UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 216-iv

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

INNOVATION, UNIVERSITIES, SCIENCE AND SKILLS COMMITTEE

 

 

RENEWABLE ELECTRICITY-GENERATION TECHNOLOGIES

 

 

Wednesday 26 March 2008

MALCOLM WICKS MP, MR SIMON VIRLEY and MS KATHRYN NEWELL

Evidence heard in Public Questions 343 - 434

 

 

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Oral Evidence

Taken before the Innovation, Universities, Science and Skills Committee

on Wednesday 26 March 2008

Members present

Mr Phil Willis, in the Chair

Dr Roberta Blackman-Woods

Dr Brian Iddon

Mr Gordon Marsden

Graham Stringer

Dr Desmond Turner

________________

 

Examination of Witnesses

Witnesses: Malcolm Wicks MP, Minister of State for Energy, Simon Virley, Head of Renewable Energy and Innovation Unit, and Kathryn Newell, Assistant Director, UK Energy Research Development & Demonstration, Department for Business Enterprise and Regulatory Reform, gave evidence.

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 elsewhere - Denmark in wind energy for example and Germany in photovoltaics - but 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 two per cent, 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 15 per cent 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 that target lowered. That is not exactly an ambitious approach to renewables, is it?

Malcolm Wicks: I am a 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 per cent of all energy - and of course the crucial word there is 'all' energy because previously targets have been talked about in terms of electricity, certainly here in the UK - should 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 per cent. That is now being negotiated. The Commission have put to us that for the UK our share, as it were, should be 15 per cent. 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 per cent 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 per cent of all our electricity generated through renewables by 2020. There is fairly common agreement about that. At the moment we have got roughly five per cent 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 ten 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 per cent 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 any insights?

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 per cent, 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 this Committee ---

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 per cent 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 target - and I am confident we can - and 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 four to five per cent 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 Grid - and I might ask Simon Virley to add to my answer here - and 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 later.

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 per cent 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 out.

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 energy - and this is a generalisation but it holds true - is 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 publish 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 seeing - and Mr Stringer knows this - that 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?

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 a 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 on 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 per cent at least, maybe 80 per cent, 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 per cent, I think, or 19 per cent 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 at 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 per cent of all energy coming from renewables to, say, 15 per cent in twenty 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 per cent 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 per cent. At the end of the day, as I understand it, we need 100 per cent 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 renewal 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 procure researching 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 per cent load factors. Is it sensible to be subsidising turbines with such low load factors? I think the average is about 27 per cent.

Malcolm Wicks: They are going to vary.

Q379 Graham Stringer: Clearly, but is 7 per cent, 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 --

Q380 Graham Stringer: I do not blame this Government when the wind does not blow!

Mr Virley: -- to give the right incentives.

Q381 Graham Stringer: But you can make estimates, and I come back to the question. Is a turbine with a load factor of 7 per cent, or 10 per cent, for that matter, reasonable to subsidise?

Malcolm Wicks: Commercially I hope we would not see much of that in the future, as the industry becomes more sophisticated about siting. The load factor, of course, for offshore wind is quite a lot higher - 40 per cent comes to mind but I would need to check that - which is one of the reasons for offshore.

Q382 Dr Blackman-Woods: What consideration has been given to the Energy Research Partnerships' recommendation that there should be a linear supply chain of research funders established?

Ms Newell: I presume you are referring to the diagram where we talk about innovation going from the Research Councils through the ERP and the Environmental Transformation Fund?

Q383 Dr Blackman-Woods: Yes.

Ms Newell: The ERP have obviously been reviewing this and it is something they continue to look at. Although we often express support for innovation as a linear line, innovation, as I am sure you all know, does not really work like that. There is a lot of cycling back and a lot of jumping ahead, and we use it as shorthand to be able to demonstrate that some of these organisations have a unique position. We would also say that we see the ETI particularly as being a very new organisation, it has only just had its first proposals, but now we expect to see it in operation quite quickly, so we need to allow time for the ETI to become established and start supporting research. The TSB was itself only newly formed as an arm's length body last July, and is currently developing its strategy for energy, so we expect the ETI and the TSB to be developing complementary portfolios. Those organisations both have a different focus in terms of their priorities, with the TSB very much focused on United Kingdom competitiveness and ETI on CO2 reduction, so they operate at slightly different spaces there.

Q384 Dr Blackman-Woods: You have not mentioned, or if you did I did not catch it, the Environmental Transformation Fund, which is what the Energy Research Partnership was saying it was to get away from this idea of overlap and being very clear that something might move from the ETI into the Transformation Fund. Have you considered that?

Ms Newell: The Environmental Transformation Fund will become operational from April this year; it brings together some of the existing programmes and activity under BERR and Defra's headings, and also the Carbon Trust.

