Select Committee on Trade and Industry Written Evidence


APPENDIX 32

Memorandum by the Institution of Electrical Engineers

EXECUTIVE SUMMARY

The "particular considerations that should apply to nuclear" new build (Question 3 of the review)

  1.  Nuclear fission is a proven and reliable power generation technology. Given an appropriate regulatory framework, there are no technical or safety arguments for excluding it from the energy mix.

  2.  Nuclear generation provides low-carbon base load electricity that is not vulnerable to short term fluctuations in fuel supplies. Replacement nuclear build would make a positive contribution to electricity supply security in the same way as the present nuclear fleet.

  3.  A solution for nuclear waste disposal should be pursued as a matter of priority. Government should use the opportunity of the report by CoRWM in summer 2006 to act swiftly and eliminate the policy uncertainty around this issue.

  4.  It will be imperative for government to anticipate the resourcing requirements which could have an impact on timely approval and delivery of nuclear new build (including the requirement for skills, equipment and planning) and to devise mechanisms to manage them.

"The implications of increasing dependence on gas imports" (Question 2 of the review)

  5.  Risk management, rather than central planning, is the appropriate government approach to energy supply. All energy technologies carry risks and rewards that can be balanced through diversification.

  6.  The regulatory and market framework should be altered to encourage industry to think and act strategically. Mechanisms should be developed to reward diversity of supply.

  7.  The need to increase storage capacity has been appreciated and more storage capacity is forthcoming. In addition, the long-term benefits to increasing interconnector capacity are being recognised and should be progressed.

  8.  Government should seek to ensure that its foreign policy enables UK markets to maintain access to a diversity of gas sources.

The capacity of microgeneration to meet a substantial proportion of UK electricity demand in the medium and long-term

  9.  We foresee that the relatively high cost of microgeneration technologies will result in incremental, rather than exponential growth in this area.

  10.  The medium to long-term potential for microgeneration will depend on the potential for reducing the cost of the available technologies, the success of regulatory arrangements and reward mechanisms for the export of excess power, the ability to achieve public engagement in direct energy management and the emergence of a market for skilled service personnel.

  11.  The main obstacle to the development of a long-term self-sustaining market in microgeneration technologies is the high cost of the generation technologies.

  12.  With an expanded market and further R, D & D it might be expected that microgeneration technologies will become significantly cheaper over the next 15 years; however, this may not be adequate in itself to create a mass market.

  13.  A simplification of regulatory arrangements and a transparent regime of rewards for export of electricity will be essential preconditions for attracting a critical mass of consumers.

  14.  We would stress the importance of "taking the public with you" if microgeneration is going to be a success.

  15.  While large scale adoption of microgeneration in the longer term would require solutions to ensure system stability and sophisticated metering, work currently being undertaken in the larger context of distributed generation provides a framework for addressing these issues.

  16.  If microgeneration forms a significant part of the UK's electrical power system, then sophisticated metering and controls will become necessary.

  17.  The move to intelligent distribution networks does not imply that the need for, and contribution of, the existing national transmission network will diminish.

  18.  An increase in the uptake of microgeneration technologies would create a demand for a new skilled labour base to undertake the increased volume of installation and maintenance tasks, and co-ordinated government-industry intervention may be required so that a potential shortage does not create a further barrier.

The "particular considerations that should apply to nuclear" new build (Question 3 of the review)

  Below we exerpt the IEE's response to Question 3 of the Energy Review consultation:

  1.  Nuclear fission is a proven and reliable power generation technology. Given an appropriate regulatory framework, there are no technical or safety arguments for excluding it from the energy mix. The challenge for government will reside in devising an appropriate regulatory and financial framework without destabilising the electricity markets, in addressing public concerns, and reaching a decision on the disposal of nuclear waste (below).

  2.  Nuclear generation provides low-carbon base load electricity that is not vulnerable to short term fluctuations in fuel supplies. Replacement nuclear build would make a positive contribution to electricity supply security in the same way as the present nuclear fleet. Electricity consumption in the UK is characterised by a minimum continual demand (base load), which nuclear is ideally suited to meeting as it optimally operates at continuous full load. As nuclear represents only in the region of 20% of the total system, this would not in itself lock the UK into a centralised electricity delivery network. [100]By common consent it seems unlikely that a new nuclear station could be built and be operational in Britain before 2015, so the possible capacity shortage forecast above for 2015 (Q2 and Appendix 2) remains unaffected.

