recently been made to that; that is likely to be the main approach for future projects going forward. It also has the advantage that it allows the developer to work with the local authority for the onshore works, because all offshore wind farms do have an onshore element and by going to section 36 route we can work with the local authorities on the onshore elements as well. Q258 Nia Griffith: In your experience how is the interface between the DTI and the National Assembly for Wales working? Dr Legerton: Our only experience is through our offshore projects in Wales, we have not had any 50 megawatt plus projects ourselves as yet, and that seemed to work perfectly fine. I think they had a good exchange of opinion and information and consulted well with each other during the application process. Q259 Nia Griffith: If I could refer now to Falck, in paragraphs 2.1 and 2.2 of your submission you refer to devolution of responsibilities under section 36 and 37 of the Electricity Act 1989 to the National Assembly of Wales. Can you tell us why you would support that and what impact that might have on planning procedures? Mr Heller: The reason that we would be supportive is trying to keep the decisions as close as possible to where the actual activity will take place, so we believe that the Welsh Assembly is perfectly capable of handling those, although we do have a concern in terms of if there was going to be a handover taking place we would like that to be as smooth as possible so that delays are not created merely in the process of devolving those powers from Westminster to the Welsh Assembly. Q260 Mr Jones: On that particular point is there not, however, a concern that what we are talking about is a major strategic national resource, and therefore ought it not to be the case that the DTI actually has overall control of a large scale wind farm application? Mr Heller: I am not certain that they would need to have overall control, I think there is a national policy of which the perspective is that it should be devolved to all the regions and each region should be making a contribution to the overall goals. So there is a co-ordination role for the DTI to play, there is a strategic role, but if it is the expectation that every area of the United Kingdom should be doing something in the area of renewables it is then reasonable to devolve those decision-making powers down to a more local level. Q261 Mr Jones: But you would accept that there is a strategic role for the DTI? Mr Heller: Absolutely. Q262 Mark Williams: Can I just ask one very quick factual question of Falck first before I ask my main question? Are there two functioning power stations at Cefn Croes owned by Falck, or is it just the one, which has a bearing on the issue of over 50 megawatts and the planning process. The capacity at Cefn Croes is 45 megawatts and Wylfa 131/2; are those both owned by Falck? Mr Heller: It is a single project. There are two Northo contracts, a Northo 3 and a Northo 4 and they are at different prices to make sure that we could not have a spill over from one northo to another these are connected to the grid completely separately. It is one single farm with 39 machines, but two separate connections because there are two separate northo contracts. Q263 Mark Williams: And they are both managed by yourselves? Mr Heller: Oh yes. Q264 Mark Williams: Thank you very much, that clarifies a local concern. What are your views of the National Assembly of Wales TAN8 planning guidelines, how effective do you think those guidelines are and perhaps both companies can tell the Committee if in fact you have responded to invitations from the Forestry Commission to issue tenders in the suggestion? Mr Heller: It is a little bit difficult for me to comment because we were just informed on Friday afternoon that our group did not pre-qualify. It is very interesting because we do not really understand why we received a two sentence reply in the e-mail saying thank you for submitting, you do not pre-qualify, despite the fact that our group has Jones Brothers, a world-class civil contractor from Wales, the largest developer in Wales, RDC, General Electric, International Power, one of the world's largest independent power producers so, quite frankly, as I said, this first step is a little bit baffling to us as to why this consortium did not get pre-qualified. I can understand later if we did not win a project, but not to be qualified to participate is baffling. Q265 Mark Williams: What are your more general views on the planning guidelines of TAN8, what are the views of both companies on those? Dr Legerton: TAN8 has been welcomed by the wind industry in general as being a very proactive and positive message going forward. There is still a bit of work to be done with the local authorities refining those boundaries and we have some key messages that we need to get across in that process to make sure that is not done a little too hastily and throwing away some of the good work which has been done in drawing up TAN8. I know, for example, in Conwy some of the area which has been allocated as part of their attainment of the targets is not available for wind farm development because the landowner is just not interested; similarly, in Powys some of the land allocated had been excluded through the TAN8 process because of the low-flying concerns, so there is a bit of consultation still to be done with the MoD. There are still some details to sort out, therefore, but the general principles and targets set prove to be very beneficial in terms of getting local authorities thinking about where wind can be accommodated in their areas, and we are hoping to win some of those sites off the Forestry Commission as well. Q266 Mark Williams: You have not heard yet. Dr Legerton: We have not heard yet, no. Mr Heller: Can I add to this that there is a concern in terms of reaching those goals, the goals are appropriate and they will get to the targets if all 800 onshore megawatts are built; however, there is a concern in terms of the electrical infrastructure. There is very little grid capacity left in North Wales, there is virtually none available in Mid Wales and the process for approving and then adding additional grid capacity is a very long and involved process, up to five years. It requires Ofgem to approve the transmission and distribution companies to build those transmission facilities, which has not been granted yet because developers have not been awarded any planning consents, so therefore they basically cannot book the capacity and pay their standby reservation fees for those capacities to get built. Q267 Mark Williams: In the short term are we reaching saturation point, which is back to the point I was making at the start of the proceedings? Mr Heller: In the short term in Mid Wales, as I said, the system is pretty much saturated and North Wales is not terribly far behind. Dr Legerton: The purpose of TAN8 was to allow a more strategic approach, and part of that strategic approach is trying to work with the grid companies to make sure that this strengthening happens at a time which meets the demands of developers. All developers have concerns that there is a lot of work to be done to get that grid strengthening in place in time for the projects. David Davies: Once again you have a knack of answering my questions; unless there are any other problems that you have identified with the national grid structure, but if you have already mentioned them I do not want to delay the Committee unnecessarily. Q268 Mr Jones: Returning to that point, that is a particular concern of mine, but both of you in your submissions to the Committee have identified the problems with the national grid infrastructure in Wales, and I think in fact it was Falck that indicated that major grid reinforcement works would typically take at least five years to plan, permit and construct. If that be the case, is it not rather putting the cart before the horse by developing the TAN8 sites at this stage until such time as the infrastructure has been put in, because how are you going to distribute the energy that is generated by the turbines on those sites? Mr Heller: You need to do both things simultaneously, because the grid will not get approval for reinforcement by Ofgem until the projects are actually