Letter to the Clerk of the Committee from
Peter Roper, Director of Regulation, Scottish and Southern Energy
Thank you for your letter of 3 December giving
Scottish and Southern Energy the opportunity to make a submission
to the new Environmental Audit Committee in respect of its work
on renewable energy.
Scottish and Southern Energy (SSE) is the largest
renewable generator in the UK and currently produces over 40 per
cent of the renewable output in this country. On 8 November 2001,
it announced plans to invest £450 million over the next 10
years in renewable generation. This includes a programme to refurbish
its hydro power stations and a programme to develop new renewable
generation, including wind and, possibly, new hydro assets.
As part of the latter programme, SSE announced
on 7 December proposals for a £60 million, 100 megawatt windfarm
in South Ayrshire. At the same time, the Minister for Energy has
unveiled plans for the creation of Europe's largest windfarm on
the Isle of Lewis and the Scottish Executive published a study
by consultants Garrad Hassan which suggested that Scotland has
a potential renewable energy resource in excess of 60 gigawatts
(the total installed UK generation capacity is around 80 gigawatts).
All of this is in direct response to the substance
of government policy, which is to encourage investment in renewable
generation, but it raises very important practical issues.
Given its potential, it is likely that most
wind energy will be developed in Scotland. Much of this will be
in areas remote from the centres of demandwhich means that
there will be increased reliance on transmission. SSE's transmission
network in the north of Scotland has been developed to serve a
rural area of low demand. There are, therefore, practical limits
on how much electricity can be exported from such remote areas
to the rest of Scotland and onwards to England and Wales.
In its Memorandum to the Environmental Audit
Committee in January 2001, SSE commented that one corollary of
the upsurge in renewable generation in Scotland will be an increase
in the number of UK renewable generators seeking connection to
SSE's electricity network in the north of Scotland. This is likely
to require large amounts of capital investment locally to upgrade
the network to accommodate them. It is critical that the cost
of this investment is not borne by the relatively few customers
in the north of Scotland area.
In addition to resolving regional constraints
and providing stronger connection in remote areas, the UK's transmission
systems will need to be capable of much greater north-south flows
within the next few years to allow Scotland's substantial renewable
resources to be exploited in full. Again there are issues about
"who pays" and how this extra capability is delivered
in a timely fashion.
Moreover, it is not practicable to meet Scottish
(or UK) customers' demand from a combination of inflexible nuclear
generation and intermittently available wind generation. Indeed,
if transmission constraints persist, the increasing concentration
of subsidised renewables generation in Scotland could undermine
the economics of existing Scottish fossil fuel generation, which
is amongst the most efficient and environmentally-benign in the
UK. For example, the repowering of Peterhead Power Station was
completed in 2000, with the result that the thermal efficiency
of the plant increased from 35 per cent to 57 per cent. This reduced
the station's fuel intake by 20 per cent and the drop in emissions
is the equivalent of removing 400,000 cars from Britain's roads.
Therefore, not only do various grid security
and capacity issues arise in areas with a prevalence of intermittent
renewable generation, it will need to be economic to retain local
existing fossil fuel generation to satisfy demand and provide
system stability, particularly when sources such as wind power
are not generating.
In summary, SSE strongly supports the Government's
incentivisation of renewable generation. It does, inevitably,
raise some practical issues about the future operation, capability
and cost of electricity generation and transmission in Scotland
and the UK more generally. Only if these are solved, the UK will
be able to benefit fully from the fact it has Europe's best renewable
We would be pleased to provide any further information