Select Committee on Science and Technology Fourth Report


INNOVATION IN RENEWABLE ENERGY TECHNOLOGIES

115. The background and status of energy generation technologies has been well covered by the ERRG review group. We will not attempt to reproduce its analysis but add some observations of our own.

Energy efficiency and construction

116. The PIU report concluded that energy efficiency had a vital role to play in reducing the UK's carbon emissions, arguing that it should be prioritised "at the highest levels of Government" and calling for a 20% improvement in domestic energy efficiency by 2010 and a further 20% by 2020.[191] This reflects the views of the Energy Savings Trust which has found that the average home in England and Wales consumes 20% more energy than equivalent home in Denmark.[192] The Trade and Industry Committee has identified energy efficiency as the most important mechanism to alleviate fuel poverty.[193] The ERRG report recommends that energy efficiency be a research priority.

117. Energy efficiency falls principally within the remit of DEFRA, the Energy Savings Trust and the Carbon Trust, through its Action Energy programme. Little support is given to RD&D by these bodies and the Research Councils' interest seems to be restricted to a few studies funded by the ESRC into the uptake of technologies. The Tyndall Centre is undertaking a £240,000 research programme into energy efficiency and low emission housing.[194] The Government says that it "has supported energy efficiency since the 70s in the form of demonstration schemes, subsidised surveys, good practice guides and support for RD&D. For the future, government support may well be needed for more generic RD&D at a pre-competitive stage".[195]

118. Professor David Strong from the BRE was concerned by the fragmentation of Governmental schemes, pointing out that the DTI, DEFRA, the Office of the Deputy Prime Minister, the Energy Savings Trust, the Carbon Trust and the devolved administrations all have an interest. This fragmentation meant that none of the projects in this field had a critical mass or any impact.[196]

119. The BRE is highly critical of Government investment in energy efficiency RD&D:[197]

"Recent changes to departmental research responsibilities have resulted in a situation where very little underpinning research is being undertaken in the UK. Furthermore, possible sources of funding are now highly fragmented and invariably require matching funding from industry, which is often difficult (or impossible) to obtain".

Professor Strong suggested that a proportion of the Energy Efficiency Commitment could be ring fenced and used to fund some of the underpinning research.[198] He felt that a figure of around £35 million would provide the research investment required. The BRE suggests that there were some easy targets that could be attacked, in particular thin-film insulation for solid-walled housing which would have a big effect on energy consumption.[199] The Energy White Paper accepts the ERRG's recommendation that energy efficiency be priority research area: "The research and development to enable these technologies to make a contribution in the years to come needs to start now. The Carbon Trust's Low Carbon Innovation Programme ... provides funding to enable that to happen".[200] As we commented in paragraph 44 above, the Carbon Trust's RD&D budget is not very large and we dispute the Government's assertion that it has the funding to make a significant impact on energy efficiency RD&D.

120. We were concerned to hear Mr Wright's views that there is a lot of energy-efficient technology that has been tried and tested but is not being deployed.[201] Don Spearman from Vent-Axia told us that "most of our European neighbours seem to be well ahead of us in terms of energy saving products, and therefore we are building products that will go into Holland, Germany, Japan, North America, and waiting for the necessary legislation to happen in this country to catch up with them and have the products available to do that".[202] Mr Spearman pointed out that companies such as his wanted well-signalled changes in regulations from government, giving them time to develop the right products: "the sort of developments we get involved with typically can take four or five years and ... can use up 5 per cent of our budget on one product".[203]

121. Mr Spearman was concerned about the drawing up of new regulations. He felt that the Government tended to find out what products were available rather than ask manufacturers what they would be prepared to develop. He told us "We had an industry meeting yesterday and even manufacturers that do not have these products, if they know they are going to be needed in five years' time, will go away and develop them, and certainly have them ready by the time those requirements are there".[204] Mr Wright commented that when people buy a new house, energy efficiency is unlikely to be a major factor in their decision-making: "The housing industry does not innovate to compete. The housing industry is driven by legislation. It has always been driven by legislation. The houses are designed to meet the minimum requirements of the building regulations".[205] Professor Strong pointed out that new regulations can provide major business opportunities.[206]

122. The Energy White Paper says that improving energy efficiency is the "cheapest, cleanest and safest way of addressing our energy policy objectives" and that the Government expects half of the UK's emissions reductions by 2020 to come through improved energy efficiency.[207] The Government "will start work immediately on the next major revision of the building regulations, which we will aim to bring into effect in 2005".[208] The housing market is driven by Government regulations and it is our view that these have not been tough enough in the past. We welcome the Government's pledge to make major revisions of its building regulations and recommend that these are demanding, recognising that they can be a powerful stimulus to innovation by manufacturers.

