As mentioned in my previous post, I have been reading "A Pragmatic Energy policy for the UK" by Professor Ian Fells and Candida Whitmill of Fells Associates, a paper that I believe every politician or person interested in the future of Britain's energy supplies should read.
The full document is available on the internet as a pdf file here,
but the executive summary reads as follows:Executive Summary
1.1 Security of energy supply must now be seen as taking priority over everything else, even climate change. UK imports of both gas and oil are accelerating, just as the fragility of supplies from Russia and the Middle East becomes more apparent and the UK heads towards the loss of one third of its generating capacity over the next 12 years. A new energy policy must be scheduled to meet the impending energy gap with an overarching long-term vision that will ensure security of supply, protect the environment, and at the same time, be deemed feasible by the engineers, financiers and utility managers who will have to implement it.
1.2 Current policy is set out in the 2007 White Paper. It supersedes the White Paper of 2003, which had strong elements of wishful thinking, by suggesting that selective renewables, combined with energy efficiency, would satisfy the demand gap without the need to replace the nuclear baseload capacity – an error finally rectified with the January 2008 White Paper on nuclear power. Nonetheless, the current 2007 paper is flawed. It misunderstands market prerequisites and technical barriers and is founded on weak energy arithmetic. Yet it is still the platform from which UK energy policy must implement the ambitious political targets of EU policy, in accordance with which 20% of all energy consumption across the EU must be from renewable sources by 2020. The UK commitment is a renewable energy target of 15%. The implications are alarming. We are currently at 1.3%6 – third from bottom in the EU league table with only Luxembourg and Malta below us. This will require a monumental shift in investment and build rate for renewables across all energy sectors.
Furthermore, it implies that 40% of electricity will have to come from renewables. Currently renewables produce just 4.5%.
1.3 These targets are demonstrably unattainable. In-depth discussions with engineers and utility managers to discover what can actually be done, and the probable consequences of such actions, should have taken place. It might have prevented bizarre pronouncements such as the construction and installation of 7000 offshore wind generators in the North Sea, which would mean installing 10 turbines a day from
now to 2020 (utilising the average 60 possible working days per year). This is 10 times the best installation rate achieved anywhere for offshore installation, yet the UK has just one suitable heavy-lifting barge available at the current time. The rush to impose biofuel quotas in motor fuel serves as another example. The full impacts of the rapidly developing biofuels sector with regard to climate change and
food supply seem not to have been understood.
1.4 This report addresses the failings that have led to a fundamental undermining of the UK’s security of supply and serves to heighten the sense of urgency about the growing energy gap. Electricity generation in particular is becoming a matter of grave concern.
1.5 The current situation is fragile. Two nuclear stations, Hartlepool and Heysham (a total of 2.4GW) are offline until 2009, and two more, Hunterston and Hinkley, are on reduced output – examples of what to expect from an ageing fleet. The planned decommissioning of nuclear power plant of 7.4GW by 2020 and 9.8GW by 2023 (respectively 10% and 13% of current generating capacity) will leave just one plant,
Sizewell B, operational. In addition, there is the expected closure of 12GW (15% of current generating capacity) of coal- and oil-fired generating plant by 201610 as a result of the EU Large Combustion Plant Directive (LCPD) of 2008, aimed at reducing emissions. In all a total of 23GW (30% of generating capacity) will need to be replaced by 2020, and from 30GW to 35GW by 2027.
This is almost entirely base-load capacity.
Renewables have a role to play, but unrealistic expectations have elevated them above their capabilities. Renewables will not replace base-load. The default position is gas, yet our reserves are diminishing to the extent that we will be importing 80% of our gas requirements by 2020, increasing our dependence on supplies from unstable political regimes and volatile markets. Furthermore, this will derail attempts to reduce CO2 emissions, which will continue to rise.
1.6 The ‘market will deliver’ philosophy is wishful thinking. The market cares nothing for the environment. It caters for today’s generation, not tomorrow’s. The market needs the right investment framework and incentives to contemplate long-term projects. The present Government’s vacillation over energy policy, nuclear being the salient example, has severely hindered development. Additionally, procrastination over carbon capture and storage (CCS) is holding back the coal industry from utilising our indigenous supplies.
