Examination of Witnesses (Questions 360
WEDNESDAY 26 MARCH 2008
MP, SIMON VIRLEY
Q360 Dr Turner: Yes, nuclear power
but that is not renewable and we will come back to that.
Malcolm Wicks: No it is not, I
Dr Turner: The point is so little has
happened then in terms of renewables deployment that it is not
unreasonable to question the actual political drive that the Government
is putting behind renewables. You are right to say that the new
EU 2020 target is a very massive challenge, so why is it that
the Government is not showing more drive? We have an Energy Bill
in front of Parliament right now. It contains very little provision
for promoting renewable energy and this does seem extraordinary.
Can you explain the Government's position here?
Q361 Chairman: Would you let the
Minister try and explain.
Malcolm Wicks: Chairman, having
spoilt my chances, at least temporarily, of an honorary degree
from Warwick University, I do not want to make an enemy of my
good friend Dr Turner by saying that he is wrong; but you are
wrong and I think you are being too pessimistic about this. I
cited some data earlier. Let me give you some data now, albeit
briefly Chairman, on wind farms. At the moment both on and offshore
we have 169 wind farms operational; a further 33 are currently
under construction; 126 have been consented; another 220 are in
the planning system, which if all are consented (and they will
not all be consented) would make a total of 548, going up from
2.4 gigawatts from the operational ones up to 18 gigawatts, and
that is just in terms of where we are at the moment before we
do our Renewable Energy Strategy. I put it to you, Dr Turner,
that, by definition, shows quite a marked increase. I could instance
the London Array off the Thames Estuary. This will be the biggest
offshore wind farm anywhere in the world and indeed some time
this year we will overtake Denmark to be the leading nation in
the world with offshore wind capacity. Given that and given other
developments in terms of biomass I could mention, I put it to
you, Mr Turner, that we are moving in the right direction. I said
to the Chairman in answer to his question of whether we need to
do more, yes we do, and that is why we are now revising our strategy
to get us in a better place.
Dr Turner: The point of my question,
Malcolm, is assuming we achieve the 18 gigawatts of wind power
that you quote, unfortunately, an awful lot of that will not be
on-stream for many years because it cannot even get grid access,
and we have taken an awful long time to get to grips with that
particular problem alone, which is just one of several problems
but a very important one which is standing in the way of renewables
deployment, and if the Government had been really serious, these
difficulties were clearly apparent at 2003 but nothing has been
Chairman: I was must try to get you to
ask a question rather than give a speech, Des, please.
Q362 Dr Turner: until now
to start to address them, so why has the Government not shown
Malcolm Wicks: Dr Turner, you
know there is a Planning Bill before Parliament in the House of
Commons at the moment which is designed to speed up the planning
process whilst still respecting the needs of local people to make
representations. That has implications for all sorts of infrastructure,
not just energy infrastructure, and it has implications for large-scale
wind farms, so we should speed up things markedly in the future.
We also have a Transmission Access Review which we are undertaking
with Ofgem to make sure that we can speed up the connections of
renewables with the grid system.
Dr Turner: Indeed you are absolutely
right but the problem has been clearly apparent for five years;
why only now? How quickly are we going to tackle all the other
issues as well?
Chairman: Sorry, Dr Turner, I think the
Minister has given an answer and I would really like to get back
on to the brief if we can.
Q363 Dr Turner: Moving on
Malcolm Wicks: We are moving on,
we are moving ahead!
Chairman: Do not you start, Minister!
Q364 Dr Turner: We have only talked
about wind this morning and wind is only one technology and we
have an enormous wind resource, but we also have other renewable
resources which we are uniquely blessed with around the shores
of the UK. How do you see your portfolio of renewables developing
to deliver the 2020 target including the marine resources?