defined, so delaying the process of identifying the projects under TAN8 will merely exacerbate the problem. The structure is Ofgem will only approve the grid upgrading if the developers have the projects and are willing to put down the deposits to get the transmission system actually built. Q269 Mr Jones: It is chicken and egg. Mr Heller: Yes, exactly. Q270 Mr Jones: To what extent are Ofgem addressing this at the moment because they must be aware of the proposals with TAN8? Mr Heller: I am not sure what they are doing, I am more familiar with what they are doing in Scotland where they have approved some of the upgrades - two major upgrades have been approved in Scotland so that the power from the north of Scotland can be brought to the Borders area. Something very similar is going to have to happen, I think, in terms of co-ordination between Ofgem, the Welsh Assembly, the developers and the distribution companies, they are going to have to basically address that problem and solve it. Q271 Mr Jones: Is the infrastructure capacity in place for Gwynt y Mor? Dr Legerton: It is not in place today but there are applications being prepared for that infrastructure to be put in place and there is sufficient capacity on the high voltage system to absorb the output from Gwynt y Mor, there are just some local works that need to be done to connect into the high voltage system. Q272 David Davies: Falck have referred to a survey by Dragon's Eye which said that 75% of the population in Wales believe that wind farms are necessary to help the country meet its current and future needs. What figures, if any, are there showing the correlation between those people who support wind farms and the geographical locations of where they live? If I can put this rather more bluntly, if you will forgive me, is it not the case that actually some of the most enthusiastic proponents politically of wind farms have suddenly become rather reticent when planning applications for wind farms have been sited in their constituencies or regions? Dr Legerton: Among the general public, where there are survey results to shed some light on that question, it might be surprising but actual support for wind energy increases in areas where wind farms have been built and I suspect that is partly because people see the reality of the situation rather than have the fear of the unknown and having to go on other people's word for what may or may not happen. It is still possible to find principled politicians who support wind farm developments in their own backyards as well as other people. Q273 David Davies: Name some. Dr Legerton: Peter Hain. Mr Heller: A study just came out in December 2005 from the University of St Andrew's and their conclusion was that there is what they called "inverse nimbyism" in that they found more support around the wind farms and as you go further and further afield you get more to the national statistics. In their study there is a lot of support and they looked at a number of other studies in the UK and America, all with similar results, that particularly once a wind farm is built there tends to be a lot of local support, even if there were questions beforehand, and most of those issues go away once a wind farm is in operation. Q274 David Davies: Could you build a wind farm or put in a planning application to have it there on a temporary basis for five, ten, 15 or 20 years, and then would you be prepared to resubmit the whole thing to a local authority planning committee after such a period expired? I am open-minded, I am willing to be persuaded, but it does seem to me that those people who live in the areas, those councillors, local authorities, Members of Parliament in the Assembly who may hold a political view that wind farms are a great thing are very anti when it is suggested that one is built in their constituency. How can we put to the test this supposition that once it is built they are suddenly very happy with it? Mr Heller: Planning permission is granted for a specific period of time, usually in the range of 25 years, the estimated life of an onshore wind turbine is in the range of 20 to 25 years, and so there is a natural end-point to that existing farm and if we wanted to replace it with new technology in the future that is a new planning application. David Davies: We will have to see what happens. Q275 Chairman: Are you familiar with the geography when you refer to Peter Hain? You were obviously being serious about that. Dr Legerton: Yes. Q276 Chairman: Are you familiar with the geography of his constituency and the visibility of those wind turbines in relation to where he lives? Dr Legerton: There are some views of the Ffynnon Oer wind farm from within his constituency. Q277 Chairman: Where he lives I said? Dr Legerton: Not from his particular dwelling, perhaps not, but I am not sure that was the question. Q278 David Davies: In fairness I thought from your answer that perhaps there was one sited directly in his constituency, not somewhere off into the distance. To be fair, just give me a name to satisfy this whimsical line of questioning of a Member of Parliament who has actually got one in his constituency and who has been willing to come out and support it? Dr Legerton: Under those criteria Peter Hain still applies, but I have not been to all the MPs' houses to know who can see a wind farm from their back garden. Q279 David Davies: A Member of Parliament who represents a constituency in which a wind farm has been sited, or a Member of the Welsh Assembly? Dr Legerton: Peter Hain still applies, he has a wind farm within his constituency. Q280 David Davies: Actually within his constituency. Dr Legerton: Yes. Mrs James: Which I can see from my constituency. Q281 David Davies: Anyone else? Are there any other examples in the UK? Your public relations department must be keen to find Members of Parliament and Welsh Assembly Members or whatever who would support a wind farm in their constituency. Dr Legerton: I can tell you Michael Howard was not. David Davies: I can think of many who were not, I am trying to find a few who were. Mrs James: With all due respect, the one that is in Peter Hain's constituency is actually visible from my constituency and, I think, from parts of yours, Chairman, from certain viewpoints - Skewen. Chairman: We are into the realms of speculation now, but it would be good if we did actually ask the Secretary of State to come and give evidence. It is unfair to be quoting him, although it is on the record that he has made these statements; it is not on the record, however, but rumour has it that he has - it is unfair to say this - actually said to people in the village of Resolven that the wind farm will not be visible in Resolven but it will be visible to people who live in my constituency, so there is this kind of nimbyism going around, or reverse nimbyism. We had better finish there and ask the Secretary of State to come to give evidence. Mr Jones: Perhaps before we leave that point, Chairman, if we are inviting the Secretary of State we could also invite the Prime Minister to attend before the Committee and explain his attitude towards the proposed Trimdon Grange turbine. Q282 Mark Williams: I do not want to be accused of nimbyism, I know that on this Committee we are delving into issues particularly about the capacity of wind power to respond to legitimate targets, but how do you respond to the Wildland Network's comments - and this is particularly pertinent to my constituency and other rural areas, I declare an interest there - that the siting should be limited to industrial sites and there should be a presumption against wind turbines in rural locations? You said at the start that there should be large tracts of the country - and I put it much wider than you would - available for leisure and quality time, peace and tranquillity so should there be a presumption against wind turbines in rural locations? How do you respond to that comment? Dr Legerton: If we want to see a significant amount of our electricity generated from wind energy then confining it to brownfield and industrial locations would prevent that from happening. As someone who has a great interest in wildlife myself I think you have to look at the wider picture and think of the effects on climate change and what effect that is going