123. It is disappointing that apart from various support schemes there is very little incentive to install energy efficient technologies into buildings. Professor Strong welcomed the new EU Directive on the energy performance of buildings, which will require houses to be labelled. This, he said, "will provide a very useful differentiation for house builders to differentiate the mediocre house from the more energy efficient house".[209] He also felt that the removal of VAT from insulating materials would be a valuable move.[210] The Budgets of 2000 and 2002 reduced the amount of VAT payable on some forms of energy efficiency from 17.5% to 5%.[211]

124. We await the revised building regulations in the hope they will provide the market pull for innovative energy-efficient products. We hope they are able to compensate for the lack of technology push generated by the feeble level of public RD&D funding in this area.

Hydroelectric

125. Hydro power is a commercial technology and accounts for a significant proportion of the UK's renewable output. Total electricity generated from renewables in 2001 amounted to 10100GWh, 38% of which was from large-scale hydro generation. Hydro makes up half of current renewable energy production in the UK. There are difficulties in the further expansion of hydro stemming from the lack of new available sites and the environmental disruptions.[212] The technology is getting very little support. In its evidence to the inquiry, NERC drew our attention to a report by the International Energy Agency published in 2001. It claimed that "hydro is the most environmentally friendly of all forms of electricity generation based on categories of emissions (including greenhouse gas emissions)... and it is technically feasible that hydro generation could treble in capacity and so provide 30% of the [UK] Government's targets for renewable energy generation by 2010 and 2026 respectively".[213] We find it hard to reconcile the Government's apparent lack of interest in a relatively mature technology with the enthusiasm of the International Energy Agency. We recommend that the Government follow up the IEA's report with its own assessment of the role that hydro can play in the UK's energy supply.

Solar

Photovoltaics

126. Photovoltaic (PV) technology converts daylight into electricity. The DTI has had an RD&D programme since the mid 1990s at an annual level of £0.5-1 million, largely targeted at paper studies addressing technical and infra-structural barriers and monitoring the few existing installations. EPSRC has a major programme of PV research, amounting to £3.5 million in 2001-02. The ERRG recommended PVs as a priority research area but the Energy White Paper was rather non-commital.[214]

127. The DTI has run a series of schemes in recent years. In 1999, the DTI made available £5 million over 2-3 years for PV components and systems. This was followed up by £1 million for the Domestic PV Systems Field Trial and £3 million for the Large Scale Building-Integrated PV Field Trial (for public sector buildings). In March 2002, the Government announced the first phase of the Major PV Demonstration Programme which is worth £20 million.[215]

128. We were interested in the approach from Intersolar. Phillip Wolfe's company is developing a product that is "to all intents and purposes a building product but incorporates the photovoltaics ... With our solar slate, every solar slate replaces a slate which would otherwise go on to that roof so we get an economic trade-off which helps make the economic case for photovoltaics".[216] We were pleased to hear that Persimmon Homes is collaborating on this programme. Less encouraging were the views from Stephen Wright of Gusto Homes: "It does not stack up financially at the moment ... we have been getting problems when trying to put photovoltaics on roofs".[217]

129. The Government has clearly decided that PVs are a priority since it attracts the highest amount of DTI RD&D funding for any technology other than nuclear fusion. But we are not sure on what basis this decision has been made. The ERRG report acknowledges that Japan and Germany have a significant lead over the UK but it recommends PV as a priority research area on the basis that the UK could make an impact on the next generation of PV technologies. This is despite concluding that the UK's competitive position is no more than "tenable".[218] Mr Philip Wolfe, who runs a company manufacturing PV roof tiles, indicated that "we are a long way short of the cutting edge ... we need to or have indeed already selected prospective winners but we have not converted that into RD&D effort and support for the industry".[219] In other words we are very close to missing the boat with PVs. Sir David King seemed confident that the UK has a real opportunity of taking the lead in the next generation of photovoltaics, based on Britain's strength in new plastics, currently being employed in flat screen technologies.[220] We were interested to hear that Sanyo is moving into the European PV market. Having visited Sanyo's Solar Ark, the world's largest solar array, during our visit to Japan, it will be interesting to see how UK companies can cope with this competition.