Malcolm Wicks: We do need a portfolio
and, Dr Turner, you said there is virtually nothing in the Energy
Bill about renewables but again, if I may say so, that is slightly
incorrect because a major section of the Energy Billand
I have just come out of the Energy Bill Committee so I know one
or two things about itis about the reform of the Renewables
Obligation, as you know, and the purpose of reforming the Renewables
Obligation is that at the moment it is an obligation that benefits
all renewables equally and we have taken the view, after getting
the appropriate advice, that we need to encourage certain forms
of renewables more than others. Onshore wind for example is becoming
more commercially viable (although I think it still needs some
support) whereas some of the newer technologies, and you have
mentioned marine, wave and tidal, are somewhere between the R&D
stage and moving towards deployment. I do not want to exaggerate
how close they are to deployment but some are now being deployed
and therefore in the Renewables Obligation we are giving two ROCs
(Renewables Obligation Certificates) for wave and tidal because
they need that extra support compared with, say, onshore wind.
I see marine energy as having huge potentiality and rather like
offshore wind it has particular application here in the British
Isles. Without boasting too much, we are one of the leading nations
in the world, I would say, in terms of marine energy. We have
a test centre up in Orkney which I visited recently, all set there
to do the tests for the different bits of kit that go in the water.
We also have Wave Hub as well. We are well set in terms of the
R&D. We have a number of enterprising companies who are developing
marine energy sources. Some of my colleagues might say more about
those. An expert in the Orkneys said, "Where we are, Minister,
on this is we are where the Wright brothers were in terms of aviation."
I thought that was an interesting comparison, and it was not cynical
because the Wright brothers eventually led to Concorde, but in
terms of where the technology is, it is at a very, very early
stage, it needs encouragement through R&D, it needs encouragement
through deployment, and it needs encouragement in terms of support
through the Renewables Obligation.
Q365 Mr Marsden: Thank you, Chairman.
You will forgive me, Minister, for observing that it took 65 years
to get from the Wright brothers to Concorde and perhaps if we
were talking about aerial warfare in the First World War we could
have more hope, but can I move on to something you said as an
aside earlier? You mentioned the question of whether nuclear should
be regarded as renewable or not, and I thought I heard you say
it was not, is that correct?
Malcolm Wicks: Yes. I was only
jesting with Mr Turner that the last White Paper was rather different
from the earlier one because of nuclear.
Q366 Mr Marsden: Many a true word
is spoken in jest! So there is no intention by the Government
to redefine nuclear as a renewable source of energy?
Malcolm Wicks: No, none at all,
because it is a clean and green source of energy; it can play
a role alongside energy efficiency and renewables in helping us
meet our very demanding targets that by 2050 CO2 should be reduced
by 60% at least, maybe 80%, against where we were in 1990, but
because it requires uranium it cannot be regarded as a renewable.
Q367 Mr Marsden: I accept that and
I am sure that message will have been heard loud and clear, but
there is an issue, is there not, about the unintended consequences
of the concentration on nuclear that the Government has announced?
How are we going to ensure, given the huge sums of money that
are involved, that the deployment of investment in renewables
is not hampered or clipped by the necessary large sums of money
that are going into nuclear?
Malcolm Wicks: Can I, first of
all, say that there is not a concentration on nuclear; there is
a concentration, I think, on two or three things. The big concentration,
if I can put it like that, has to be on climate change. Second,
we are increasingly, I think, focused also on energy security
in a world where the geopolitics of energy insecurity are going
to become more important as the decades roll by, in our judgment.
Thirdly, we are focused on social justice issues around both fuel
poverty at home and making sure there are not perverse consequences
of, say, biofuels technology in the developed world. They are
the things we are focused on. Now, in order to help us tackle
those issues, we think nuclear has a role to play. About 20%,
I think, or 19% of our electricity at the moment is from nuclear;
we think it should play a role in the future; as we have said
we think renewables should play an increasing role, so I would
concentrate on those two but also on energy efficiency, buildings
and zero carbon housing and many other points.