Q385 Dr Blackman-Woods: So are you accepting that there should be this linear chain and there should not be overlap with very specific remits for different funders?

Ms Newell: The overall aim is that they will mainly operate in separate spaces. However, the boundaries between some of these organisations will be slightly fuzzy depending on the technology. If I could use an example, perhaps, of marine, perhaps under the ETI we might see the support for marine going as far as similar prototypes going in the water, and then we might see the Marine Renewables Deployment Fund encompassed under the ETF supporting commercial deployment. For other technologies you may see the boundaries shifting slightly one way or another, but the key here for us is to work together to make sure we do not operate in each other's spaces and we do have individual roles.

Malcolm Wicks: I would add to that the obvious point, Chairman, that there is never a final chapter to a technology. Photovoltaics, for example, are being deployed in Germany quite a lot; we are trying to develop them here and encourage them; and we now read quite a lot about the second and third generation of photovoltaics, and much of that in Britain would be in the province, say, of the Research Councils but also some industries, ideas about nanotechnology and its potential for all sorts of things, not least photovoltaics. So, although something could be deployed, obviously the old R&D story continues.

Q386 Dr Blackman-Woods: Moving on to the Technologies Institute, it was set up obviously to accelerate technology development but the intellectual property from ETR-funded projects is likely to remain with industrial partners, is it not, and how will SMEs fare if that is the scenario?

Malcolm Wicks: That is a very good question. You are right that the intellectual property would stay with the company, and I think rightly so, but is your question how would that then favour --

Q387 Dr Blackman-Woods: Will SMEs therefore be disadvantaged because they are not likely to be, or are less likely to be, an industrial partner?

Malcolm Wicks: They would have to pay, obviously, the proper amounts for using the IP but what I would say, and I suppose I am thinking back to my brief period as science minister, Chairman, when I looked at science and innovation, it seemed to me that in a number of these fields, and I am thinking of cell technology when I visited Ceres, which was at one stage quite a small company, and when I think of bioscience, it is quite often the smaller company, sometimes the spin-out company from the university, that is particularly good at invention and developing IP itself.

Q388 Dr Blackman-Woods: Indeed.

Ms Newell: The ETI has set out some principles about how they will manage IP, and this is quite a balancing act because it needs to reflect the investment risk that private partners are making as well as recognition from the public sector who would like to see wider benefits coming from this. So basically what has been established is a set of guidelines about how the members will benefit and how they will manage individual projects, but the principles themselves do need to be flexible to reflect the fact that, as the Minister has suggested, a lot of innovation rests with small companies, and I think all the members of ETI are keen that they engage with the best people in the business and the people who have got the ideas, so I think they are sensitive to the need that this flexibility needs to be able to be used to attract these small companies into ETI and to get support, and to reflect that they will want to get some returns, so I think there is the flexibility there for small companies to benefit but it needs to be developed as we progress forward.

Q389 Dr Blackman-Woods: So they are likely to be partners with larger industries?

Ms Newell: It will depend on the nature of the projects that are supported. If ETI could procure research, and if that is the case, then maybe ETI and its members would hold most of the research. If they are more in a partnership where the SMEs are bringing something to the party in terms of finance or their base IP, then I think that will need to be reflected in how they are rewarded.

Q390 Dr Blackman-Woods: You may be aware that there is some concern in the academic community that the funds that are going through EPSRC to ETI are, in fact, just a recycling of money that really would have supported basic research for long-term technological departments in universities in any case. How would you respond to their concerns and to other concerns expressed about how the decision about the ETI and where it was going to be located was reached? Are you dealing with that set of concerns from the academic community?

Malcolm Wicks: My view is that more and more money is now being spent on the science of energy and research and development. I have a figure here, but I need to make sure I have the period of time right, that the main component is some 63 million on Research Councils. Over what period is that?

Ms Newell: That is annual.

Malcolm Wicks: Of 63 million on the Research Council's energy programme, not just renewables, 20 million is being committed by the Technology Strategy Board, 10 million for the Carbon Trust, and then, as you know, the European Union Framework Programme Seven which British scientists and researchers have always been very good at accessing, mainly because they are very good scientists. So you could always argue whether there is enough but I think there is a good deal of research money now available --

Q391 Dr Blackman-Woods: But the question is whether it is new money, or have you simply focused money that was already available which would have been earmarked for basic research in universities into ETI?

Malcolm Wicks: Certainly most of the ETI money is new because it is public-private partnership. We have managed to get major companies like Shell and BP, because the idea is to have a 50:50 partnership.

Q392 Dr Blackman-Woods: The ability for ETI to fund projects that are 100 per cent is dependent on them getting state aid approval from the EU. Can you update us on the progress of that bid?