130. The Government describes the PV demonstration programme as a "major market stimulation programme" intended to be analogous to the schemes run in Japan and Germany. This may be its intention but given that the Japan's NEF residential PV subsidy programme had a budget of around £130 million in 2002, the UK's programme is comparatively minor. In January 1999, the German Government launched a 100,000 Roofs programme for photovoltaics in which it assigned a bank to issue 10-year, interest-free loans covering almost 40% of the cost of a PV system. The programme will cost almost _500 million and will run until 100MW has been installed.[221]

Solar heating and cooling

131. This embraces two technologies. Passive solar design uses building design to capture, store and distribute solar energy. There seems to be little Government support for RD&D, although the Carbon Trust, through its Action Energy programme, and DEFRA provide support for its deployment. Support for the technology comes from Professor David Strong from the BRE:

"An intelligent architectural design can exploit the natural systems that are available for free, so as to drive the ventilation systems to provide daylight and so on. These are extremely important renewable technologies which in the UK we have a world lead on in many respects and yet we are not particularly good at capitalising on this expertise because it is not a tangible product in the way that photovoltaics are and in the way that wind power is".[222]

132. Solar thermal or active solar heating is a mature and proven technology and has an "established but small market", according to the Government.[223] The Energy Conservation and Solar Centre (ECSC) describes solar heating as the "Cinderella of renewable energy systems".[224] The ECSC argues that the technology is cheap and capable of being installed in any building, yet was dismissed, it says, in one sentence by the PIU. The White Paper says that revisions to the building regulations will encourage solar water heating.[225]

133. Professor Strong's sentiments strike a chord with us. It is easy to focus on electricity generation and ignore perhaps simpler technologies that can deliver reductions in CO2 emissions at lower cost. We have suggested earlier that the Government should prioritise more with its RD&D strategy and we risk accusations of inconsistency by demanding attention to some technologies. However, we are concerned that the relative benefits of non-PV and PV solar have not been adequately established. The ERRG report lumps non-PV solar in with energy efficiency technologies and while efficiency is given priority status, there is no sign that non-PV solar should benefit. Professor Strong indicates that the UK has a world lead in passive renewables. We recommend that the Government commission a cost-benefit assessment of different solar technologies.

Wave and tidal

134. Wave and tidal energy has huge potential in the UK, with one estimate suggesting that 1,000 MW could be installed by 2012-13.[226] Set amid oceans, with strong currents, Britain has a massive natural resource. Tidal energy is more reliable than wind and solar power but in terms of technological development it is well behind both. Current generation costs are relatively high although we have been told that in the long term it has the potential to be one of the cheapest forms of electricity generation.[227] The UK has RD&D strengths in these technologies, with a small number of companies who lead the development of the technologies as well as a number of universities with a significant research capability in this area.[228] EPSRC has a moderate investment in wave and tidal research, having risen from nothing in 1999-2000 to around £0.5 million in 2001-02. The DTI expects to spend £1.6 million on RD&D in 2002-03 and has recently announced that two companies—Wavegen and Tidal Hydraulic Generators—will receive £3.7 million between them to develop prototype tidal generators off the coasts of Islay (west Scotland) and Pembrokeshire (see Table 6). Wave and tidal were considered priority areas of research by the ERRG report, stating that they were technologies with "good long-term prospects of yielding very large reductions of carbon emissions" with "the potential to play a significant role in helping to meet the challenge of a secure, sustainable, low-carbon energy supply".[229] Brian Wilson told us that he was a fan of wave and tidal technologies and that the DTI had managed to support all credible projects in wave and tidal energy, which begs the question as to why there are so few credible projects.[230] Mr Wilson seemed very confident about the future of the technology, suggesting that the current commercial generator on Islay only needed to be scaled up and mass produced like sausages.[231] We hope the Minister is right and it really is that simple. We were pleased to see his announcement of new funding for wave and tidal projects two days after appearing before us.[232]

