Examination of Witnesses (Questions 343
WEDNESDAY 26 MARCH 2008
MP, SIMON VIRLEY
Q343 Chairman: Good morning to everyone
and good morning, Minister, and we welcome you to the Innovation,
Universities, Science and Skills Committee, in fact your first
visit to the new Committee but an old friend of many of us, and
to this the final session of the Renewable Electricity-Generation
Technologies Inquiry. We welcome too Simon Virley, the Head of
the Renewable Energy and Innovation Unit at BERR, and Kathryn
Newell, the Assistant Director, UK Energy Research and Development
at BERR. Minister, Warwick Business School told us that "the
UK has never taken renewable energy deployment seriously".
How would you respond to that criticism?
Malcolm Wicks: I would ask Warwick
University, with all due respect, to do their research more thoroughly.
I think we need to understand this partly historically. The UK's
energy base ever since the mid-1960s has been the UKCS, the North
Sea. We have been blessed with oil and gas offshore and, although
now in decline, still some two-thirds, maybe a little more, of
our total energy comes from the North Sea. Given that, it is not
so surprising that before the era when climate change became the
pre-eminent issue we were reliant on that. After earlier oil shocks,
others without that resource invested elsewhereDenmark
in wind energy for example and Germany in photovoltaicsbut
what I would say to Warwick University is look at the momentum
now. Yes, as a percentage of all of our energy we are still somewhat
under 2%, and that looks very small, but every year now we are
seeing major developments, not least in terms of wind farms, particularly
offshore, and that the momentum in terms of our total energy coming
from renewables is increasing, I would argue, quite dramatically
year by year, so I would say look at the momentum.
Q344 Chairman: Let us look at the
momentum then. The target proposed by 2020 is that 20% of energy
shall be generated from renewables.
Malcolm Wicks: That is for the
European Union as a whole.
Q345 Chairman: Yes, for the European
Union. You are arguing very strongly that we need to have the
15% UK target lowered. That is not exactly an ambitious approach
to renewables, is it?
Malcolm Wicks: I am happy to go
back to the issue of momentum when that is timely but on the European
issue let us remember what has been agreed. The heads of state,
including our own former Prime Minister, signed up to a target
for the whole of the European Union, that 20% of all energyand
of course the crucial word there is "all" energy because
previously targets have been talked about in terms of electricity,
certainly here in the UKshould come from renewables, as
you say, by 2020. There was never any suggestion from the European
Commission that every country would have the same target or that
we would each have 20%. That is now being negotiated. The Commission
have put to us that for the UK our share, as it were, should be
15%. This is a perfectly reasonable negotiation going on. Clearly
where you have a country already with a lot of renewable resource,
often because of hydro such as Sweden, it is not so surprising
that their target will be higher than a country like Britain.
They are saying 15% and we are discussing that, but clearly it
will be there or thereabouts. The thing to focus on is that it
is very, very demanding, it is a huge challenge, and we are going
to have to do a great deal to hit the target.
Q346 Chairman: I think one of the
things that has struck the Committee during this particular inquiry
is that if we look at the whole of energy from renewables in order
to meet the targets, which have been set either by our own Government
or indeed by Europe, in terms of electricity generation we need
to have somewhere between 30 and 40% of all our electricity generated
through renewables by 2020. There is fairly common agreement about
that. At the moment we have got roughly 5% of electricity being
generated through renewables. You set a target to triple that
by 2015 and then between 2015 to 2020 to actually double that
again. It is not realistic, is it, Minister?
Malcolm Wicks: No it is not, but
let me explain where we are. We have had a Renewables Strategy,
and I return to the Warwick critique, when you look at the momentum,
if I can just give you some figures, if you look at all renewables
generation as measured on the Renewables Obligation basis, then
in 2002 we had something like 5.7 gigawatts of power from renewables.
It had gone up to almost 10 gigawatts by 2004 and in 2006 it was
about 14.5 gigawatts, and that is what I mean by the momentum.
We had a strategy in place that was already delivering against
the UK targets, but where I agree with you, Chairman, is that
given the goal posts have been changed, if I can use that comparison
in advance of the Arsenal Summit between the two heads of state
later this week, because of the new European targets, we need
to ask are our existing policies adequate? No, they are not. Do
we need to review to make sure that we can get to the 15% target,
or whatever it is, yes we do, and that is why we are now developing
a new Renewable Energy Strategy which we will be putting out for
discussion and consultation in the summer.