to have on habitats and wildlife throughout the world and make a balanced judgment that there id a case for carefully siting wind farms in the countryside, having properly assessed the effects on wildlife and making sure you do all you can to mitigate those effects but still get the benefits from those wind farms in terms of climate change reduction and the habitat protection that that will provide. Mr Heller: I do not have much to add, other than there are other organisations, Friends of the Earth and Greenpeace, who do agree that carefully selected rural locations are appropriate for wind developments, and also point out that if you are limited to industrial areas you are, one, limited to a small amount of land and, two, you will probably be in very close proximity to large numbers of dwellings and so then you have the balance between are you locating near cities and large numbers of people or are you out in the country. There is a balance that needs to be maintained. Q283 Mark Williams: Notwithstanding that wind farms have a life expectancy of about 25 years, in the genesis of the wind farm story are there instances of redundant wind farms now being returned back to the way they were that you can think of, and what is the potential for that? I appreciate that at Cefn Croes attempts have been made to do some remedial work there but more generally? Dr Legerton: You mean after the wind farm has completed its usefulness? Q284 Mark Williams: Yes. Dr Legerton: We are still so early in our wind farm development days. Probably the first one went in in December 1991 and that is still going strong today so we have not gone full cycle yet in any of our wind farms in the UK. Mr Heller: There is a financial obligation on all wind farms to have the money put aside either in terms of a bond, a trust or an account to restore the land to as it was beforehand. We all have that obligation to decommission and the decommissioning of a wind farm is far less complicated or expensive than decommissioning nuclear or fossil fuel plants. Q285 Mr Jones: The Committee has received a large number of objections to the proposed Gwynt y Mor wind farm which, just to put it in context, I believe will be one of the biggest offshore wind farms in the world. It would be upwards of 200 turbines, each over 500 feet high. Most of the objections are in terms of visual impact, quite clearly, because it would be just off a very intensely and highly populated coast. If it were possible to put the turbines further out to sea so that they would not be visible from the coast, those objections would disappear. Would it be possible technically and otherwise to site the turbines further out to sea so that they would not be visible from the coast? Dr Legerton: I am afraid I am going to disappoint you in saying it would not be. If you go any further off the coast of north Wales, you run into an area that is very heavily used for shipping and navigation and oil and gas exploration. Added to that, you increase the cost of energy from that wind farm and then you start to call into question the economics of offshore wind energy the further offshore you go. Those are two very real, physical constraints on going any further offshore. Q286 Mr Jones: Theoretically, is there any reason apart from that why the wind farms could not be further out to sea or do they have to be in reasonable proximity to a land mass? Dr Legerton: There is no reason in principle why you could not build further out to sea. Water depth becomes an additional factor and the deeper the water the higher the construction costs. The further the distance from the shore the higher the cabling costs to afford the grid connection. It is a cost issue rather than a "cannot be done" issue. It depends in part how much the consumer would be willing to pay for electricity from offshore. Q287 Jessica Morden: This is a question for Falck about community engagement. You talk in your submission about how you engage with local communities. Could you explain a bit more about that and, in particular, the Co-op investment scheme you have where local communities can invest in wind farms? Mr Jones: If we talk about Cefn Croes first, there is a community trust that has been set up. Falck will pay £58,500 a year into the trust and that money will be managed by five trustees. I am a trustee. There are two trustees from each of the community councils at Pontarfynach and Blaenrheidol. We are in the process at the moment of registering the trust as a charity and in the coming months we will be looking to spend the money and allocate the funds. That process has been going on since the wind farm was commissioned and the money is available now to spend. We are just putting the process in place to make sure we can comply with the charity legislation. Q288 Jessica Morden: Has it been well received? What kind of things will you spend the money on? Mr Jones: In terms of being well received, we are having meetings with the two community councils at the end of the month to launch the trust. The types of things that we are spending the money on are recreation, public amenities and leisure activities. We are looking for the ideas to come from the local communities. Rather than the trustees saying, "This is where the money will be spent" the projects will be submitted by the community and the trustees will decide how to allocate the funds to the projects that have been put forward. Mr Heller: We also have a programme called the Land Management Plan where we all put £10,000 a year into it and the objective is to restore the land and improve it over what it was when we first started the project, to an area of intense commercial forestry and agriculture. The idea is to try and improve the project site and make it better than it was before we even began the project. That is separate funding. Q289 Jessica Morden: In the evidence we have had from the Wales TUC, they stated that of all the renewable sources wind technology is also likely to produce the most jobs in the immediate future if the manufacture of wind turbines is carried out in Wales. Can I ask where the wind turbines for North Hoyle and Cefn Croes were manufactured? Mr Heller: The Cefn Croes turbines were manufactured in Germany. There were no turbine manufacturers in Wales. As a matter of fact, the tower manufacturing and cabling engineering was established and had financial difficulties for a number of years before it ultimately failed. They were getting very little business because of the stop-start nature of development in Wales and did most of their business exporting out of Wales but ultimately that business failed. Q290 Jessica Morden: Nobody manufactures wind turbines in Wales? Mr Heller: No. Q291 Jessica Morden: There are no plans in the future that you are aware of? Mr Heller: None that I know of. Q292 Jessica Morden: Should it be granted planning permission, where will the wind turbines for Gwynt y Mor be manufactured? In Germany? Dr Legerton: It is EU procurement law that we will have to go out to tender for that project. It would be impossible for me to say who will supply the turbines because it depends on the results of that open tender as to who is best placed to meet those demands. I would hope however that Welsh manufacturing has a strong role to play even if it is not in the turbine supply itself but in supplying components for these wind turbines. Being local to the project gives them some commercial advantage in doing their own tenders to those suppliers. There is a lot of scope for Welsh supply but we cannot categorically say it would be from this company at this stage. Q293 Jessica Morden: Would you agree with the Wales TUC that local employment predictions should be a key part of the planning consents and in the generation of planning consents? Dr Legerton: We have included estimations of local employment and UK employment in the Gwynt y Mor application. I am not sure that I would agree it should be part of the planning determination or not. I would have to give that more thought. I think it is perhaps straying from one issue to another. There is definitely a role to play in using renewables to bring economic development but how closely that should be linked to planning consent needs consideration. Q294 Mark Williams: How many jobs in Wylfa and Cefn