Select Committee on Science and Technology Minutes of Evidence

Examination of Witnesses (Questions 240 - 259)



  240. We have Wavegen and Ocean Power Delivery, two of the country's leading wave power companies, and they told us that they are actively considering moving part of their research to Portugal because of the lack of such a facility. Are you aware of this? Might that, perhaps, give an added impetus to you looking at this issue?
  (Mr Hain) I actually was not aware of that, and certainly we will follow that up right away.

  241. Can you look at what needs to be done to attract companies like that into the UK?
  (Mr Hain) Well, of course, they are in the UK.

  242. There are other companies as well. If we have the few that are in the UK moving abroad, then we are not likely to attract more are we?
  (Mr Hain) I have not heard that they are about to move abroad—

  243. It is part of their—
  (Mr Hain) Although it could be part of extending their arm. I will encourage British companies to find investment opportunities abroad and work abroad, but as part of spreading our expertise. We do want to preserve and develop a solid British platform. Certainly I will look at that and get to the bottom of it.

Dr Turner

  244. Could I just enlarge on that point slightly, Minister? One of the problems which keeps being brought to our attention with respect to either installing or testing devices is access to the grid. The provision of a grid point of access is virtually the most important aspect of a test site, so long as it is in suitable natural conditions. Is there anything the DTI could do to facilitate that?
  (Mr Hain) Obviously, yes, we can help. That is not something that I was aware was an enormous hurdle to the overall momentum of the project. I think we are, really, in a demonstration stage of the technology at the present time, but, of course, the renewables obligation will provide plenty of opportunity if the technology starts to take off. I think I am right in saying that Islay is connected to the grid.

  Dr Turner: Islay is.

Dr Jones

  245. If I can come in there, it is only able to transmit a proportion of the power it generates. In fact, Wavegen has been quoted £0.5 million to be connected fully to the grid and Ocean Power's device, which is due to be installed, is facing a bill of £1 million to be connected. We are not talking about anything like Millennium Dome sums of money but it is a step for those companies. So what are you going to do about these specific problems?
  (Mr Hain) Are you saying that that is an obstacle to their development?

  246. Yes, because they cannot transmit all the power that they generate into the grid. This was a problem, for example, in Dounreay with the nuclear fast reactor. Do you know who paid the substantial costs to get that generation into the grid?
  (Mr Hain) No, but nuclear has enormous liabilities.

  Dr Jones: This was before they started generating liabilities. As I understand it, there was a lot of public money being put in to connect such remote facilities. Obviously, with wave and tidal power a lot of the facilities will be at the edge of the grid and this is a very important issue.


  247. Minister, before you answer, if I may add a little bit. At the time of Dounreay, for example, Dounreay would have been nationally owned and the grid would have been nationally owned, and I am sure the nationally owned managers would come together and do it. We are now talking about a situation where the grid is privately owned, and where, with projects such as Islay, although the research is government-sponsored the projects will be privately owned. So it is a very different situation when you have got two privately-owned organisations from when we had two state-owned organisations. One is not necessarily suggesting the Government has to spend the money but the Government might have to bang a few heads together and act as a catalyst. So I make those comments before you answer Dr Jones.
  (Mr Hain) Yes, I am quite happy to look at either a role of banging heads together or a role of providing public assistance, if it is justified and if it can be defended. One of the reasons that we are providing finance on a very large scale compared with what it has been in the past, which is next to nothing, is precisely to assist with capital costs of projects, including, doubtless, connections to the grid. I would not want to see any successful renewable project, least of all wave power or tidal stream power, founder because of the cost of a cable. Our Embedded Generation Group and the Performance and Innovation Unit and the work we are doing will consider all this and, again, I look forward to reading your recommendations on that.

Mr McWalter

  248. I think, perhaps, you have addressed this already, Minister but it is worth dwelling on it. There was a joint DTI and DETR memorandum which said that the long-term commercial viability of wave and tidal power remains uncertain. That was written in March 1999 and you were not in post then, and I get the impression there is going to be a fresh breeze blowing through that judgment. One of the issues, in part, is that the assessment of commercial viability has looked very much at the prototypes, or whatever, whereas we know that with the Danish wind business once they actually had the thing up and running and then they redesigned the turbines, and so on, the costs fell very dramatically; once you have got the thing up and running you can see where you can make economies. Do you now, basically, disavow that remark, and wish to replace it by one saying: "Well, we expect to make the commitment needed to wave and tidal energy to ensure its long-term commercial viability is assured?"
  (Mr Hain) I do not want to disavow that statement made two years ago, but a lot has happened since, both on the development front and in terms of the Government putting its money where its mouth is in that respect. There is naturally—and I guess the Committee is more familiar with this than most ministers—a balance to be struck between backing a technology and pouring lots of money into it, which then proves commercially uncompetitive compared with other renewable sources, and depriving it of the investment and support which could stop it developing in the way that I think it has the capacity to develop in this instance. So we have got to get that balance right. I hope that we can resource potentially commercially successful wave power and tidal stream power with the backing that it needs.

  Mr McWalter: In the case of Islay, electricity apparently is produced at a cost of about five pence three farthings, as it were.

  Chairman: Is that a metric farthing?

