Select Committee on Trade and Industry Written Evidence


Memorandum by ABB Ltd

  A coherent Energy policy requires a consistent and joined-up approach across government and industry. It is important that supply, delivery and demand is designed and implemented using a shared vision and that implementation can be achieved in a liberalised framework. To this end the following observations are believed to offer an indication of where improvements could be made.

  Key issues that the select committee should be addressing in their review:

    —  The environmental impact of climate change is a main driver for the energy review. Immediate impact on this issue is likely only to be made via reduction of demand side usage utilising modern technology that enable and assist culture change to take place. The ability to take advantage of various technologies which have been used internationally require different regulatory, commercial and environmental models to be considered to be able to take advantage of options like smart metering, etc.

    —  Transmission and Distribution networks enable the efficient connection of all forms of generation to the demand side. The age profiles of these infrastructures are such that a large renewal process is about to begin. The opportunity to be innovative and replace existing equipment with state-of-the-art technology to reduce losses and increase efficiency via automation and intelligent "active" distribution networks could be lost unless the drivers for utilities change. Low cost or "best value to end customers" has driven many utilities to adopt a very low risk approach to new and innovative solutions that could deliver greater reliability, flexibility and capability.

    —  Generation—Networks interface. In order to maximise the opportunity that distributed generation provides, the ability to harness this energy for use in supporting local or "islanded" grids requires a review of license conditions, grid codes, engineering standards, etc. At present distributed generators have to disconnect as soon as a fault is detected.

    —  In order to deliver security of supply a portfolio of primary fuels and sources combined with generation mix is required. In a liberalised market those ratios are not fixed by policy or government but by market reaction to "signals" from the market place. Government can provide those signals but they need to remain stable and consistent. While short term issues such as the Renewable Obligation Certificates (ROC) and European Emission Trading Scheme (EU ETS) add to uncertainty beyond short term horizons. (eg 2008 for EU ETS.)

    —  In order to implement these innovative opportunities a new breed of engineers will be needed to be multi skilled in a variety of disciplines. A skills shortage is already identified, the opportunity to improve the training and certification of our future workforce is an area where government can provide leadership and direction.

    —  Finally, policy and regulatory structures are common themes, which either enable or present barriers to technological breakthroughs. In line with the points covered it is important that joined-up policy extends to the implementation cycle.

  We also attach as an Annex the key questions asked in the current energy review and are reproduced here to provide backup material to the key issues outlined above. Only questions where we believe we have sufficient competence/experience have been answered.

  I hope the response is helpful in providing you with our perspective on the improvements that could be made to enable innovative technology to play a successful role in the UK's future economy.

Managing Director


17 March 2006

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