  3.  A solution for nuclear waste disposal should be pursued as a matter of priority. Government should use the opportunity of the report by CoRWM in summer 2006 to act swiftly and eliminate the policy uncertainty around this issue. The treatment of nuclear waste is a "live" issue regardless of an outcome for or against new build, given the quantities of legacy waste awaiting disposal solutions. The view in the science and technology community is that acceptable solutions do exist, and it is now imperative that a decision be made on the basis of the CoRWM recommendations.

  4.  It will be imperative for government to anticipate the resourcing requirements which could have an impact on timely approval and delivery of nuclear new build (including the requirement for skills, equipment and planning) and to devise mechanisms to manage them. Many countries are in the same situation as the UK with regard to considering possible new build. Growing international demand may mean that critical resources can be acquired only at a premium, adding to the cost of new nuclear build, while others may result in significant public sector liabilities.

    (a)  Critical resources include the skills for licensing, construction and operation of new plant in the context of an increasingly competitive global market for nuclear technology. While this problem could be addressed in the medium to long term, a temporary shortage of skilled people to undertake licensing of new reactors could add significantly to the timescales for delivery. While we welcome the involvement of the Health & Safety Executive in investigating the possibility of prelicensing reactor designs, anecdotal evidence suggests that its Nuclear Installations Inspectorate is already suffering from difficulties recruiting skilled staff in the necessary timescales. [101]

    (b)  On the other hand, taking advantage of the potential for international collaboration on safety standards could significantly reduce risk and timescales for new build.

    (c)  At the same time, the global manufacturing capacity for pressure vessels is known to be limited, while the demand for nuclear technology is becoming increasingly competitive.

    (d)  While it is pragmatic to consider locating new build on existing sites, not all current nuclear sites will have adequate infrastructure for new generation nuclear plant. Those scheduled for closure first are the Magnox stations which are modest in size and typically have only 132kV grid connections. New build would require 400kV connections and could therefore create contention over planning consent for upgrades to the lines for these sites. Nor should accordance with the criteria for seismic assurance and flooding risk for new plants be taken for granted.

    (e)  Locating new build on existing sites, if it can be arranged, could have the additional advantage of reducing decommissioning costs, which are currently calculated on the assumption of returning those sites to green field status.

    (f)  Finally, the potential for life extensions for existing nuclear facilities could provide some breathing space for implementing new solutions. We concur that AGR stations are likely to enjoy lives in excess of their currently projected design lives, and the recent announcement by British Energy of a 10 year life extension for Dungeness B bears this out.

"The implications of increasing dependence on gas imports" (Question 2 of the review)

  Below we exerpt the sections relevant to gas supplies from the IEE's response to Question 2 of the Energy Review consultation:

  5.  Risk management, rather than central planning, is the appropriate government approach to energy supply. All energy technologies carry risks and rewards that can be balanced through diversification. Although market liberalisation increased the diversity of the electricity supply mix, current trends point to a dominance of natural gas in the medium term, which may have to be managed through additional regulatory and market mechanisms. Projections of generation capacity over the next 15 years suggest that if no new dispatchable plant is constructed, shortages of capacity could be in the order of 3 GW in 2010, 7 GW in 2015 and 10 GW in 2020. If the market responds with new gas plant this shortage could be eliminated, though this may come at the expense of reduced diversity in the supply mix.

  6.  The regulatory and market framework should be altered to encourage industry to think and act strategically. Mechanisms should be developed to reward diversity of supply, in a more comprehensive way than the limited policy interventions currently in effect.

  7.  The need to increase storage capacity has been appreciated and more storage capacity is forthcoming. Proposed gas storage projects are expected to double the UK's storage capacity by 2010, even though this would still fall short of the strategic capacity maintained by many European gas importers. In addition, the long-term benefits to increasing interconnector capacity are being recognised and should be progressed.

  8.  Government should seek to ensure that its foreign policy enables UK markets to maintain access to a diversity of gas sources.

The capacity of microgeneration to meet a substantial proportion of UK electricity demand in the medium and long-term

  9.  We foresee that the relatively high cost of microgeneration technologies will result in incremental, rather than exponential growth in this area. At present it would appear unlikely that the installed capacity of micro generators (including micro CHP) will exceed 1,000 MW before 2015.

  10.  The medium to long-term potential for microgeneration will depend on the potential for reducing the cost of the available technologies, the success of regulatory arrangements and reward mechanisms for the export of excess power, the ability to achieve public engagement in direct energy management and the emergence of a market for skilled service personnel. The attractiveness of microgeneration to potential purchasers will also depend on issues like future gas prices and the potential effect of large-scale public installations. There are no insurmountable technical barriers to the adoption of microgeneration, but there are challenges that will need to be addressed systematically.