Q347 Chairman: If we are going to
triple the current level of production of electricity from renewables
by 2015, in seven years' time, so we are going to triple what
we are doing now, and then we are going to double it between 2015
and 2020, what do you envisage is going to be the major breakthrough
that is going to enable you to actually achieve that because,
quite frankly, we are struggling to see that?
Malcolm Wicks: You will see it
more clearly of course when our strategy is published when we
can discuss that. We are doing a great deal of work on this now.
Q348 Chairman: Can you not give us
Malcolm Wicks: Yes I can. You
are right to say that the bulk of this almost certainly will come
in terms of electricity because in terms of renewables for our
cars, renewables for our performance heating in industry et cetera,
that will be a smaller but I hope increasing proportion. I do
not particularly want to say it is 40%, but I think you are right,
it is there or thereabouts. I think one of the major drivers but
not the only driver will be offshore wind and wind farms generally.
I think that is the technology that is most proven in terms of
the British context. We are an island and we are blessed with
a huge resource in terms of wind power, and international studies
show that we are among the top countries in terms of wind power,
and also offshore the seas are relatively shallow, which makes
the construction of wind farms rather easier, so we have a huge
potential resource. My Secretary of State, John Hutton, has said
as a policy statement that we want to see a major expansion of
offshore wind. It is not the only thing, by the way, but in answer
to your question it would be top of my list of the way in which
we are going to hit our target.
Q349 Chairman: The whole of Britain's
coastline would have to be covered with wind turbines to get anywhere
near this target and that is not realistic, is it?
Malcolm Wicks: I do not think
the whole of Britain. Obviously there are places which are most
advantageous in terms of the sea terrain and wind power, but I
think, yes, we will see colossal expansion of offshore wind. I
am bound to say, and this will be of interest to your Committee
in particular Chairman, there is now a good deal of work going
on. My colleague Kathryn Newell may want to say something more
about this in terms of the research and development side in terms
of wind energy. I think there has been a sense up to now that
the wind turbine that has been onshore has more or less been put
offshore. I do not think that is quite adequate. In the industry
and other sectors we are doing a lot of R&D now on the kinds
of wind turbines we might see. I think they are going to be far
larger than the ones we are used to at the present time.
Q350 Chairman: I do not wish to be
rude or confrontational because that is not the way we work in
Malcolm Wicks: I have never known
you, Chairman, to be confrontational, except on one or two occasions!
Q351 Chairman: We will miss that
out. By March 2010 the UK has to produce and lodge with the European
Union an Action Plan in terms of achieving these targets, and
in that Action Plan you will have to have a roadmap which indicates
not only the direction of travel but the milestones along the
way in terms of achieving the European target, whether it is reduced
from 15% or not, and whatever proportion from electricity. Clearly
you must have at this stage some idea as to what will be the balance
between, say, electricity production through onshore wind farms
and offshore. Can you share that with the Committee?
Malcolm Wicks: I think I have,
have I not, I have indicated
Q352 Chairman: You have indicated
you are going to have both.
Malcolm Wicks: I will tell you
what, Chairman, to hit our renewables targetand I am confident
we canand more importantly to hit our targets in terms
of the pre-eminent issue of climate change, reducing CO2, you
say we are going to do both, but we have got to throw virtually
everything at this actually. In terms of carbon there are a dozen
things which are important. I am highlighting offshore wind because
I think in terms of the suitability for Britain we will see major
developments there but there will be other developments too around
other forms of renewables. I think micro generation can play an
increasingly important part and of course there is the potentiality
of the very grand project, but a controversial project and one
we need to think through very carefully, of the Severn Barrage
where, as you know, the Government in principle is interested
in that and will do very careful work, including environmental
feasibility work, to see whether that is a starter or not. The
Severn Barrage by 2020 or perhaps a year or two after could deliver
4 to 5% of our total electricity requirement.
Q353 Graham Stringer: Just returning
to wind and the percentage of electricity it will produce, have
you done any studies or are you concerned about the Danish experience
of introducing instability to the grid when you pass a particular
point of wind-generated electricity going into the system? Effectively,
the Danes have to have a back-up system, do they not, because
the wind does not blow all the time?