Croes are there, running the projects? What is the employment state there? Dr Legerton: I am going to hazard a guess at 20. Mr Jones: At Cefn Croes there are four technicians on site plus a manager and obviously I get involved as far as Falck is concerned. Q295 Nia Griffith: Turning to hydro energy, you state that new small hydro should not be neglected as a valuable additional source of renewable electricity. Can you tell us what potential you see in Wales for developing hydro electricity and what obstacles we may need to overcome if we wish to go down that route? Dr Legerton: My colleagues who work with me in hydro guided our submission on this point and they identified that there is still untapped hydro resource in Wales which can be utilised. Their suggestion was that perhaps a 20 megawatt target by 2010 would be a realistic capacity to aim for. I go on their guidance. That is the order of magnitude I think we could see yet still to come from Wales from hydro energy. Q296 Nia Griffith: Could you put that in context by telling us how much that 20 megawatt by 2010 is in terms of meeting renewable targets? Dr Legerton: It would be small but that is no bad thing. The philosophy of the renewables generation as a whole is that it is applicable in all sorts of scales and sizes from micro generation at rooftop to more offshore wind farms. I do not think anything is less useful just because it is of a comparatively small scale. It is all about adding up the total contribution to renewables that really matters and that will come from a wide range of different technologies. Q297 Nia Griffith: That might link into some community projects? Dr Legerton: Yes. Smaller projects tend to lend themselves more to community scale involvement. Q298 Mrs James: You mentioned in your introduction that you are involved in coal technology as well. We are aware that the National Assembly in Wales is currently working on a coal planning TAN. Could you tell us a little bit more about this? Mr McElroy: The coal TAN plan is being developed to look at how Welsh coal resources might be exploited going forward. We have some involvement in that. I am not involved myself but that is very much looking at the planning guidelines for the future open cast developments in Wales. Obviously for us at Aberthaw, investing as much as we are at the moment, we see an important role for coal in south Wales over the next ten or fifteen years. We would like to see competitive Welsh coal. The alternative is that we have to import that coal. Q299 Nia Griffith: You mentioned, "... of particular concern to us is the possibility that opportunities to extend the productive life of the Welsh coalfield could be frustrated by changes in the planning regime for coal mines." Could you explain what you mean by those concerns? Mr McElroy: I am not fully up to speed on any specific detail with regard to the coal planning TAN but I understand that one of the issues is the proximity to housing development and other development. That is certainly one of the issues that is being looked at, at the moment, in terms of what the guidelines should be for that area. Q300 Mrs James: You mentioned hydro. What role are you as a company particularly playing in the development of tidal and wave technology in Wales? Dr Legerton: Through our juice fund, which is money raised through the sale of electricity from the North Hoyle offshore wind farm, we are putting about £800,000 a year into research and development into marine tidal wave type projects. We are supporting the development of those new technologies through that juice fund. Q301 Mrs James: Is that within the company or open to other organisations? Dr Legerton: It is open to other organisations to make submissions to apply for that funding, to put into their own business aims. Q302 Nia Griffith: Could you tell us about the potential for Wales for tidal and wave projects? Dr Legerton: I am a wind farm developer but I can tell you what I do know. Every renewable has its role to play but of the two tidal is probably more limited in its application than wave energy certainly in Europe and worldwide. Wales does benefit from some high tidal ranges. That is one of the issues we have to address when building offshore wind farms, so there is resource there. It all comes down to when and if they become economically viable to compete in the technology market which we have today, but there is certainly potential there. Q303 Nia Griffith: Have you designed one which does both at the same time? Dr Legerton: I have not seen it done yet, no, but you should patent it. Q304 Mrs James: In Swansea it is of particular interest and there is a lot going on there. You are not specifically involved at the moment with a project? Dr Legerton: No. To the best of my knowledge we have no direct ties with any private projects at the moment. If I am wrong in that, I will correct it. Chairman: Thank you very much for your evidence and in particular for your written evidence. If you feel that there is, in the light of the questions today, anything further that you wish to share with us, we would be very pleased to receive it from you. Thank you very much. Memorandum submitted by British Nuclear Fuels Examination of Witnesses
Witnesses: Mr Adrian Bull, Head of Energy Policy Studies, and Miss Dorothy Seed, Head of Stakeholder Engagement, British Nuclear Fuels, gave evidence. Q305 Chairman: Good morning. Could you introduce yourselves for the record? Mr Bull: My name is Adrian Bull. I am the head of energy policy studies within the energy unit at BNFL. Miss Seed: I am Dorothy Seed, head of stakeholder engagement, also in the energy unit at BNFL. Q306 Chairman: Could you explain your operations in Wales? Mr Bull: BNFL is one of the UK's biggest nuclear companies. Specifically in Wales, we are the managing contractor of two sites through our British Nuclear Group business, our major clean-up and decommissioning site management business. We are the operator of the Wylfa operating station on Anglesey and we are also the site manager for the Trawsfynydd station which has operations now getting ready for decommissioning. Q307 Chairman: What is your role in the proposed decommissioning of the Wylfa power station? Mr Bull: At the moment we are busy operating it. Once it reaches the end of its lifetime in 2010, we would expect that the owner of the site, the Nuclear Decommissioning Authority, will put a tender out for future aspects of the site operation such as decommissioning. Potentially the British Nuclear Group could be a successful candidate in winning a bid for decommissioning but that is something to be determined in the future. The owner of the site is the Nuclear Decommissioning Authority and that would be a decision for them to make. Miss Seed: The Wylfa will cease operations in 2010 and the end date was set out about five years ago as part of the suite of end dates for the existing magnox reactors. The planning for that closure has been taking place in terms of looking at when the fuel has to be manufactured and the linked plant that will create the various products to go into the fuel and its fabrication. A whole sequence of events has had to take place to align with that end date. Q308 Mr Jones: The Assembly Government has indicated that it wants to extend the life of Wylfa. How easy would this be in practice? Mr Bull: In practice there are a lot of considerations to be weighed into that decision. The first point is to restate it is not a decision for us to make; it is a decision for the Nuclear Decommissioning Authority as the owner of the station. It is not simply a question of taking a decision about the station in isolation. Wylfa is the last of a series of magnox power stations. All of the fuel for those stations has been manufactured at the Springfield site in Preston. They are just in the process now of making the last fuel for Wylfa. They just recently cast the last billet of uranium which is to go into making the final fuel for Wylfa to dispose of by 2010. Probably the more significant consideration relates to the fate of the fuel once it comes out of the reactor. The consideration there is that there is only facility for reprocessing that fuel. That is the magnox reprocessing facility at Sellafield. Under the terms of our commitments to the