Inconsistent intervention is not helpful either. The renewables market has been
distorted through unbalanced support for low-capital renewables with least return in energy terms, such as wind.
1.7 A determined and urgent course of action is of paramount importance to address this major threat to the long-term economy, security and social well being of the United Kingdom. The key elements to a new energy policy are laid out below. They draw together to form a cohesive action plan, the Route Map to Energy Survival for the UK (see page 25), a strategy that determines the priorities and is deemed to be feasible by those who will have to implement it. It demonstrates how a new energy policy must now divide into two distinct timescales – a short-term strategy to deal with the impending energy gap without impeding the long-term strategy of ensuring our energy requirements in an era when oil and gas will become increasingly scarce and the role of electricity takes on an even greater importance in sustaining our civilisation.
2. The key elements of a pragmatic energy policy must satisfy the following three fundamental criteria.• Ensure security of supply both in the short term (up to 2020) and the long term (2020 – 2050)
• Protect the environment by striving to achieve CO2 and renewable-energy targets
• Remain technically feasible from an engineering perspectiveThe key elements of a pragmatic energy policy
1. Adopt the Route Map to Energy Survival for the UK (see page 25). This means making
decisions now to meet short- and long-term demands. Only a visionary, overarching strategy will maintain sustainable economic development, satisfy our environmental obligations and keep the lights on.
2. Security of electricity supply should now top the political agenda, even above climate change. There will be a shortfall in UK power generation of 23GW by 2020, rising to between 30GW and 35GW by 2027.13 An impending crisis in power generation is now emerging and could lead to a dramatic shortfall as early as 2012 – 2015. This arises from the closure of ageing nuclear and coal-fired stations. The default position is to build new gas-fired stations as they can be completed in four years, but only 4.5GW are currently under construction. In terms of security of supply and energy costs this is unsatisfactory, but new nuclear stations cannot be brought on stream in much less than 10 years.
Neither can a Severn barrage. In the medium term a strong case can be made for replacing inefficient, polluting, old coal-fired stations with new coal-fired stations. They will be less polluting than the stations they replace and, if carbon capture and storage (CCS) can be demonstrated to work, it can be retrofitted.
Presently, coal provides 34% of the UK’s electricity. This would give an important element of security as coal is partly indigenous and partly imported from reasonably stable parts of the world. Considerable effort should go into demonstrating the feasibility of CCS. And if the collected CO2 is then pumped into failing North Sea oil wells to give tertiary oil recovery, it will increase the contribution the North Sea can make to UK oil supplies, providing a further contribution to UK energy security.
Other measures include a significant increase in gas and electricity storage. Germany has 70 days’ supply of gas, the UK has 14. Depleted gas fields in the North Sea can be used for gas storage. Onshore initiatives should be encouraged, such as the gas storage facility at Hornsea in East Yorkshire where nine man-made salt cavities have been leached into a salt layer 1.8 kilometres below the surface,
creating 325 million cubic metres of gas storage space. As a matter of urgency, security of electricity supply should be further increased by linking the UK with
Norway, Germany, the Netherlands (now building the 1GW BRITNED) and France (an additional link). This could be achieved within two or three years using British technology, in time to help with the anticipated shortfall in electricity generation capacity.
It would be timely to fully reassess fossil-fuel reserves in the light of “peak oil”, “peak gas” and now coal, both in the UK and worldwide. The UK should also establish a depletion policy for the North Sea, rather than expect the market to manage it strategically.
3. Nuclear power has been allowed to decline in the UK, despite its central role in providing CO2-free electricity. New, more efficient stations are now available and are being planned and built elsewhere. The present Government has done a belated U-turn and now wants nuclear power as an essential part of the energy mix. In the meantime, it has sold off Westinghouse, one of only five builders of nuclear power stations in the world, and one with a large and growing order book – a significant error of judgement. The situation can be rectified, but it will take time and money.
