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

Examination of Witnesses (Questions 360 - 379)



  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 agree.

  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 done—

  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 more urgency?

  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 Bill—and I have just come out of the Energy Bill Committee so I know one or two things about it—is 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 position?

  Malcolm Wicks: Well, it is the position.

  Q370  Mr Marsden: So you can give a guarantee today to this Committee that that will remain the position?

  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 yet?

  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 blight—and it is not just investment, it is stronger than that—which 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 subsidised—renewables; one—perfectly properly—is not going to be, and that is nuclear.

  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 way.

  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 that.

  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 to vary.

  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—

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