Memorandum by the Institution of Civil
Q1. Given the imminent dependence of the
UK on energy imports, how can the UK maintain a secure energy
supply? What mix of fuels would maximise security?
If security of supply is the primary concern,
then the only course of action for base load generation as current
things stand (and with a view to the longer term), would be a
return to coal fired generation (for which the nation has several
hundred years of reserves) and/or possibly nuclear generation.
The first has the difficulty of CO2 emissions;
so its constraint is to have full CO2 removal and storage to meet
UK/EU offered Kyoto targets, which would attract significant cost
and require innovative resolution.
The second alternative of nuclear, which is
large CO2 free, has the even harder hurdle to cross of general
public acceptance and competitive pricing (neither of which are
foreseeable in the short to medium term). Nuclear also has the
downside of needing a full ten years (or in some cases longer)
from planning to commissioning for any of its developments.
Gas in the medium to longer term has to be recognised
as a stop gap measure which will feature far less in the mix portfolio
in 20 years' time. This is as supplies will require an extended
infrastructure to the Central Asian states or mid African states,
which will attract higher security of supply risk and increased
Renewables (without the advent of electricity
storage such as the Regensys Project) are unlikely to make a serious
contribution to baseload generation, although larger wind developments
such as those 200 MW + schemes now being proposed in Scotland
will help raise its contribution with time.
Q2. Is there a conflict between achieving
security of supply and environmental policy? What is the role
for renewables, and Combined Heat and Power schemes?
Yes is the simple answerthe recently
introduced New Electricity Trading Arrangements [NETA] has effectively
killed off the fledgling CHP market and is seriously constraining
small stand-alone wind developments. Embedded generation below
50 MW has no easy route into the new commodity trading market.
Other than wind, little sizeable activity is taking place in the
renewables sector. The Government's target of 10 per cent renewables
by 2010 will fall short on current investment figureseven
7 per cent by 2010 may be over-optimistic.
The environmental planning hurdles for new renewable
developments means that around a third of such proposals are put
through too an exacting process and many are stood down. The same
is true for transmission and distribution development to support
renewable projects, which in themselves attract public inquiriesreinforced
network connection costs can also be prohibitive.
Increasing renewable capacity onto the network
will also have a detrimental effect on network management. The
present distribution and transmission networks are designed to
transport large volumes of electricity from the current single
point large sites of generation. Many of the best renewable sites
however are in remote areas where network connection is weak,
often at the end of tapered distribution lines with associated
voltage control and thermal rating problems. The displacement
of high performance conventional generators on the grid also gives
rise to transient and dynamic stability problems. Renewable generation
machines tend to have smaller inertia, no contribution to system
synchronising power, poor voltage support and no support to frequency
Q3. What scope is there for further energy
Effective measures to curtail demand and improve
energy conservation are an absolute must in any future energy
policy. In future, Negawatts (or watts saved) will become more
important than Megawatts consumed. Government should turn its
mind to meaningful measures to promote Negawattssavings
made in one industry should not be allowed to be wasted by increased
demand in another [for instance improved building performance
through use of better insulation materials, solar panels for low
grade heat etc should not be sold short by allowing new demand
such as Internet Hotels each needing a supply of 20 MW [unless
that new load can be met by renewables or possibly CHP sectors].
Mechanisms for securing energy saved in one sector must be nailed
down and policed to prevent demand increasing in another, without
serious attempts to curtail and/or have supplied by sustainable
Q4. What impact would any changes have on
industrial competitiveness and on efforts to tackle fuel poverty?
These will be substantial in both terms of industrial
competitiveness and fuel poverty.
Regulation has helped achieve the lowest electricity
prices in real terms in the UK since 1974. However regulation
has run its course [Railtrack is a case in point] and unnecessary
over-zealous regulation is now overseeing the demise of the home
grown liberalised companies. Take over by foreign consortia is
now almost completethis will ultimately be of no benefit
to Britain, its ESI, its industry as a whole and the British consumer.
The Industry is now overly regulated so that the benefits secured
by privatisation have been largely squandered. With the exception
of Scandinavia possibly, Britain ten years ago led the world in
its approach to introducing competition into the electricity industry.
Profit erosion and sweating existing assets means that the UK
energy utilities are becoming emasculated and that short-term
decision making applies.
In the medium term, energy will become a much
higher priced commodity (possibly within seven years)fuel
poverty will become a very serious issue, particularly for the
elderly in the lowest economic third of the population. Industrial
competitiveness will also be impacted, but the issues facing Britain
will be shared with Europe where energy prices can be expected
to rise significantly as well. Future energy sourcing, pricing
and energy use behaviour in the USA will dictate western world
trends. Large coal reserves in the Far East, coupled with a likely
disregard for CO2 emission controls, will further aid this region's
Q5. Is any change of Government policy necessary?
How could/should Government influence commercial decisions in
order to achieve a secure and diverse supply of energy?
Regulation of the gas and electricity industry
in its current form should be severely curtailed. Rather than
leading on low prices, regulation should concentrate on how best
to meet environmental targets and international commitments, whilst
promoting a diverse and secure mix.
Demand reduction must become a key Government
target. Energy savings initiatives need to be sufficiently rewarded
so that such drives are self-perpetuating. Energy conservation
measures need to be tightened for new developments of any nature
and incentives to substantially increase retro-fitting programmes
should be introduced.