135. Wave and tidal power was the subject of an inquiry by our predecessor Committee in the last Parliament and it remains a particular concern of ours.[233] The report concluded that there were no major technological barriers to its exploitation and criticised the Government for its lack of funding. It recommended a managed programme by the EPSRC for wave and tidal and a "significant proportion" of the £100 million announced by the Prime Minister for renewables in March 2001. We are pleased to see that wave and tidal energy has received greater governmental attention since our predecessors' report. We hope that the recent increases in funding represent the first stage in building capacity, leading to investment commensurate with the potential of wave and tidal energy. We can look forward in the near future to investment commensurate with wave and tidal energy's potential impact on the UK's energy supply.

136. A further recommendation of our predecessors was that a National Offshore Wave and Tidal Test Centre should be set up. In its reply, the Government said that it had taken the first steps in setting up a Marine Energy Test Centre at Stromness in the Orkneys. We welcome this development and look forward to its opening "later this year".[234] There is clearly progress in this field but the Government would do well to note these comments from the Engineering Business:

"Tide and wave energy technology developers are intending to make huge progress on large-scale systems in a very short time scale, all on low budget programmes. The challenge for government is to decide how desirable it is to generate significant power from wave and tide resources, and how important it is to develop these new industries based on British companies using existing UK skills and infrastructure. If the answer to both of these questions is yes, then we are confident that we can deliver and the only requirement is to provide market conditions that encourage this to happen".[235]


191   Performance and Innovation Unit, The Energy Review, February 2002, paras 9.12, 7.63 Back

192   Energy Savings Trust, Putting Climate Change at the Heart of Energy Policy, Energy Saving Trust Submission to

the Energy White Paper, September 2002, p 24 Back

193   Sixth Report of the Trade and Industry Committee, Session 2001-02, Fuel Poverty, HC 814, para 34 Back

194   Ev 92, 101, 110 Back

195   Ev 110 Back

196   Ev 489-490 Back

197   Ev 135 Back

198   Q 509 Back

199   Ev 135 Back

200   DTI, Our energy future-creating a low carbon future, Cm 5761, February 2003, para 3.47 Back

201   Q 491 Back

202   Q 491 Back

203   Q 493 Back

204   Q 495 Back

205   Q 495 Back

206   Q 496 Back

207   DTI, Our energy future-creating a low carbon future, Cm 5761, February 2003, paras 3.2, 3.5 Back

208   As above, para 3.16 Back

209   Q 500 Back

210   Q 508 Back

211   HM Treasury, 2002 Budget Report, para 7.24 Back

212   Ev 34 Back

213   Ev 91 Back

214   DTI, Our energy future-creating a low carbon future, Cm 5761, February 2003, para 4.57 Back

215   Ev 113 Back

216   Q 312 Back

217   Q 506 Back

218   OST, Report of the Chief Scientific Adviser's Energy Research Review Group, February 2002, p 22 Back

219   Q 307 Back

220   Q 600 Back

221   British Embassy Berlin, Background on Renewable Energy, July 2002 Back

222   Q 507 Back

223   Ev 113 Back

224   Ev 69 Back

225   DTI, Our energy future-creating a low carbon future, Cm 5761, February 2003, para 3.16 Back

226   Ev 160 Back

227   Ev 160 Back

228   Ev 114 Back

229   OST, Report of the Chief Scientific Adviser's Energy Research Review Group, February 2002, paras 42, 70 Back

230   Q 596 Back

231   Q 597 Back

232   DTI press release, Seachange for Western Isles, 21 March 2003 Back

233   Seventh Report of the Science and Technology Committee, session 2000-2001, Wave and Tidal Energy, HC 291 Back

234   DTI, Our energy future-creating a low carbon future, Cm 5761, February 2003, para 4.53 Back

235   Ev 161 Back


 
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