Examination of Witnesses (Questions 220
WEDNESDAY 13 MARCH 2002
220. You have mentioned, and we understand,
that renewables will include a contribution of energy from waste,
which at the moment is a very big political hot potato. When we
are looking at incineration that is one source but there does
not seem to be much in the way of gasification going on at all,
nor pyrolysis. There is also a quite substantial possibility that
incineration will be taxed in the same way that landfill is. What
would you see is the likelihood of a quarter of the target of
renewables being contributed by energy from waste given the political
backdrop that we have got with that increasing unpopularity?
(Mr Byers) I can feel an itch on my right, but I shall
just start the answer, if I can. I think one must separate energy
from waste and the consideration of municipal solid waste, which
is the hot potato in terms of incineration and dioxins, etcetera.
I would agree with you that there are no visible signs of massive-scale
pyrolysis and gasification which are proven yet, but there are
a number of smaller-scale technologies which are further than
just the prototype stage. Energy from waste includes all types
of waste, whether they be anaerobic digestion of sewage or whatever.
The difference I think Mrs Clark alluded to is that we talk about
growing crops for energy. It is actually different from using
agricultural wastes in some form of incineration or gasification,
and avoidance of landfill by utilising agricultural waste and
biological waste from human beings is an area which we are developing
in this country far behind some other European countries. Collectively
the energy crop and the biomass generation from waste fuel, whether
it be hedge clippings or whatever, needs a fundamental, different
way of harvesting, organising local authorities, so that these
do not become waste, they become avoidance of incineration, avoidance
of landfill and active recycling effective enough to produce renewable
(Dr Pitcher) Yes, it was a similar point I was going
to make on the fuel. The definition of waste at the moment in
England and Wales differs from that in Scotland. For instance,
some of the material which comes out of the harvesting operations
of woodland is regarded in England and Wales as a waste and therefore
currently cannot be used in projects, whereas in Scotland it is
not so regarded. So there is a clear action there to have that
defect put right so that there is a clear definition of what biomass
is. What in the past may have been considered as a waste is now
actually a biomass fuel and grown as part of future projects.
The second point I wanted to make was that the Arbre project utilises
gasification technology, and the fuels which we use for that are
energy crops and forestry. However, for the future that technology,
once it has gone through a series of commercial demonstrations,
may well prove suitable for gasification of other fuels, of other
materials currently regarded as waste which could be regarded
as a fuel.
(Mr Byers) We would like to see Government advocate
slightly more flexible definitions, so that certain technologies
can trial themselves, whilst qualifying as renewable energy, without
such strict guidelines. For instance, the 2 per cent limit on
non-biological fuel in certain guidelines recently agreed stops
certain technologies going ahead purely because of the string
round the bales.
221. Do you think that if you did that, though,
you would leave the door open for domestic waste incineration
to be further strengthened, as a possible alternative waste, in
amongst all the other things that you have described?
(Dr Pitcher) Perhaps I can cite the work which we
have done with the European Commission on this sector. The primary
objective is to increase recycling aspects from the current waste
streams that we have. What we are saying is that the biodegradable
material which is left it must classify as biomass. However, the
point that David was just making in terms of material which is
used to bind straw bales is that that element which is going into
future projects actually takes it above the 2 per cent limit,
which is preventing the projects going ahead. We have made this
comment to the DTI and we have asked that it is urgently reviewed,
where it can be demonstrated to be part of the fuel supply chain.
222. We spent a little time in Germany the week
before last. The technical problem they emphasised to us was first
the problem of storage which the storage advisers still felt had
not been cracked technically, and the second was the fluctuations
and the intermittent nature of the supply from solar, wind and
so forth. This is still a huge problem in their eyes. Do you agree?
(Mr Byers) It has been ever since I studied physics.
I think there are solutions on the horizon. If you invite Brian
Count from Innogy
223. But are there any on the horizon?
(Mr Byers) Regenesis. In terms of chemical or electrical
storage beyond batteries, it is still quite a considerable challenge,
but I think there are systems not only biological but chemical
which are pretty well commercialised.