In the longer term, like the rest of the world, we will have to move to generation IV reactors, which are breeder reactors and use uranium 60 times more efficiently than today’s thermal reactors. If we take this route (the Russians have already taken it, with the BN600 breeder reactor having run successfully for over 20 years), we could effectively multiply the world’s dwindling energy resources by 10.
4. Financial incentives will be needed to restore investor confidence after policy vacillation and injudicious market intervention. The sharp fall in electricity prices, instigated by the regulator in a vain attempt to address fuel poverty, led to the near collapse of British Energy. This must not be allowed to happen again. There may have to be a minimum floor price for low-carbon, new-build electricity. A possible model to stimulate new nuclear build, and also the construction of a Severn barrage, would be for the electricity price to be guaranteed by letting a 50-year contract (or concession) at a fixed price (with escalators) for electricity supply and inviting appropriate consortia to bid for the contract. Additionally,
clear long-term carbon price signals are essential.
6. Give the go-ahead to build a Severn barrage, which would provide 5% of the UK’s electricity. A Severn barrage should be looked at in comparison with offshore costs. Both will be needed to approach our EU obligations. Other barrage sites around the coast, such as the River Mersey, should be examined with the prospect of pumped storage in mind.
7. Restructure the grid. Considerable investment will be needed if the transmission and distribution networks are to accommodate the development of new-build and distributed generators, many of them renewables. Scotland in particular, with a high density of wind, wave and tidal resources, faces connection difficulties as described by the Highlands and Islands Enterprise 2007 report. Offshore projects will lose viability if onshore connections are not upgraded. The upgrade of the Beauly–Denny line (through central Scotland) from 132,000 (132kV) to 400,000 volts (400kV) is currently subject to a public enquiry which is due to report in 2008. The Scotland–England 2.2GW interconnector will have to be substantially strengthened if the renewable energy coming from the Western Isles is to be sold into England.
8. The Climate Change Levy should be scrapped (why it was applied to nuclear power and hydro is a mystery), and replaced with an obligation on generators and suppliers to provide 50% of low-carbon electricity as early as is realistically possible. This should include all forms of low-carbon generation, especially nuclear. The driver for this is the current renewable electricity obligation of 10% by 2010 (which
we will not reach). This will give a strong incentive to both renewable and nuclear electricity to attract a premium plus an additional premium for providing consistent, on-demand power whenever required.
This figure of 50% renewable electricity ties in well with the energy balance for the UK’s 15% share of the EU renewable energy obligation by 2020, which implies 40% renewable electricity in the mix. Unfortunately it will not be met by that date. BERR’s best estimate, in the 2007 Energy White Paper, is 14% by 2020. There will be a huge discrepancy.
9. Decentralised distributed energy has been the focus of much misinformed attention.
If gas is the preferred fuel, CO2 emissions will rise because centralised power stations are much more efficient than many small, local, domestic units. They also bring economies of scale. Losses in transmission in the high-voltage grid are only around 2%, but 5% or more is lost in the local network. So the perceived savings from local generation are small. This would be putting the clock back to the
1920s (see analysis by Paul Spare in Energy World, October 2006).
10. Energy-saving programmes should be reassessed and resources streamlined to support the most successful strategies. There is a promising trend towards individual responsibility for energy saving. However, it must be understood that the major changes in demand behaviour of the magnitude and in the timescale needed to have a significant impact on the supply gap are not possible.
Domestic energy efficiency has taken on new significance. As we move to an increasingly electrified society, heat will be increasingly provided by electricity as oil and gas prices soar. Heat-pump technology has improved enormously over recent years, and now pumps are available with real coefficients of performance of four (that is, one unit of electricity providing four units of heat from the ground or the
air). Heat pumps should replace gas for domestic heating. If CO2-free electricity is used to power them, they will make a significant reduction in CO2 emissions and reduce dependence on imported gas.
11. Skills shortages in electrical and nuclear engineering must be addressed urgently. Areva is trying to recruit 11,000 new engineers and technicians in Europe. This is proving very difficult. Up to 40% of staff at British Energy are due to retire within the next 10 years.20 The new National Skills Academy for Nuclear is to be commended, but it will be rendered ineffective if there are no universities
offering degrees in nuclear engineering. The industry is expected to need 1,000 new graduates a year for the next 15 years. Incentive bursaries should be offered at both undergraduate and postgraduate level. Grants for mature students should be encouraged to upgrade existing, transferable skills. Engineering and construction workers are also urgently needed. At its peak, building a Severn barrage would need 35,000 people.