Q368 Mr Marsden: I accept all that
but, in the practical world of politics and comprehensive spending
settlements and everything else, do you not think you and maybe
one or two of your colleagues are going to come under some pressure,
the Government having so vociferously announced it is going to
pursue the nuclear role from people elsewhere and maybe people
in government, who are going to say: "Now come on, if we
want this thing to run we are going to have to put more into money
into it and that means we will have to cut back on renewables".
Malcolm Wicks: You say "more"
money; we are not putting any public money into new nuclear. We
operate in a market system, it is the job of Government
Q369 Mr Marsden: That is the current
Malcolm Wicks: Well, it is the
Q370 Mr Marsden: So you can give
a guarantee today to this Committee that that will remain the
Malcolm Wicks: Well, as a distinguished
historian yourself, Mr Marsden, you know even someone as powerful
as the Minister of State in the Department of Business cannot
predict history, but what I am saying is
Q371 Mr Marsden: I am just trying
to tease out the general direction of travel from you. I am not
asking you to be Cassandra.
Malcolm Wicks: The direction of
travel is that we are going to facilitate a range of technologies,
including nuclear; we will facilitate it in different ways through
planning changes, the development of the emissions trading scheme,
the better price of carbon, et cetera, et cetera,
but we are not in the business of paying for new nuclear and we
made it absolutely clear, and the Energy Bill is partly about
this, that the companies will pay the full costs of new nuclear,
including their appropriate share of disposing of nuclear waste
at the end of the day.
Q372 Mr Marsden: Quickly, and finally,
wave power and wind power have been mentioned and you gave some
apparently impressive statistics in terms of the planning process,
particularly in terms of wind and wave. Are you now confident
that the longstanding default position of the Ministry of Defence,
which was to object to many of these significant developments
on grounds of national security, has now been overcome?
Malcolm Wicks: The issue has not
been overcome yet. It is genuinely difficult because clearly when
the MoD tell us, as they do, that wind farms can interfere with
radar for a number of, as it were, critical moments and in terms
of the obvious need to plot what planes are heading towards Britain,
that is a serious issue; it is not a trivial issue but a serious
one. Gordon Brown, the Prime Minister, however, has made it absolutely
clear he wants this one resolved and our officials are working
well together on this.
Q373 Mr Marsden: It is not resolved
Malcolm Wicks: No. At ministerial
level we have had a meeting but it is not resolved yet because
there are some quite serious technical issues which require some
R&D and some rapid deployment of new technology.
Q374 Dr Turner: The renewables industry
is very worried about the possibility of a nuclear blightand
it is not just investment, it is stronger than thatwhich
may interfere with the development of renewables long before the
2020 date by which we can possibly expect new nuclear stations
to start producing, and I have heard the nuclear industry saying
on many occasions: "Yes, we can build new stations without
subsidies but we will need long-term supply contracts", so
they will need guaranteed access at all times to the Grid in order
for their reactors to function economically. That is a basic fact
of nuclear economics. What are you going to do to guarantee that
there will be no nuclear blight on the renewables industry?
Malcolm Wicks: The renewables
industry have reasons to be cheerful. They are not the happiest
bunnies I meet, I must admit; they need to cheer up a bit, because
never before has there been a time when a government has been
so committed to renewables. When faced with a situation where
we need to move from 2% of all energy coming from renewables to,
say, 15% in 20 years, would not most industries be rather cheerful
about that? Actually, I think some are more optimistic now, but,
Mr Turner, I think this attempt, which I hear all the time from
both sides, to make out this is some boxing match between the
nuclears in one corner and the renewables in another is ridiculous,
because the fact of the matter is that because a lot of power
stations are going to be closing down over the next 15 years,
because of our climate change obligations, because of all the
new investment that is coming forward, there is plenty of room
for investment in all sorts of technologies, and if it is 15%
for renewables by 2020, if we can replace or more than replace
the nuclear we get at moment, nowhere does that add up to 100%.