(Dr Pitcher) I would like to come in in response to
your earlier question about the mix and picking winners. I think
one of the other advantages of having a spread of technologies
is that it reflects the intermittent nature of some resources,
but there are others which can be regarded very much as base load,
and biomass is one of those which is under the control of the
generation plants to get the fuel in.
224. None the less, things like solar and wind
are intermittent, with problems of fluctuation, are they not?
(Dr Pitcher) Yes.
225. While that remains the case, is it not
going to be difficult to argue for your cause while you have alternatives
which are not fluctuating?
(Dr Pitcher) Yes. I think the point I was making was
that by having a portfolio which includes more base-load type
generation, the effect of a rapidly increasing percentage from
renewables is not only going to be based on the intermittent sources,
it will have a strong element in there of high capacity generation.
(Mr Byers) I think the National Grid are on record
now as saying that the intermittency from interruptible renewables
is not at all a problem from the general load curves of the United
226. That is a very strong statement.
(Mr Byers) Yes, and I am prepared to repeat it as
well. The National Grid will go on record that anywhere up to
20 per cent of renewables in the national energy mix will not
cause technical problems due to intermittency. I can give you
a reference, if you like, for them. So we do not feel that intermittency
is a great detraction from renewable power. I would certainly
agree that if we had reliable, 100 per cent fission storage it
would solve many problems, not least peak loading from expensive
sources of gas turbines. The best type of storage I believe we
have is pumped water storage which we only have, I believe, in
two sites in Wales and perhaps some in Scotland.
227. The other aspect of our German experience
was that the level of investment which they had put in was clearly
several factors greater than what is currently the case in the
UK. They felt that in many cases, for example solar and wind,
this had to be done if you were going to be a serious player in
this market. Would you agree?
(Mr Wolfe) Yes. Certainly there are great advantages
to be won investing at a significant level at an early stage in
development, particularly in solar where the primary issue, as
I say, is one of interim volume. If the German Government put
investment into creating a short-term market, then they will obtain
benefits in terms of commitment of industry, and therefore they
will be reaping the rewards down the road in terms of having the
industrial infrastructure to install into the market in the future.
228. To interrupt you, what they said was that
the solar industry would not exist if it were not for subsidies,
and that really in Europe that would always be the case; they
said that they looked to their real market as the two billion
people who have no electricity in the Third World, because you
put a little power in at relatively low cost and it is the cheapest
way of producing energy, but Europe forget that.
(Mr Wolfe) No, I do not think we see things in that
way. We see investment as being in the interim to enable industry
to drive the cost down to a level where subsidy is not needed
in the future.
229. You will reach that point?
(Mr Wolfe) Certainly the thin film solar technologies
can reach that point.
(Mr Byers) I think we would also comment there that
mass generation in the classical sense from solar photovoltaics
is not likely. There are many examples at the moment where building
materials with embedded PV are equally cost-effective with other
building materials, and all it requires to install them in any
new buildings are government changes in building regulations.
I think we are arguing from the position of the RPA not primarily
for British exports and British jobs, we are arguing for renewable
generation because it is good for the environment. If we can also
build indigenous technologies and export them, all to the good.
That is really a matter for Government to decide, again picking
winners, but if you want to build an industry capable of exporting
large volumes of jobs and goods, then it is certainly a very good
one to look at, but it will not be done without government support,
and that includes some funding for the future technologies.
230. Would you say the case rests on the environmental
argument, and that if that did not exist we would not be considering
any of these things?
(Mr Byers) I think so, yes.
231. As a point of clarification on the various
costs, grants and subsidies and so on, I have in front of me Table
2 of your memorandum of evidence. I want to ask for some clarification
on the timescales here for the various monetary sums that are
mentioned. Looking at page 12, "Energy crops", it talks
about £33 million in the form of £/MW grants from the
DTI. Is that this financial year? Is that the entirety of the
three-year programme? Is this all relating to this financial year?
