Select Committee on Innovation, Universities, Science and Skills Minutes of Evidence

Examination of Witnesses (Questions 240 - 249)



  Q240  Chairman: If it ever arrives.

  Mr Harrington: It will be a concern for us if it does not.

  Q241  Mr Cawsey: You mentioned earlier quite a lot about environmental impact assessments and in some of the information that we received we saw that for instance Marine Current Turbine's Seagen project had an £8 million budget for a tidal turbine development of which £2 million was the environmental impact assessment. Do you think we have reached a stage where the costs of these assessments are now a deterrent to investment in renewables in the UK?

  Mr Harrington: I think you will find the reason for that is that nobody has done it before, and as nobody has ever done a project like that before, there are understandable concerns from stakeholders whether a revolving propeller is going to kill seals. It is thought it probably will not but the first time you do a project you need to get answers to a lot of very pressing questions of that sort. When the next project comes along, we will know the answer to that, so the same level of investigation and monitoring is unlikely to be required in subsequent projects. For these first projects that would be a big burden to place on that company. It is a fairly small company, and I think if at that stage public sector research resources could be brought into play to look at the impact of that technology, and perhaps others at the same time, that would be a way of reducing the burden on the small companies developing their technologies.

  Mr Baga: I was going to say that in slightly different words. Any new technology will raise questions, and those questions will be legitimate and they need to be answered. I suppose in the process of taking technologies from the test bed through to commercialisation, we need to make sure that we consider the environmental impact assessment as part of that package of work in taking them through this process and that will help reduce that burden of cost or perhaps have that burden shared more equally amongst developers.

  Q242  Mr Cawsey: There is some argument that the Government should provide baseline assessments that could be used. Would that help reduce the cost and speed up processes?

  Mr Baga: Or part of the framework. Again, if we are turning to research and development, I suppose the choice of technologies you have is immense and not everybody is going to be able to invest in all of the technologies all of the time because you just have not got the resource available, so pooling those resources is something that is happening through the ETI where essentially a number of companies are investing, and we are certainly putting our money into that pool, and there is no reason why those sorts of institutions cannot be used to carry out these assessments which will benefit everyone.

  Q243  Mr Boswell: Alongside the assessment is there some merit in looking at the concept of having a research programme, whoever runs it, which is dedicated to mitigating the environmental impacts; it is both recording what they are and also seeing whether they are real constraints on the development of technology or could be remediated?

  Mr Baga: I would agree that has got to be part of that package.

  Q244  Chairman: If you could just answer this final question as briefly as you can please. It has been very interesting looking at this whole issue of some of the other problems. It is not simply developing the technologies and then deploying the technologies; there is a whole set of other issues involved. One of them is the speed at which you can get from beginning an application right through to actually connecting the generation of power to the grid, and that seems to be another great obstacle. Briefly, what is the timescale between getting, say, permission for a—

  Mr McCullough: Getting to the point of permission is the hardest challenge.

  Q245  Chairman: Is there not a problem then getting connected to the grid? Is there not a backlog there?

  Mr McCullough: If the developer is planning all of his successive steps and has the funding to be able to apply for the grid early, and therefore take the exposure on that (because it is a financial exposure with a final sums liability that would currently apply to that developer) and can take that early lead, then at best you are probably looking at a two or three-year period at the moment. Quite typically you are looking at more than that. If you take our most recent example, we are currently constructing Little Cheney Court adjacent to Romney Marsh near Dungeness. That had been in the determination lifecycle for seven years before we actually started constructing it. That is an extreme but it is becoming more typical and there are many obstacles.

  Q246  Chairman: So is the principal reason then planning? Is that what we are talking about?

  Mr McCullough: The principal reason is planning but it would be wrong to accept that that is the sole reason; the principal reason is planning.

  Mr Harrington: There is another issue which you might wish to be aware of and that is land assembly. These projects are being brought forward by private sector companies who do not have the ability to use compulsory purchase powers in the way that public sector organisations do. They can obtain those powers but they can only initiate the process when they have obtained a generating licence. They have to apply, get a consent, get a generating licence and then commence compulsory purchase procedures. You might have one landowner where you need to dig a trench across his field and it could hold the whole thing up for another two years.

  Q247  Chairman: One of my and my colleagues' concerns here is that if we are going to encourage small entrepreneurial generators of electricity to get access to the grid, they cannot possibly afford all the time delays and the huge cost, and yet if you go to Germany grid operators are required to prioritise renewable sources for access to the grid.

  Mr McCullough: Indeed there is an EU Directive to give renewable energy priority dispatch to the grid, which is at the operational end. One of the things that you hit on there, Chairman, that is very key—

  Q248  Chairman: I thought I was.

  Mr McCullough: —is that many of the organisations, and at least two are represented on this panel, operate across multiple countries, and whilst we are all very willing to invest very large sums—in my own case over 1 billion a year[3]—then we are faced with having to look, for any shareholder, where we can put that money to work in the most efficient and most predictable and planned way. The temptation will be great for many developers to find the path of least resistance to do that. Unless we can make collectively the planning and consent and determination and all that goes with that more predictable in the UK (and that does not mean to say that they all have to be passed) then we will be at severe risk of losing out in investment. That is one of the key reasons why we are behind our European neighbours in deployment of renewable energy.

  Q249  Chairman: Any other comments on this? The issue of priority of getting onto the grid for renewables would help this process, would it not, it would stop that log jam?

  Mr McCullough: If anybody applies to that National Grid at the moment to get a grid connection, typically you will get an offer within a 90-day/three-month period. The challenge is that because the current transmission directives that apply are very old in statute and apply to centralised generation in particular, and therefore have various rules to be complied with that do not lend themselves to a more decentralised form of generation, so gaining the application and the right to apply is not actually the hurdle; it will be the cost of that application and the grid strengthening. If I want to put 30 megawatts in the middle of north Yorkshire, for example, the cost of the grid application there (because that connection point is deemed to be at capacity) means that I as the developer would have to pay for the strengthening of the whole area network to allow for that incremental increase. That is the subject of very deep study at the moment with the Transmission Access Review.

  Mr Baga: I would like to make an important point. That is only one side of the story. The other side of the story is that renewables technologies do not deliver a large share of our power. Even at 20% that is still only one fifth, stating the obvious. If you are going to give priority access to renewables, that will affect investment decisions in other technologies. The underlying issue is we have a queue, we have a limited amount of transmission capacity and that needs to be expanded. There is work on-going through the Transmission Access Review. If priority access is given to renewables at the expense of other technologies being able to connect, then that weakens their investment case or adds uncertainty to the investment case in those technologies, and so you really need to weigh those two up. The third thing you need to take into account is the eventual cost to the consumers. Particularly in the case of renewables where your capacity is used intermittently, you do need to take into account the costs of then maintaining the back-up and the other sources of generation and supply that will be needed to compensate for that. In principle, everybody would agree that, yes, where we have a renewable source we should be making the best use of it, but there are some other consequences of that approach that need to be dealt with before coming to any hard and fast rules on it.

  Chairman: Okay, we will leave it at that. Can I thank Nick Harrington, Jeff Alexander, Ravi Baga and Kevin McCullough very much indeed for your appearance this morning.

3   Note from the witness: RWE Innogy intend to invest €1 billion annually from 2008 onwards in renewable technologies. Whilst the UK will attract a significant proportion of this investment, RWE Innogy will also be investing in renewables in other countries. Back

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