Select Committee on Science and Technology Fourth Report


198. RD&D cannot be considered in isolation from the electricity transmission network, the market and its regulation. Although our inquiry's focus is on RD&D, there are distinct disincentives to RD&D and these will be dealt with here.


199. We have considered some of the RD&D issues facing transmission companies. Some of the infrastructural changes required to facilitate the large scale installation of the renewable energy sources require the application of well-established technologies, however. Many renewable energy sources are likely to be located away from major urban centres and so the Grid will need to be strengthened in certain areas to ensure transmission from generator to consumer.[326] For historical and economic reasons, the flow of electricity in England and Wales is largely from North to South, with 10,000 MW being transferred regularly. Many of the renewable sources of electricity are found in the north, west and in particular Scotland. The three British transmission-owning companies—National Grid, Scottish Power and Scottish and Southern Electric—have conducted a study on behalf of the DTI into the changes necessary to increase flows. The study concluded that "substantial transmission development and investment will be required, including the upgrade of some distribution circuits and building some new substations, if renewable developments on this scale are to take place and indeed if the Government's targets for 2010 are to be met".[327]

200. The White Paper recognises the substantial strengthening of the transmission network necessary to exploit renewables such as onshore wind and marine technologies, stating that "Transmission companies must start preparing now to strengthen the network to enable the UK to increase substantially its deployment of renewables". We note that "Discussions are currently taking place between Ofgem and the transmission operators on plans to upgrade the transmission network across the whole country".[328] We look forward to finding out the results of those discussions and in particular how the "rewiring" referred to by Brian Wilson will be paid for. He indicated that the utilities will have to pay for it but that this investment would have to be recognised by Ofgem.[329] The concept of a West Coast Interconnector was favoured by Mr Wilson as it would avoid a lot of the planning difficulties. It seems that its high cost will mean that it is unlikely that it ever gets built.[330]

201. A further issue for the transmission companies is the task of ensuring that the second-by-second demand for electricity is supplied. It has been suggested that the intermittent nature of some renewable energy sources, particularly wind, could lead to technical problems in balancing the system. National Grid has conducted a study into the implications of a larger proportion of renewable generation and concluded that the target of 10% renewable generation by 2010 would not be constrained by the current technology but there are costs involved. National Grid estimates that if wind made up the full 10% it would cost £60-80 million a year. Beyond 10%, no technical problems are foreseen but there would be cost implications.[331] Stand-by generation and large-scale storage may be required.

202. We discussed the technical issues necessary to connect distributed generation to local networks in paragraphs 75-80. But these are only one part of the problem. The White Paper concludes that "Very substantial changes will be needed in the way in which our distribution networks are designed, organised and financed ... DNOs will also need to take a more proactive approach to distributed generation". It goes on "Under the present price control rules there is no financial incentive for the DNOs to connect distributed generation to their networks. We therefore believe that the regulatory framework needs to be amended

so that the DNOs connect and use higher levels of distributed generation.[332] At present the transmission companies and network operators have little obligation or incentive to invest in bringing forward and installing the technology needed to make large-scale renewable generation a reality. The lack of these incentives discourages industry to tackle the problems remaining with many exciting new energy technologies. We are pleased that the Government appreciates the need to revise the regulatory framework. In selecting the methods of energy generation for the future, account will need to be taken of the potential changes needed in the distribution network infrastructure.


203. The PIU report describes the problems in gaining planning permission for energy projects as "persistent theme of the review" which it attributes to different concerns of potential developers and local residents. This is not just a problem for mature technologies as demonstration projects may have to face the same obstacles and the any barriers to the deployment of new technologies will inevitably have an impact on RD&D investment. A particular problem is with offshore developments. There is no authorisation process offshore comparable to the planning process onshore and offshore developers must gain a series of consents. There are also likely to be conflicts with other offshore activities such as fishing, transport, defence activities, and oil and gas infrastructure. The PIU recommended a range of measures, of which the principal ones were:

The Government's response in the Energy White Paper accepts the first recommendation. It says it will work with local planning authorities to obtain better statistics on the number of renewable projects that are achieving planning approval and why others are being rejected.[334]

326   Ev 126 Back

327   Ev 126 Back

328   DTI, Our energy future-creating a low carbon future, Cm 5761, February 2003, para 4.25 Back

329   Q 616 Back

330   Q 619 Back

331   Ev 126 Back

332   DTI, Our energy future-creating a low carbon future, Cm 5761, February 2003, paras 4.21-4.22 Back

333   Performance and Innovation Unit, The Energy Review, February 2002, paras 8.38-8.43 Back

334   DTI, Our energy future-creating a low carbon future, Cm 5761, February 2003, para 4.32 Back

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