(Dr Pitcher) No, it is over the lifetime of the programme.
To put that in context, the level of that support will deliver
around about 50 MW or about 60 MW worth of new generated capacity,
and we are looking at a contribution, as we discussed earlier,
of around about 1,000 MW typically from biomass. So we add that
to the sum total of that.
232. I am not terribly good at arithmetic, but
I have tried to total up the amounts in this table, and it comes
to something like £170 million or thereabouts. The Chancellor's
Pre-Budget Report last year spoke of £279 million over three
years going to renewables. Would you say that that is an adequate
sum? It is actually an increase, because I cannot compare like
with like here.
(Mr Byers) From the RPA's perspective, I am not quite
sure you can rationalise the two figures you have in mind. We
do not think this is an adequate support for a fundamental plank
of this Government's and future governments' environmental policy.
We have received the PIU report. We have had a lot of talk about
carbon by 2050. Energy efficiency itself is the greatest aid that
is going to reduce carbon emissions. I will not speak here about
nuclear, but renewable energy is definitely another major component
in reaching overall environmental targets. I see the hand of the
Treasury in determining the policy here. I suspect that a certain
amount has been allocated and a policy has been made to fit. We
shall see how it goes over the next one to two years, but I do
not feel, on the scale of the challenge that we are facing and
from the low level on which we start, that this is an adequate
capital grant structure across multiple technologies some of which
need volume to mature and penetrate. So the answer is no, we do
not feel that it is adequate, but recognise that what the Government
has done over the last year or so has been a great step forward.
233. So £279 million over three years is
not adequate. What would be?
(Dr Pitcher) To take the example I have just given
on the biomass sector, this will deliver around about 50 or 60
MW of new capacity. My company is ready to develop around about
350 MW of new generation biomass projects, and we want to bring
in the private investment that is necessary to enable that to
happen. The best way to do that is not to do it as one project
at a time, but to have a proper programme in place in order that
manufacturing industry, designers and so on have something to
get their teeth into and we get economies of scale coming more
rapidly. So on a straight multiplier, you can see the level of
support that that one sector would need alone. We are very confident
that the cost reduction that we have seen in other sectors like
wind over the last decade
234. That is a big multiplier, is it not?
(Dr Pitcher) Yes, it is. We will see the same coming
on, but that is the one sector I can speak for.
(Mr Byers) I would like to add that we would like
not just more money, but a greater clarity of how you get at it,
because it is extremely difficult. I believe we have identified
at least 25 different ways of getting money out of some department
in some part of Government. The industry is very frustrated by
bureaucracy, by sometimes inability to tap two funds. I might
add that if the whole purpose of grant aid is to encourage efficiency,
drive down the costs, then we do not like some of the processes
whereby only projects that are completed, therefore could have
been financed anyway, may receive grants. I would rather see a
European model, which I have experience of in several countries,
whereby you have got the grant and the grant will be taken away
if you do not perform, rather than if you perform you might get
a grant, which is illogical to me.
235. Can I follow that up and ask you how much
do you think it is not just about the money, or the grant and
the availability of extra support or subsidy, but how much it
is about the overall culture? I am thinking particularly, for
example, of when we were interviewing the International Development
Secretary last week, and we were looking at the options and possibilities
for investment in developing countries. We linked that back to
a previous question that was asked by someone in the House, which
related to what kind of investment there could be in renewables.
There was somehow the understanding that renewables were what
could be considered when the main thrust of investment and infrastructure
investment had taken place first; that somehow or other when we
have done the major bulk of the investment we can add on renewables
as an extra. How much do you think there is scope to look at the
culture of actually understanding that renewables can be at the
core of infrastructure investment?
(Mr Byers) I think I could talk for hours about that.