12. Switch surface transport to electricity. Transport, with the exception of some train systems, is predicated on oil for land, sea and air. It will have to be weaned off oil and onto electricity where possible. This means an even bigger demand for base-load electricity. Trains should be first, then cars, both electric and hybrid. New battery technology makes this a very real possibility. Car parks should be
fitted with charging points and replacement battery packs should be obtainable from filling stations. Fuel cells for transport are already available and being trialled in buses. Hydrogen may not be the best fuel due to generation, distribution and storage difficulties. Liquid fuels such as methanol from secondgeneration
biofuels may be an alternative.
13. Air transport. It is difficult to contemplate fuels other than kerosene-type hydrocarbons being used for air transport, but a move to more efficient, turboprop propulsion systems is already appearing. It is possible to manufacture jet fuel from coal and biofuels via the Fisher-Tropsch process, and also from methane, currently flared off, by a synfuel process. This may become a security imperative if oil from
the Middle East comes under pressure.
14. Rolling targets should be the paradigm for future policy. These should be set every five years or so, with success or failure impacting on the figures for the next target, rather than looking 40 years ahead (often with targets having little chance of realization). It is constructive to look at the scenarios developed by the Royal Commission on Environmental Pollution when it set a target of 60% reduction
in CO2 production by 2050. Those scenarios have been largely ignored. One startling scenario suggests, “keep demand in 2050 the same as in 1998, multiply renewables 20-fold and nuclear power 4-fold with 46 Sizewell B sized stations”. Other scenarios are even more extreme, particularly where nuclear power is not included. They have to be realistically re-examined but are unlikely to be watered down.
A rolling target approach is more likely to be effective. The present Government talks of an 80% reduction being necessary by 2050 to keep CO2 emissions below 550ppm. The implications of accommodating this “challenging” 80% target remain no more than a political objective until clearly defined in engineering and cost terms.
15. Reinstate the Department of Energy to bring all energy policy under one department with cabinet representation in the person of a Secretary of State, emphasising and reflecting the central role that energy plays in every aspect of government, business and day-to-day life.Conclusion
This proposed policy is intended to heighten awareness of the growing energy gap as a matter of urgency. Electricity generation in particular is becoming a cause for grave concern. While this is acknowledged by the present Government (this report utilises the Government’s own data; industrial leaders predict even higher generation losses), it continues ostensibly to leave the gap to be filled by the market, which in reality has been distorted by counterproductive intervention. Vacillation, procrastination and the lack of an appropriate investment framework have all served to severely hinder energy-supply development and our ability to meet
That there will be supply–side difficulties is inevitable. A risk management strategy that identifies the responsibilities of government, local authorities and businesses in the eventuality of power interruption is imperative. Particular care must be taken to safeguard hospitals, schools, care homes and other vulnerable
sectors of society.
Our Route Map to Energy Survival for the UK sets out a step-by-step action plan to
mitigate the risks of large-scale power cuts and electricity “famine” by defining priorities and timescales for energy development.
From a global perspective, the conviction that “peak oil” and “peak gas” theories, which predict worldwide supplies will peak in the next few years (perhaps they already have, with oil at 86mbbls a day), and then go steadily downhill, is gaining ground. This fuels the growing belief that gas from the Middle East and Russia may
not be available to satisfy the growing demand from Europe and the UK over the next 10 years (before a new strategy of new-build nuclear, renewables in quantity from a Severn barrage and coal-fired stations with CCS come on stream). Competition from China and India further diminishes our ability to lever access to affordable,
secure hydrocarbon supplies. We have drifted into a situation resembling a slow motion train crash. South Africa has already hit the buffers with disastrous effects on its economy.
Energy is the lifeblood of growing civilisations. Without it we slide into anarchy. Fortunately, there are high-technology solutions if we care to take them.