COST

  11.  The main obstacle to the development of a long-term self-sustaining market in microgeneration technologies is the high cost of the generation technologies. Annex A of the DTI's Consultation on the Microgeneration Strategy and Low Carbon Buildings Programme (2005) states pay-back times for PV of 120 years, 29 years for small wind turbines and up to 80 years for solar thermal hot water systems. Although these figures are likely to be challenged by supporters of the technologies, they are of the correct order of magnitude. Such long pay-back times would need to be reduced by a factor of 40 for PV and 10 for small wind turbines before domestic customers are likely to invest on commercial grounds.

  12.  With an expanded market and further R, D & D it might be expected that microgeneration technologies will become significantly cheaper over the next 15 years; however, this may not be adequate in itself to create a mass market. Reductions to 30-50% of current costs can be reasonlably expected in the short to medium term. However, it should be recognised that most of the technologies (PV, small wind turbines, solar thermal) have been in development for at least 40 years and so it would be optimistic to expect higher reductions. Thus, in terms of cost of energy, microgeneration is unlikely to be competitive with large-scale renewables, and effective energy efficiency measures are always likely to be more cost effective. In addition, the experience of high-efficiency electric motors in industry indicates that even very short payback times may not in themselves provide adequate incentive for purchase. The public's purchasing decisions are likely to be informed directly by factors including the capital cost and perceived benefits of available technologies.

REGULATION

  13.  A simplification of regulatory arrangements and a transparent regime of rewards for export of electricity will be essential preconditions for attracting a critical mass of consumers. We recognise that there are two potential "buyer groups" for microgeneration, domestic and industrial. The comments herein are broad in nature and apply to both these groups, although differences are likely to emerge in practice.

PUBLIC ENGAGEMENT

  14.  We would stress the importance of "taking the public with you" if microgeneration is going to be a success. By definition, microgeneration can only make a real contribution to the country's energy infrastructure if millions of people "buy it"! The first adopters are likely to be motivated primarily by the perceived environmental benefits. The news flow in the early stages of the introduction of microgeneration products could make or break them, and therefore effective communication will be essential. A major element of success will depend on the perceived competence of the installation and maintenance workforce which will have to be created to service the new technologies.

TECHNICAL IMPLICATIONS

  15.  While large scale adoption of microgeneration in the longer term would require solutions to ensure system stability and sophisticated metering, work currently being undertaken in the larger context of distributed generation provides a framework for addressing these issues. [102]It is generally acknowledged that an increase in distributed generation and active participation at all levels of the distribution networks will require the incorporation of more active management and intelligent network technology. The predicted incremental rather than exponential growth in microgeneration could offer significant benefits in terms of testing and developing a long term strategy.

  16.  If microgeneration forms a significant part of the UK's electrical power system, then sophisticated metering and controls will become necessary. These will be required so that the economic value of any exported power is correctly determined and the micro generators contribute to system operation. At present levels, there is a strong argument to treat microgeneration on a de minimis basis and to provide the simplest possible metering while finding alternative methods (eg profiling or even net-metering) to ensure an adequate income stream for the micro generator. This has been the IEE's recommendation to government in our response to last year's consultation. [103]

  17.  The move to intelligent distribution networks does not imply that the need for, and contribution of, the existing national transmission network will diminish. Networks provide both the means for sharing reserve plant, and the physical infrastructure which allows markets to operate. Contrary to many claims, the need is to enhance the capability of existing networks, rather than to substitute them with an entirely different system.

SKILLS

  18.  An increase in the uptake of microgeneration technologies would create a demand for a new skilled labour base to undertake the increased volume of installation and maintenance tasks, and co-ordinated government-industry intervention may be required so that a potential shortage does not create a further barrier.

24 March 2005









100   An increasing proportion of nuclear plant could be detrimental in the rare but very onerous situation of a national electricity grid failure (as has happened elsewhere in the world recently, though never in the UK since the establishment of the national 400kV system in the 1960s). This is because nuclear stations cannot come back on line quickly after an unplanned disconnection from the grid. In the recent major USA disruption the return of full supplies to consumers was hampered by the unavailability of exports from nuclear generation in Canada for this reason. Back

101   House of Lords debate on Energy Policy: Nuclear Power, 16 February 2006. Back

102   The Electricity Networks Strategy Group (ENSG) set up under the auspices of DTI and Ofgem has been tasked with addressing the long term strategic development of the transmission and distribution networks. Back

103   The full submission is available at http://www.iee.org/object/C7A8FB60-F81F-6FAB-15B6C03F152B7A56. Back


 
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