There are many things I am proud of about Britain and many reasons
why we should fundamentally analyse what our culture is. I think
part of Denmark's success is that they look at the windmills and
they say, "It's our windmill, it's not some American company's
windmill." I am here representing investors who put money
at risk to make money, so I am not advocating completely new public
ownership, but I think that in certain communities and in certain
regions if there was a higher degree of involvement, there might
be a higher degree of acceptance that this is part of solving
my life. That is as true for transport, waste disposal, water
services, but from where I am sitting at the moment, if communities
know, not as an obligation but by a desire which was perpetrated
through schools, through television, through whatever source,
that actually they benefit here in some tangible as well as intangible
way, then it would be a very good thing to inject into the British
culture. It is one of the three or four major aims of the Renewable
Power Association to inform and educate NGOs, the press and the
people, but it needs help from all, in my view.
236. I think that is an interesting point, and
I think it links back to a point you made earlier about photovoltaics
and embedding in overcladding for buildings. I was involved three
or four years ago in a project to put external photovoltaic cells
on a public sector high-rise block to win the landlord's supply.
That proved to be quite expensive. I was interested in your comment
when you said that embedded cells in overcladding material now
are very cheap. Why have we not seen an expansion in that area,
then, particularly in the local authority sector, and also on
the production of commercial buildings? Can you give us some background
on that? A note may be more appropriate. I do not want to take
up too much time on this, but it is interesting.
(Mr Wolfe) There has been an expansion in that area,
from a very low base. I have to point out that while photovoltaics
is embedded into materials there is still a cost premium compared
to traditional grid generation as we understand it. That premium
is coming down all the time, and particularly under the subsidised
programme like what we hope will eventually be a 70,000 or 100,000
roofs programme. That enables the cost premium to come down from
the users' point of view to relatively modest levels. To put numbers
round that, typically today if someone installs, let us say, our
solar roof slate instead of a traditional roof slate, we have
designed this product so that it is to all intents and purposes
interchangeable, with no planning issues, it looks like the standard
roof slate, but it generates power. If someone did that and funded
it themselves, the payback time has been calculated out at something
over 30 years, which for most users is excessive. That will come
down as volume builds, and our target is to get that down to the
three-year to five-year payback time that people are prepared
to use for double glazing, for example. Another way of approaching
this, of course, is to integrate it into building regulations.
One of the main things that has created a massive increase in
the use of cavity-wall insulation is not the fact that it is economicthe
payback time on that is arguably ten years plusbut it is
done because it is a requirement of the building regulations.
The same could be applied for photovoltaics and building insulation,
roof insulation, for example. That, of course, would have a massive
effect on the uptake of it and enable it to be done arguably at
a rather longer payback time than would otherwise be the case.
David Wright: Some further information on that
would be quite interesting.
237. If you have anything, it would be useful
to have a note on it.
(Mr Wolfe) Yes, I would be happy to do that.
238. I wanted to go back a little bit to what
you said about public participation and ownership. Perhaps I can
give you an example of my own constituency where we just faced
the planning application from the largest wind farm in the United
Kingdom to date, and one which is on the horizon, which is three
times that size. There the decisions were taken directly by the
DTI, because this matter is caught within certain sections of
the Act, over 50 MW and so on. Increasingly we are going to see
wind farms to be over 50 MW and therefore they will be taken significantly
by the DTI, it will not be a local planning decision and process
at all. The complaint in your document about public inquiries,
which is particularly true in Wales, of course, holding up wind
farm development, will not necessarily be there. How do we reconcile
what will be an increasingly centralised decision-making process
with your views, as a renewable energy association, to see that
the public can actually be involved in these decisions? That is
one part of the question. The other part is to ask, do you have
any thoughts about actually identifying now the areas and sites
that would be suitable for particularly onshore wind, rather than
biomass which in theory can go anywhere, and where these should
be? I think we found when we were in Germany that they had done
this, they had identified the sites in advance and then they allowed
the local government and the Lánder to work with
the population on how they should be developed. What are your
thoughts on those aspects?