Malcolm Wicks: Absolutely.
Q354 Graham Stringer: What studies
have you done about that instability in the grid?
Malcolm Wicks: The National Gridand
I might ask Simon Virley to add to my answer hereand indeed
ourselves are doing a lot of thinking about this because as the
years pass and over the next few decades I think the existing
grid system, which is very heavily reliant on fossil-fuelled power
stations, is going to change very much in two directions. One
will be nuclear electricity and it is difficult to predict but
we would rather hope that in the future more of our electricity
will come from nuclear and more will come from renewables, both
of them clean energy sources. Therefore I have discussed this
with the National Grid and so have my officials and the National
Grid are thinking very hard about the very critical issues you
are raising about how such a grid system would operate. Would
it be helpful if my colleague Mr Virley comes in on this one?
Chairman: I am quite happy for Simon
to have a quick word here but I want to come back to the grid
Q355 Graham Stringer: I am particularly
interested in the problem of wind power and how it brings instability
into the grid.
Malcolm Wicks: It is why you need
a base load of course, by definition.
Mr Virley: We are doing modelling
work with the National Grid on that in terms of what it would
mean for the Grid to have 35-40% renewable electricity on the
grid. We are working with them and Ofgem in the context of the
Transmission Access Review and also trying to define what is put
in the Directive about what priority access for renewables would
mean in terms of access to the grid, so that work is underway
and will form part of the Renewable Energy Strategy when it comes
Q356 Graham Stringer: Just one last
question on wind, I do not know how you compare Oxford University
to Warwick University, Minister, but Professor Dieter Helm estimates
that for every tonne of carbon dioxide avoided by wind it costs
£510 sterling. Do you think that is a reasonable estimate
by Professor Helm?
Malcolm Wicks: I have great respect
for all universities as a matter of fact.
Q357 Graham Stringer: Except Warwick!
Malcolm Wicks: Warwick too but
I like to chivvy them to do their research more thoroughly than
they have done on that particular study. The serious point here
is that renewable energyand this is a generalisation but
it holds trueis more expensive at the moment than conventional
sources of electricity generation; it is more expensive than coal
and gas and so on, and that is one of the reasons why societies,
including our own, have chosen to effectively subsidise it, our
main vehicle being the Renewables Obligation, but I am very mindful
of the issue of costs.
Q358 Graham Stringer: But I am asking
a very specific question. I know renewables cost money and they
are subsidised by the taxpayer and by the consumer at the end
of the day, but you must have done estimates of the cost of avoiding
each tonne of carbon dioxide. Is £510 a reasonable estimate,
because that is what is estimated to be the cost of avoiding a
tonne of CO2 via wind farms, and that is at the bottom of any
strategy that moves on to such a large percentage of wind farms.
Mr Virley: There will be significant
costs here. We have published a preliminary impact assessment
which shows the provisional impact of costs in our estimates that
we currently have. I am not able to substantiate that particular
figure but there are some estimates that we have published now
of what the costs of implementing a Renewable Energy Directive
would look like and those are now available.
Malcolm Wicks: If there is any
data we have not given you already, Chairman, we will send it
to you, but we are certainly mindful of the fact that to move
towards the UK share of the European target is going to be very
expensive and we already seeingand Mr Stringer knows thisthat
as a proportion of the bills that we pay for our electricity as
householders, and it is true for industry too, an increasing proportion
now are the costs of running the Renewable Obligation, the Emission
Trading Scheme and one or two other projects. I think that will
increase in the future and at a time of rising energy costs we
have to be very mindful about the cost-effectiveness of the strategy
we are developing.
Q359 Dr Turner: Malcolm, perhaps
the attitude of Warwick University is tempered by the fact that
not an awful lot has really changed either in the background factors,
the recognition of the importance of climate change, the decline
of the North Sea, et cetera, since the 2003 Energy Review which
put forward the same aspirations for renewable energy as held
good until very recently, and the Energy White Paper last year
was virtually a rewrite of the 2003 Energy Review and subsequent
Energy White Paper.
Malcolm Wicks: I think it mentioned
nuclear this time. Was there not a new element to it this time?