OSPAR agreement we have to end marine discharges from the Sellafield site by 2020 so the closure date for that reprocessing facility is set in 2012. It is not simply a question of looking at could we run the reactor for another five years as a decision to be made in isolation. How we would manage the future fate of the fuel post-2010 and whether there is any potential at all for extending the life of the reprocessing facility whilst still meeting our OSPAR obligations for 2020 is a major challenge. Our understanding is that the NDA do not consider it realistic to extend the life of Wylfa beyond 2010. Miss Seed: That would be a decision for the DTI to take on recommendation from the NDA. Any proposal to extend the life or otherwise will be decided by the DTI. Q309 Mrs James: You talked about Sellafield and the knock-on effect of Sellafield on Wylfa. If Sellafield was to close down, where would waste from Wylfa, if it was extended, be dealt with? Mr Bull: There is not really an alternative that would allow you to run the station with the fuel it takes. Magnox fuel has to be reprocessed and there is only one facility to do that. It certainly would not be viable to think about building a new facility to take that fuel for the extra years of potential Wylfa extension. It would have to go through that facility at Sellafield. The two are inextricably linked. Q310 David Davies: It is interesting because I was under the impression that there was quite a strong possibility that the lifespan of Wylfa might be extended. From what you are saying, that is not likely at all. Waste would have to be a factor if it was because there is nowhere else for it to go. Is that a fair summary? Mr Bull: It is not a general waste question; it is spent fuel from Wylfa. Magnox fuel has to go through the reprocessing facility at Sellafield. That is a very clear constraint on the operation of the whole magnox fuel site. Because Wylfa is the last of the stations, that makes it a particular consideration. Looking to the future, if we were to think ahead to new nuclear in the UK, we have learned the lesson from having adopted a design of reactor which is unique to this country and we are now running the last few of those stations but we are constrained in terms of fuel supply and the ultimate route for that fuel. In the future we will be adopting standard, international designs for our fuel supply. Q311 David Davies: I do not think this is too much of a deviation since you mention fuel. When we met the DTI here, I asked them specifically how much uranium there was left because people having been saying there is a shortage. The DTI could not answer so I did my own research which suggests that there are supplies of uranium 235 for about 100 years. Uranium 238, which is the sort that goes into the new nuclear power stations, could be made to last for thousands of years. Is that correct? Mr Bull: Uranium 238 is used for fast breeder reactors, which is a different type of technology from anything that we are thinking of or might be considering in the medium term. Q312 David Davies: These are not the APG 1000, if that is the correct name for the reactor? Mr Bull: It is the AP 1000. Q313 David Davies: They do not use 238? Mr Bull: There would be both isotopes in there because uranium is a mixture of two different atoms. It is the uranium 235 which is the fuel content in the historic magnox, the AGRs, and it would also be the isotope that provides the energy in an AP 1000 or anything you might think of for potential new nuclear in the UK. Q314 David Davies: Is that estimate of 100 years about right in your opinion? Mr Bull: In respect of any mineral resource or any fuel, there is not a clear, straight answer as to how much there is in the world as a natural resource. It depends on the cost of extracting it and at what level it is cost effective to do that. The witnesses from the DTI referred to the authoritative document on this which is the OECD's study on uranium resources, popularly known as The Red Book. That identified that there are known resources of uranium that are extractable quite affordably to fuel at the current rate of use of uranium through the global nuclear industry for around 50 or 60 years. If you look at uranium resources that are known but are slightly more expensive to extract, perhaps less than twice as expensive, and you are also extrapolating from what they call likely resources rather than specifically identified resources, that pretty much trebles the amount of uranium there is in the world. Q315 David Davies: Was that based on current usage or was that extrapolated to take account of the fact that various countries are developing their nuclear technologies? Mr Bull: The figure is based on the annual usage of uranium at the moment in the world's nuclear industry with about 440 reactors. If you can treble it, if we were to think about trebling over the next few decades the size of the world's nuclear effort, you would be able to operate all those potential new reactors for their design lifetime of 150 years or so with uranium we know about today. Q316 Nia Griffith: Returning to the waste issue, you mentioned that wastes associated with modern reactor designs are much smaller in volume and are already treated and prepared for long term storage. Are you there referring to existing reactors or are you talking about the new generation that is coming along? Mr Bull: It is a process of continuous improvement. The kind of reactor like the AP 1000 or the EPR produces much less waste than older designs like magnox or the Gaskell reactors. We already have Sizewell B in the UK, which is our one water cooled reactor and perhaps a more modern design than the magnox or AGR stations. There is still an improvement in the waste volumes per unit of energy produced but it is less pronounced compared to the AP 1000 and the old magnox stations. Q317 David Davies: How much waste are we talking about from the new generation of reactors? Obviously, there are different grades. There are some things which are radioactive but are not terribly dangerous to life. Of the high level radiation, how much is produced annually by one of the new power stations? Enough to fill this room? Are we talking about enough to fill this building or perhaps a very small amount? I just do not know. Mr Bull: Perhaps it is instructive to think about the three different types of waste. There is low level waste which is things like tissues and protective clothing and the significant volumes of concrete that make up the reactor and the building. There are then the two that are of more concern: intermediate level waste, things like the metallic tubes that the fuel is held in, and high level waste, which is waste that can generate its own heat, things like used fuel as it comes out of the reactor or it can be the very high level, concentrated waste that would come out of reprocessing. I think the gist of your question was for a new nuclear station. If we were to take the fuel for perhaps ten of those that we would need in a year which would be enough to keep the proportion of the UK's electricity at around 20 to 25% coming from nuclear, the fuel for a year's worth of that would fit into this room. Q318 David Davies: Everything? Mr Bull: Everything. Q319 Mrs James: In your submission you talk about the historic legacy of dealing with waste and decommissioning costs et cetera, so I take it that the decommissioning costs are separate or different to what I would know as storage costs of waste products. You also talk about the legacy costs which are, I take it, from previous amounts of waste that have been produced. I am a little confused about what the actual costs are. What percentage would you allocate to the disposal and the safe management of those wastes, however they are produced or when? Mr Bull: In terms of the proportion of the generating costs for nuclear electricity, the waste management cost by whatever route - we would assume it would not be from reprocessing - comes in at about 2 to 3% of the total generating costs of electricity. There is a similar proportion that would represent the decommissioning costs of the power station at the end of its life. Both of those are based on some fairly conservative assumptions about what you would have to do in respect of waste