Ms Newell: Yes. I believe that this is progressing well for the European Commission and we are expecting a decision in the next month or so. My understanding is that there have been some questions but we are addressing them.

Q393 Dr Blackman-Woods: Minister, you mentioned Framework Programme Seven. Would it be beneficial, do you think, to co-ordinate bids to the programme in order to maximise United Kingdom success?

Malcolm Wicks: I am not sure, to be honest. I suppose probably that is a question to ask DIUS, because DIUS would have responsibility for Framework Programme 7 now. I once had responsibility but I had better not trespass into old territory on that.

Q394 Dr Blackman-Woods: I am sure, Chairman, we can direct that question to DIUS, but has consideration been given to how United Kingdom research in renewables will interact with the European Institute for Innovation and Technology?

Ms Newell: Yes. This is the very recent announcement you are talking about?

Q395 Dr Blackman-Woods: Yes.

Ms Newell: I think we expect ETI perhaps to be an organisation that might be involved in that. It is quite a new announcement so we have not exactly structured our approach to that yet.

Q396 Dr Blackman-Woods: But what we are asking is will you give consideration to how the ETI will feed into the EIT at European level?

Ms Newell: The ETI has a remit to deal with international and European issues as well, so it is very natural that it will give consideration to how it will engage at European level.

Malcolm Wicks: That is very important because we are faced with global issues and certainly with European issues, and now we have European targets very helpfully in terms of carbon reductions and the renewables targets we have mentioned, and it is very important that we see more European collaboration certainly on science and technology. It would be absurd if every country was trying to do the same.

Q397 Chairman: What is the chance of us getting the Institute here in the United Kingdom? Have we made a bid for that?

Malcolm Wicks: The European Institute? I do not know, Chairman.

Q398 Chairman: Would it be possible to let us know what initiative has been made to try and get it here?

Malcolm Wicks: Yes, I will ask DIUS. I will say the Select Committee asked and I am sure they will answer!

Q399 Dr Turner: Our total government public spend on R&D in this country in renewable energy, or in energy at all, pales into insignificance compared with other countries and the historic spend on R&D, for instance, of the late lamented CEGB. Are you satisfied that we are putting enough resource into RD&D, and that we are arriving now at a mechanism where you have not got little bodies with little pockets of money falling over each other and making life difficult, because it has been very difficult for these small innovative companies to fight their way through the funding system up till now? The ETI looks like a big step forward, but it is still hard for companies to get that far, and then we find cases like the Marine Technologies Development Fund, which seemed a great idea when it was launched about three years ago by one of your predecessors but where there has not yet been any take-up because nobody has been able to fit the criteria. So was it premature? Because you need a lot of work before companies are at that point where they could fulfil the criteria of the Marine Development Fund.

Malcolm Wicks: My brief response, and I use the word "momentum" again, is that I think there is now a great deal of momentum behind funding in terms of R&D and Deployment. My colleague has mentioned the Technology Strategy Board, only just really established as an arm's length organisation; the ETI, a brand new organisation, and the developments we have just heard about in Europe. On the Marine Deployment Fund, the issue is this: that we put that in place because we are hopeful that following an R&D stage the kit can be deployed in the water, and so far, although we expect a couple of new applications quite soon, the technology is really not at that stage. It is important to remember about wave and tidal that very few bits of kit, if I can put it simply, have been tested in the water for sufficient lengths of time to prove their viability. As soon as a proper application comes forward we have the money to spend, so I do not think we should apologise for having a pot of money ready to bring forward deployment.

Q400 Dr Turner: I am not suggesting you should apologise for the Marine Development Fund. My point is has there been enough support for leading up to the stage where people might qualify for the Marine Development Fund? If the government had put more support in at that point we might have had more companies able to access the Marine Development Fund.

Malcolm Wicks: I will not look back but what I am saying now is that there are more funds available, so I think the future looks much better.

Mr Virley: As the Minister says the amount of funding is increasing; there is, of course, the role of the private sector as well as public money going in, and on the Marine Development Fund we have had the report from the Renewables Advisory Board that has looked at this and given an inkling that the criteria are appropriate, and we expect the SeaGen project, for example, at Strangford Lough to be deployed this weekend, which will be a very good step forward.

Q401 Dr Iddon: Going back to Renewables Obligation Certificates, of course, banding is in the present Bill before the Houses of Parliament now, and presumably the new banding scheme will kick in next year, some time in 2009. Now, the British Wind Association have given us some evidence to suggest that there really is a period of only three or four years to incentivise new technologies, or existing ones, such as offshore wind which require long lead-in times with respect to planning and logistics, and they are expensive anyhow to establish. So what the British Wind Association is arguing is that we only have from 2009 to 2012 approximately, or perhaps one or two years later, for the new banding scheme to incentivise these technologies. What have you to say to the British Wind Association's complaint?