Mr McWalter

  249. I thought I would put that word "farthing" back into the Parliamentary vocabulary. Do you think that we can seriously expect wave and tide energy to be able to compete with fossil fuels without the massive subsidies that certainly nuclear power receives and certainly the massive subsidies per kilowatt hour it received when it first came on stream?
  (Mr Hain) I do not think that renewable energy will get off the ground in the way it needs to be without massive support. That is why the renewables obligation is such a powerful driver because it requires electricity suppliers to have 10 per cent of their market share from renewables. So that will inject resource as well. In fact, we estimate—I will be corrected if I am wrong—about £600 million through the renewables obligation, which means that if you add together the various components of support—our £250 million, plus other support—you are talking about round about £1 billion worth of support for renewables, including this area, over the coming years. That is a lot of support. However, I would readily concede that nuclear energy never would have got off the ground without the massive public subsidy it had—rightly or wrongly, from different points of view.

  250. The sort of devices currently on stream have got potential capacities of up to 130 kilowatts. If you are talking about the investment needed to get power delivery of 2 megawatts or something, you are talking about a very, very different level of investment. Given that the DTI analysis itself says that the potential export market for wave energy, even excluding tidal power, is estimated to be in excess of £1 trillion, at some stage or other has there not got to be a brave, major investment in devices of the right sort of order to get all of those teething problems at initial stages and so on sorted? That is something that is very clear that the EPSRC is utterly unable to do. The scope of it and the investment needed is way beyond their current ability.
  (Mr Hain) Again, I think we are in the infancy of a strategy and the development of the technology and capacity for it to provide increasing shares of energy.

  251. This infant needs to be reared very quickly, does it not?
  (Mr Hain) I think you are right.

Dr Jones

  252. Can I just turn to the question of planning permissions? Last month you announced a consultation on proposals for a one-stop shop for gaining planning consent for offshore wind farms. We have been told by one tidal energy company that they are going to place their prototype device off the coast of Iceland because of the prohibitively high cost of obtaining planning consent from, apparently, seven different planning authorities, with the prospect of about two years to get planning consent. What are you doing to alleviate the situation?
  (Mr Hain) As you indicated, that consultation document is an attempt to strip down the levels of application people need to go through. I think there is a serious problem here, both in the sheer bureaucracy and in the associated costs that have to be waded through—if that is the right term—coupled with (and I think I referred to this in the House last week, Chairman) what, frankly, I think is the schizophrenia on the part of the public and the authorities; that, on the one hand, everybody wants clean energy but nobody particularly invites a nuclear power station in their back yard or a coal-fired power station or even a gas-fired power station, but when it comes to renewable energy, particularly wind farms offshore or onshore, or doubtless in the future we will have wave and tidal stream (and I am aware of this problem in respect of the company locating in Iceland, but if you have got any more details I will look at that), when confronted with a decision you get a less enthusiastic commitment from the local community and from the relevant planning authority. We have to engage in a public debate that confronts people with some pretty stark choices here. What really do they want?

  253. It is important to take account of the possible offshore environmental degradation that could occur.
  (Mr Hain) Oh of course.

  254. Why did you not, though, when you announced this consultation over planning permission for wind, consider this might be an issue for other forms of renewables?
  (Mr Hain) It is offshore.

  255. It is for all, it is not just for—
  (Mr Hain) For offshore wind, yes.

  256. I am talking about tidal and wave.
  (Mr Hain) That is tidal and wave as well.

  257. So that is included in the current consultation?
  (Mr Hain) Yes.


  258. I think that brings us just about to the end. I did want to conclude with a question which you have made very much easier, Minister, by your personal commitment, made very clear to us this afternoon, to alternative energy generation. What I was going to say was that many of the people who have been to give evidence to us and the submissions we have had have said they have had difficulty in getting investors' capital into their projects because there seems to be a less than adequate degree of enthusiasm or commitment from government for these types of projects. This afternoon you have given a very strong personal pledge. Do you think it would be possible sometime in the not too-distant future for the Government to come out with, perhaps, a more publicly announced pledge to support the need for renewable energy which might encourage investors to believe they have got a long-term opportunity of having a return on their capital?
  (Mr Hain) I will certainly look at that, Chairman, with a very sympathetic mind. Clearly, the Prime Minister's commitment a few weeks ago was an important and ground-breaking event, and created quite an impact. In fact, in this very room, I think it was last week (the weeks go by quite quickly in this job) there was the all-party renewables group meeting. I expected it to be a fairly small meeting but it was absolutely packed, with standing room only. I think that is an indication of the interest. As to capital financing, Britain has not been very good at venture capital in these sorts of areas, and I think we, as a Government, need to look at this very closely. Again, I will study any recommendations and evidence that you have with a great deal of interest because it is something that I really do think we have a responsibility to take forward.

  259. Minister, thank you very much indeed and thank you, too, to Mr Doddrell and Mr Eppel. Minister, you have given us a lot of information this afternoon. We are most grateful to you. You have also been kind enough to say that you are looking forward to our report. That gives us an added incentive to make sure that our report is as helpful to you as it can be, in the hope that when we do present it to the House you and your department will take an interest in it and it will, perhaps, then be mutually beneficial to us to have the report that reflects our views on this subject and for you to have the report that is from, almost, an independent point of view on the benefits of alternative energy. We thank you for helping us and we hope we, in due course, can help you.

  (Mr Hain) Thank you very much. I look forward to it.

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