management and decommissioning. There is not a UK policy in respect of radioactive waste management. The Committee on Radioactive Waste Management is currently finalising its report on that and is due to report this year. If they are going down the route of international best practice from elsewhere in the world, any of the short list of options that they are looking at would be well within that. Q320 Nia Griffith: If Wylfa did close in 2010, what sort of timescale would you be looking at for decommissioning? Mr Bull: The timescale for defuelling, taking the fuel out of the reactor, runs for another two years until 2012. Miss Seed: The overall decommissioning goes in a number of different phases. Defuelling is about two years. From that we are going to a period of care and maintenance which is getting rid of some of the ancillary aspects of the power station which will last I think for about 20 years. Mr Bull: The care and maintenance preparation would start in 2009 and end in 2025 according to the British Nuclear Group data. Miss Seed: Those are the current time frames. The NDA has issued its draft strategy in terms of proposals to look at those time frames again. It may well be that those end dates will change as far as the length of that total decommissioning period is concerned. Q321 Mr Jones: You indicated in your submission, in the section headed "Action is Needed Now" that modern nuclear reactors take around ten years to build and commission, presumably from the moment that the decision to do so is taken. On the assumption that the forthcoming energy review does conclude that we should be building a new generation of reactors in this country, would it be the case that, for a period, this country would be without any nuclear generated power at all? Mr Bull: The ten year period is not just the building and commissioning of a station. You are quite right; it will be ten years from the decision being made, if one were to be made in the relatively near future, to the first generation of electricity. The first three years would be our estimate for what it would take to license the new technology for use in the UK, technology like the AP 1000 or the European pressurised water reactor. Although they are licensed for use in their country of origin, they are not yet licensed for use in the UK, so there would have to be a review by the safety inspectors to satisfy them about these designs which do not have the equivalent kite mark of approval. That is a one off process. We would estimate two years for a public inquiry to look at the local issues. After five years you start the breaking of the ground to do the building and commissioning. The total period of ten years is absolutely right. The latter five years is the building and commissioning component of that. In respect of whether we would be without nuclear generation, for Wales, the answer is yes because we are working on the presumption that we discussed before that Wylfa will close in 2010. For the UK in general, no, because our last advanced Gaskell reactor will run until 2023. According to the current schedule at Sizewell B, our pressurised water reactor is due to run until 2035 so we will still have nuclear in this country but we are expecting quite a number of the stations, on current projections, to close within the next ten or fifteen years. Q322 Jessica Morden: Would it make sense for new build to be on existing sites or would new sites be considered? Mr Bull: It absolutely makes sense to look at the existing sites. There are three sensible reasons for that. The first is they already have nuclear site licences. That is a step in the process that is avoided. There is a grid infrastructure there, the substations and so on, which although it may need to be refurbished and upgraded, would still be easier than starting with a brand new site. Perhaps most importantly - referring to the phrase that we heard from your witnesses earlier of "inverse NIMBY-ism" - we get very good levels of support for nuclear in the communities around where we have existing stations, as well as having the skill base there. A lot of the people who have quite high quality jobs within the nuclear industry at the moment would retire at the date when the reactor ceases its operation and they will be very keen to see new nuclear capability erected and operational on the same site for their own reasons. Q323 Jessica Morden: There has been press speculation about a new site being in Aberthaw. Can you shed any light on that? Mr Bull: I only know what I have read in the press which I am sure you have read as well. I was surprised to see that. I have not heard any speculation on it before. The industry position has always been that on or adjacent to the existing nuclear power station site is the sensible place for the new nuclear to be built. Q324 Jessica Morden: Would there be any benefit from new nuclear being built in south Wales? Mr Bull: There is demand in south Wales. South Wales is currently a significant importer of electricity, whereas north Wales is an exporter so from that point of view new baseload capacity of any kind in south Wales would be helpful in the longer term to ensure the security of supply and so on. New nuclear would be focused on the existing nuclear sites for the foreseeable future. There is no commitment to look at sites in Aberthaw or elsewhere. Q325 David Davies: What advances have been made in the design of nuclear power stations? I am particularly interested in the AP 1000 which I think would be the most likely kind of station to be built if we do get any more new build. Could you tell us about the step change in terms of output? Would that be increased or would we simply be replacing existing output? Can you also mention something about the costs in terms of kilowatt hour? We asked the representatives of Falck about that and I think we ought to ask you the same question. Mr Bull: To take the AP 1000, in terms of its output, that would be typically around 1100 megawatts which is just over a gigawatt of electricity generation from a single reactor. The Wylfa site at the moment, to put that in context, delivers around 980 megawatts from its two stations. That is of the same order. The EPR design is a bigger reactor at around 1600 megawatts of output for a single reactor. In terms of how they differ from past technology, there are a lot of developments in terms of the simplicity of design which both those reactor designs embody to quite a substantial extent. We have realised in this country that moving to more and more complex, one-off designs is not necessarily the way to go, particularly when you are looking at attracting private sector investment and delivering these stations on a longer timescale but a relatively short timescale of a three year construction within a five year construction and commissioning period. That can be achieved through elements of modular construction so that there can be a lot of construction activity going on in parallel off-site, if we had large modules like control rooms and so on being shipped to the site near completed and assembled on-site. Also, some of the features of the reactor design itself. The AP 1000, for instance, embodies what we call passive safety. Instead of relying on multiple sensing, instrumentation and actuation systems within the reactor, it is a more simple design that relies on things like gravity and natural thermal circulation to assure safety. Q326 David Davies: To put it in layman's terms, what are the chances of one of these things going boom? Mr Bull: That is the kind of question you always dread being asked because anyone who works in the industry will know you can never give an absolute guarantee of safety on anything. Increasingly, as designs progress, they meet tighter and tighter safety standards for their operations against different levels of accident scenario that people might look at. For instance, the AP 1000 is even safer than designs that are operating today. Q327 David Davies: What happens if somebody fires a jumbo jet at it? It is a serious question. I am asked these questions all the time and I do not know the answers. There would be an explosion but would the whole thing go up or would it simply be an explosion and some sort of collateral damage to the surrounding area? Mr Bull: That is a question I am much more comfortable being asked. The big advantage of nuclear power stations is that they are some of the most robust structures on this earth. They were designed that way originally not to be resistant to aircraft impact but to keep what is inside inside. It works both ways. The industry does not do full scale testing of flying planes into power stations, you will be very relieved to know, but there has been some experimental work done in the United States where a sample of concrete wall, representative of the kind of wall used in a nuclear station, was erected in the desert and a Phantom military jet fully loaded with fuel but without a pilot was flown into the wall. Not surprisingly, it wrote off the plane and made about a six inch indentation in the concrete wall. That is one piece of hard, practical evidence about the robustness of these structures. There has also been quite a lot of modelling work, as you might expect, since September 2001, looking specifically at the question you ask. The best and most authoritative in the world was done by the Electric Power Research Institution in the United States and their studies showed that there would be no release of radioactivity from any credible aircraft impact. Q328 David Davies: Is 2.3 pence per kilowatt hour a fair summary of the total cost of building and running a nuclear power station? Mr Bull: Typically, it is a figure of that order. It does very much depend on how many you build. The cost of a single unit, the first of its kind, built in the UK would attract some one-off costs. If we were to look at building the same design in several locations, that brings the average cost down quite notably. We have seen that happen in other countries of the world. It is happening in the Far East. It is the approach the French have always adopted with around a dozen always of the same design. After they have built a mini-series, only then do they upgrade to the next level of design. They have seen substantially better economics. It is worth saying again that new nuclear in this country would not be on the same basis that we have done it in the past. In the magnox series of reactors in particular, every one of those was different because we were right at the forefront of the nuclear industry. At the time, the industry was government run and the technology was in its early stages. Each time we built a design, we identified a number of ways in which we could improve on the next one. With seven AGR stations, we have four different designs. We have three pairs and Dungeness which is a single design on its own. We have again a series of changes in the design. The only way in which the private sector would look at new nuclear in this country would be if we were to take standard, internationally recognised designs that are being built or approved elsewhere in the world and built those in the UK to the same spec. That is the model that is being speculated upon. Q329 Nia Griffith: When we talk about cost, we also need to take into account the raw material, the uranium. One of our suppliers, I presume, is still Australia. Mr Bull: That is right. Q330 Nia Griffith: Do you envisage price rises with competition from other areas in developing nuclear? When you have a shortage of commodity people tend to put up prices. What competition is there out there in terms of variety of source of supply, because we have been hit by a security of supply issue in gas and we would not want the same to happen on this. Mr Bull: Absolutely. Australia is one of the source countries. Canada is another big source of supply. The timescale for identifying new mines or extending mining operations that are already in existence is similar to the timescale for building new stations so the supply side in that respect can keep track of where the demand is likely to come from and how it is likely to change around the world. There is a forward visibility of what the demand curve is going to look like. You specifically referred to a comparison with gas. That is a good point to make. If we look at electricity from a gas fired power station, the cost of the raw gas itself accounts for between 60 to 80% of the total generating cost. As the gas price in the world market changes, so the cost of the electricity from the power station goes up and is very closely linked to it. For nuclear electricity the total fuel assembly accounts for about 20% of the total electricity cost but of that only about 5 to 10% is the uranium. The rest of it is enriching the uranium and fabricating the tubes and the finished fuel assembly. You can afford a much bigger rise in the world market price of uranium without seeing much of an impact on the electricity costs compared to gas. The two are very closely linked and obviously that is why gas prices have been going up around the world recently. We have become a net importer and much more linked to the world gas market which is reflected very strongly in the electricity price. Q331 Mrs James: My concern is that the only benefit of nuclear power, as it is always portrayed, is it is cheap. In the sixties when these were being proposed, we were told that nuclear energy would be pennies, that we would all see a time in the 21st century when we would halve fuel costs. There was a very rosy picture painted and frankly I think the safety side of it was possibly played down at that point. We are much more aware now. When will nuclear get too expensive? You have already talked about The Red Book. You have talked about 50 to 60 years of uranium reserves that we know of now. We are a much more educated generation now. We are very aware. There are no undeveloped parts of the world so we have a pretty good idea where these uranium reserves are. Can you envisage a point where uranium costs will become prohibitively expensive or where we just run out of uranium? Mr Bull: I am glad you have raised that. We know of 50 years' worth of supply of uranium at a market price that is seen today as a similar sort of figure that you will see in virtually every commodity. Part of the reason for that is prospectors simply do not go looking for where the commodity is going to come from in 100 or 150 years' time. What we have seen is substantial development in the technology used to prospect for uranium. To give you one example, a lot of the work done scanning in Canada for uranium resources was done some decades ago on airborne scanners. They would fly a plane over. It had equipment on the plane that would look below the ground and sense what the geological makeup of the ground was. At that time, that equipment could sense down 100 metres into the earth's surface. The technology we have now will go ten times deeper than that so we know we can look a kilometre down rather than 100 metres down. We as an industry have not been back to do that because we already know where the uranium for the next 50 years can affordably come from. There is no real impetus to go and look beyond that. We find this picture with a number of mineral types that people look for. As demand goes up and the price goes up for a short period, people go out and look much more carefully and extensively for where it will be. I have seen data that is true for a number of minerals. You find world resources going up once the price goes up demand starts to go up because there is an awful lot more exploration done in finding new deposits and reserves. If we think about the uranium that we already know about that would fuel a world fleet three times as big as the one we have now right the way through to the design life of those power stations, the question you are asking is not relevant to thinking about our future energy needs in the UK and the decisions we might make in the next 10, 15 or 20 years about what kind of power station to build. Whatever happens elsewhere in the world, we know that there is uranium there to provide the fuel for any installations we might think about building. Q332 Mrs James: It appears to me that nuclear is on a very advantageous playing field. We have heard evidence from other renewable industries that their research and development costs are prohibitively expensive. Always the bottom line is in comparison to nuclear you just cannot make the grade. I see it is a much broader picture of having