At the end of the day, as I understand it, we need 100% of energy
supply, and there is plenty of room for everyone. Going back to
Mr Marsden's cross-examination of me, which I understand, about
whether we are really not going to subsidise nuclear, no, we are
not going to subsidise nuclear, but we do subsidise renewables.
The Renewables Obligation by 2010 is going to be £1 billion
a year, and that is quite a considerable subsidy on top of all
the R&D and other things we do to try to bring forward these
technologies. So one industry, perfectly properly, is being subsidisedrenewables;
oneperfectly properlyis not going to be, and that
Q375 Graham Stringer: The Government
has a policy of not picking winners on renewables, as I understand
it, not choosing one technology over another. Would it be fair
to say that this has resulted in a one-size-fits-all approach
when supporting R&D?
Malcolm Wicks: No. I listened
carefully to the question and no, we are not in the business of
trying to pick winners but I think I need to nuance that, because
I have said earlier that we do recognise that some of the renewable
technologies are a few pages into Chapter 1 of their eventual
histories and some are reasonably well proven now, such as onshore
wind, and therefore through the reform of the Renewables Obligation
we are, as it were, tilting the subsidies structure in favour
of, say, wave and tidal and not so much in favour of onshore wind.
That is not quite the same as picking winners; it is about having
an understanding of the life cycle in terms of R&D and deployment,
and a move towards hopefully successful commercial development.
Ms Newell: In terms of flexibility
of approach perhaps I could point to the example of the Energy
Technologies Institute which, of course, is a new organisation
which has recently been established. One of the benefits they
have as an arm's length body is they can take a variety of approaches
as to how they procure and how they fund research. Their initial
concentration has been in the offshore wind area and marine, and
they have taken the approach of very open calls for expression
of interest, and now they are going to take a much more direct
approach of bringing those collaborators together to develop projects
to tackle some of these issues in terms of future offshore and
marine. Going forward, they have the flexibility perhaps of procuring
research in the future or to take a different more open approach,
so I would say ETI is an example of where they are looking at
some of the issues affecting the technologies, and the approach
they are taking is being tailored to address those in the best
Q376 Graham Stringer: So it is not
quite as neutral as I implied. Can I just take your answer, which
I think was a very fair answer, Minister, in terms of recognising
that subsidies do influence what happens. Do you think, going
back to wind farms, that when a single turbine can generate half
a million profit per year and the cost of renewables, as you have
said, is going to fall on the taxpayer or the consumer, that is
a reasonable industry to subsidise when that is the level of profit?
Malcolm Wicks: I am not disputing
your figure but I cannot verify it either, so I should look at
Q377 Graham Stringer: From the half
million, as I understand it, it is £200,000 from profit and
£300,000 from subsidy on a 2 megawatt turbine.
Malcolm Wicks: As I understand
the economics, onshore wind is still worthy of support, if I can
put it like that, through the Renewables Obligation. Certainly
we want to see a much greater deployment of onshore wind as well
as perhaps rather more in the future in terms of offshore wind.
It can take far too long at the moment, hence the need for planning
reform, for an idea to come from the boardroom to fruition. Some
fall by the wayside for different reasons so there are still risks
in the industry, but obviously in the future one will need to
keep that under review, and I look forward to the time when, say,
onshore wind will not need any extra support from the customer.
Q378 Graham Stringer: They are money
generating at the taxpayer's expense, but there is another consequence
of that, is there not, that there are turbines out there with
only 7% load factors. Is it sensible to be subsidising turbines
with such low load factors? I think the average is about 27%.
Malcolm Wicks: They are going
Q379 Graham Stringer: Clearly, but
is 7%, with that level of subsidy, sensible?
Mr Virley: There is always going
to be an issue about load and intermittency with wind, and they
do vary depending on sites, and in a sense the banding of the
ROC is designed