(Mr Byers) I know personally at least 12 entrepreneurial
wind development companies, and there is a very active effort
to identify not just the best sites, which are largely easy to
find, it is the second level of good sites that have not been
identified at the moment. I assure you that a lot of commercial
activity is spent doing that. One or two of those companies are
specialising in ensuring investment comes from the local authority
or the town, particularly if it is willing to buy the electricity
so generated. So I think there is a lot of effort focussed now
on making sure the community buys into the project. I think it
is a misnomer to think that renewable energy companies have an
enormous amount of money to butter up councils or Government,
because the margins are typically thin, they do not have the sort
of money to do community work compared with, say, a house builder
or a developer of land. Having said that, since the last decade,
without consulting the community you get nowhere. So that is one
lesson that has been learnt from the renewable developers. The
involvement and education of the community to get planning permission
is fundamental. You can take it further than that in terms of
an arrangement of selling electricity to the local community.
As to centralised decision-making, it is a very tough one. Certainly
above a certain scale it is going to be centralised. We are advocating
a regional responsibility, more or less for the same reason that
the electricity efficiency analysis says do not put on individual
consumers the obligation to make sure that their iron conforms
to certain regulations, make the iron manufacturers make standard
conformity. So the further down you go towards the individual
consumer of electricity, the less likely you are to get an easy
and speedy approval. Therefore, planning permission has fallen
foul of very local politics in this country, not at the regional
and not necessarily at the central level, because of "nimbyism"
and because of political support which fades as soon as they realise
that it is within their immediate parish. So we are advocating
community responsibility at a regional level, and we recognise
that the larger-scale renewables will be centrally approved, but
I do not think there are too many sites of anything other than
wind that are going to be 50 MW and above. Perhaps Keith might
have one or two examples. 20 to 30 MW is a large renewable plant.
239. It is the visibility of wind farms which
opponents of course oppose and if we could have a note about the
environmental impact that would be useful for the Committee. How
would you overcome the fact which you referred to earlier that
the energy is in the remote west and north basically and the use
is elsewhere and therefore the community that you are trying to
encourage to support these developments in fact is not going to
make use of that energy? For example, in my constituency we have
one of the hydroelectric storage stations you referred to. I could
make a very convincing argument that my constituency is 100 per
cent renewable now, or will be when the new wind farm comes on
board. How can I persuade my constituentshow does anyone
persuade my constituentsto take another wind farm on top
of that when it is plainly not needed for local need? There is
a wider question here. I appreciate it is wider than your Association
and wider than your developments. The other part of that is that
you mentioned selling locally. Have you any examples of that happening
now in the United Kingdom and, if you do, could you give a note
to the Committee?
(Dr Pitcher) Yes, I do. Again, my experience in the
last few years relates directly to biomass. What we have found
is that there is a desire to have projects in areas such as the
four metropolitan councils and the more traditional county councils,
such as South Yorkshire. All of those have asked us to come and
develop the project in that area and, if not, they would like
to give their support for the fuel supply from there. Going back
to the earlier point about a diverse range of technologies, this
helps to overcome the fear that it is not just going to be one
particular form of development we are going to see. There is a
very important message there. Also, what we are finding is that
there is a desire for people to purchase their electricity from
green sources, and again some of the local authorities in our
region are investigating that. Leeds is doing that, a number of
well publicised commercial organisations are doing that. We are
seeing that there is a growing customer demand for buying green
electricity from projects of this type. It is trying to make that
fit with something in their vicinity that they can be actively
involved in and support. I echo what was said earlier by David
that a lot of the time we have spent in developing projects is
at the front end talking to local communities, regional communities,
statutory consultees, who are interested in the principles as
to why we are doing it here and what the benefits at the local
level will be. Provided that is done properly and thoroughly then
you hope that people will then take the ownership of the projects,
not only for the planning but in the years they are in operation
thereafter. We have seen direct confirmation of that process now.