everything in the mix at some point. Mr Bull: Absolutely. I certainly would not argue that it should be nuclear to the exclusion of all else by any means. A balanced mix is the absolute key to managing security of supply in all its forms. When you asked the question about the big strength of nuclear, I genuinely did not know whether you were talking about the security of supply, the cost or the low carbon nature of nuclear. Depending on who you talk to, any one of those three can be very important. It is nuclear as part of a balanced mix and as a way of allowing us to make better use of our fossil fuel deposits because there is no other practical use for the uranium that we have. When we look at things like oil and gas reserves, we cannot just think about using gas, for instance, in gas fired power stations. We have other industrial uses of gas. We have gas domestically and so on. Finding an alternative to gas in the electricity generating sector, based on a resource that we are not looking to use for other things, allows us to extend our gas and oil reserves further into the future while we look for the very long term solutions that your question I think was hinting at. Q333 Nia Griffith: Can we return to the timescale? If you build a new nuclear reactor, what is its lifespan before you decommission? Mr Bull: The typical operating lifetime would be 40 years but we are already seeing in countries like the United States reactors coming up to operating close to 25 or 30 years. Quite a number of those have put in for a lifetime extension to extend their safety case for another 10 or 20 years' operation beyond that. Lifetimes of 60 years are certainly not infeasible. Q334 Mrs James: You mentioned CO2 emissions. Can you explain to us what levels of CO2 emissions are made by nuclear power stations? You talked about the advantages. Mr Bull: Do you mean which part of the fuel cycle contributes to ----? Q335 Mrs James: Just overall really. You talked about it as a benefit. Mr Bull: Nuclear electricity is carbon free at the point of generation. The power station does not produce carbon dioxide or other greenhouse gas emissions in the way that fossil fuel stations do. Overall, we have to take into account the emissions associated with mining uranium, transporting uranium around, enriching it, the energy that goes into building the power station and the energy required associated with waste management and decommissioning. When we factor all of those into the picture, we find that nuclear is about on a par with the best of the renewables. It is about as low overall as you can get in terms of its CO2 emissions. Q336 Mrs James: Do you think that you can make a contribution to the government's climate change goals? Mr Bull: Absolutely. We already have nuclear, both in Wales and across the UK, making a substantial contribution to the electricity goals. We have to recognise that if we allow those stations to reach the end of their scheduled lifetime, to close and be replaced by something else, unless that all comes from renewables, the emissions will go up. Even to keep our CO2 emission levels at the level they are now is going to be quite challenging as our nuclear stations close. If we are serious about making the major cuts in our CO2 emissions that people are talking about now, the UK government will have to be committed to putting ourselves on a path of a 60% cut by 2050 across all our industry. We need to be looking at making huge reductions in the electricity sector and that means a much greater contribution to all low carbon technologies. It is not just nuclear and renewables; it is clean coal with the technology to capture the CO2 and store it so it does not enter the atmosphere, but again that is a very new technology and it has not been demonstrated on a large scale as yet. Certainly we would encourage work to see that brought to a commercial scale development as well. Q337 David Davies: You are, if anything, being quite hard on yourselves because it must be the case that nuclear power is as green in that sense as wind power. When we spoke to the representatives from the wind energy organisations, they accepted that there has to be some form of back-up operation in place in case of no wind. They also mentioned, unless I misheard, that there has to be some sort of back-up operation in place in the case of nuclear energy in case there is some sort of glitch. Is that the case? Mr Bull: I think it is a general comment about the supply side of the electricity industry anyway that, if you are taking a national view of matching supply and demand minute by minute, which is what we have to do - electricity does not lend itself to being stored easily - there is always the possibility that a major station will go offline for some reason. We have the example of Sizewell B quoted because it is now the biggest single station that we have in this country so it will have the biggest impact. Q338 David Davies: Does it go off very often? Mr Bull: I could not give you the details off the top of my head but no. Q339 David Davies: It works more than 30% of the time? Mr Bull: The typical load factor - I think you discussed this with the earlier witnesses where we were talking about figures of between 20 to 30% - and the equivalent figure for a nuclear station would be in the high eighties or early nineties per cent. The difference would be that the down time for nuclear stations is made up almost entirely of scheduled refuelling closures. Q340 David Davies: Can you turn up the volume to manage peak demand? You get certain peak demand for electricity. Can you switch up the power and switch it down again fairly quickly? Mr Bull: No, because nuclear operates very closely to rated capacity all the time. Because of the nature of it, it has low operating costs and relatively high up front capital costs, in many ways like renewables. Once you have it there on the system the lowest margin cost operator is probably a nuclear station. Q341 Nia Griffith: Supposing the UK government decides to go down the nuclear route but the Welsh Assembly remains opposed to it. How would you see this difference of approach being managed and could you see the UK pursuing a nuclear energy policy with Wales remaining out of it? Mr Bull: There are two slightly different but related questions. The first part I think you discussed in some detail with witnesses from the DTI a few weeks ago. I looked at their evidence and I certainly would not contradict their view that the decision ultimately rests with the Secretary of State and Westminster. In relation to the second part of the question and whether there could be a nuclear free Wales but a nuclear programme in the rest of the UK, yes, that is feasible. There are different factors that would weigh against different sites. Wylfa would have some features that would be good or bad; other sites would have different pros and cons. Ultimately, it would be a decision for investors to make and site owners as to how that panned out but, looking at the impact that would have on Wales, Wales currently is a net exporter of electricity and north Wales in particular is a net exporter of electricity. That would leave Wales importing, I would guess, substantial amounts of electricity unless there was some other capacity built in Wales, in which case the question would be can you manage the security of supply aspect as well as the carbon emissions aspect. If you were building a new baseload station, that would traditionally be a gas or coal fired station. There are scenarios in which you can think of other types of capacity built in Wales to meet the demand, perhaps at the expense of carbon emissions, or else look to a future where both north and south Wales are importing electricity from elsewhere. Q342 Nia Griffith: There are things like tidal and there is the supply issue as well. Mr Bull: If that becomes cost effective certainly there is a role for that to play and Wales, as I understand it, has significant coastal resources that would be suitable. Chairman: Thank you for your written and oral evidence. If you feel that you want to add to anything in the light of the questions that have been posed to you today, we would be very pleased to hear from you. Thank you very much.
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