Malcolm Wicks: That their task is urgent and the challenges are great, but we shall overcome. That is my message to them.

Q402 Chairman: They will be greatly reassured by that, Minister!

Malcolm Wicks: And they should be, because we are doing so much to facilitate the development. Britain has done things in the past relatively quickly. I do not think everyone understands - this Committee does - in a sense the series of revolutions that we need if we are to reduce carbon to the extent we say we will by the middle of the century. This is going to need revolutions in terms of motor transport, in terms of housing we are building, and, of course, the way in which we generate in particular electricity. So the challenges are huge but the job of government is to facilitate and tackle planning problems, look at some of the technical important issues around MoD and radar, and to reorganise the Renewables Obligation and so on to bring forward these technologies, and to do the R&D, and I think we are putting these things in place.

Q403 Dr Iddon: It is the cut-off date of 2027 that worries that particular industry. Is that a magic date? Why was it chosen? Are there any plans to extend it?

Malcolm Wicks: No, nothing is set in stone. That was the date and we are now, as it were, revisiting our renewable strategy in the light of the very demanding European target and we will be consulting on our initial ideas on the strategy in the summer. So no, I would not say anything about the date. I cannot predict what it will be but it is not set in stone.

Q404 Dr Iddon: That is important for the industry to hear from you, thank you. Could you now give us your argument, which, of course, I have heard before in the Energy Bill Committee but members of this Committee will probably not be aware of it, as to why the Government has turned its back on feed-in tariffs and has chosen banding of Renewable Obligations Certificates instead?

Malcolm Wicks: Feed-in tariffs are obviously just one means of bringing forward renewable electricity. People often cite Germany as an example of where feed-in tariffs have been deployed. Our view is that we have in place a Renewables Obligation which is now proving successful; we are reforming it through the Energy Bill, as we have discussed, to make it more sensitive to new technologies; and with the other reforms, and I will not keep repeating myself, on planning and so on, we are confident that for macro, large-scale renewable deployment, this is a success and can be more successful in the future. What I have said, however, is that we need to revisit whether we are providing enough incentives for microgeneration - something I am very interested in and the Government is very interested in; there is not a great deal of microgeneration in Britain at the present time. There are some incentives for householders in terms of micro, but are there enough? Maybe not, and I have said that as part of our renewable energy strategy review we will look again at microgeneration and on the table will be one or two different mechanisms including feed-in tariffs, but that is not about large-scale deployment or turning our back on the RO, which we think is the appropriate mechanism, and one does not want to keep chopping and changing because of investor confidence.

Q405 Dr Turner: Quickly, what is your view on research published which suggests that the ROC is an expensive mechanism in terms of the quantity of renewable energy it has delivered compared with the feed-in tariff system, which would not cost the Treasury anything, whereas the ROC costs the Government a considerable amount? Given that you have already recognised that there is very good case for a feed-in tariff mechanism for microgeneration, where the ROC is far too cumbersome, while you are at the point of reviewing the support strategy, would it not make sense to look at feed-in tariffs across the board?

Malcolm Wicks: For, as it were, macro renewables as well? No, I do not think it would, because what a lot of companies and investors say to us is that they need some long-term certainty. They are happy about the way in which we are reforming the RO but we need to look again at whether we are in the right place for microgeneration. I notice that when people talk about the virtues of the feed-in tariff they seldom talk about the costs, and in Germany the costs are very considerable. If I can give the Committee some figures from the International Energy Agency, the German feed-in tariff regime between 2000 and 2012 will result in payments of 68 billion EUR, of which some 30-36 billion EUR is additional cost to the renewables, and by 2012 the annual cost will be between 8.1 and 9.4 billion EUR, so feed-in tariffs, particularly for solar PV, have been "successful" in Germany, but at a huge cost to the German economy and the German citizen. If I can give you one more figure, solar PV would provide some 4.5 per cent of their renewable electricity by 2012 while taking some 20 per cent of total payments, so you can deploy anything if you throw money at it, and in Germany it is now very expensive, so much so that the tariff is now coming down because of concern about the sheer cost to Germany of this deployment.

Q406 Chairman: It is an issue that concerns us mostly because the other point which I think it is fair to put to you, Minister, is the fact that Germany is producing roughly 20 per cent of its electricity through renewables largely because of the incentives caused by the feed-in tariffs, so we cannot have it both ways. If we want renewable electricity, somehow we have to incentivise it. Would you accept that is a reasonable position for a government to take?

Malcolm Wicks: Certainly I have said myself that we have to recognise that bringing forward renewables is expensive vis--vis traditional fossil fuels, and that is a price that the customer will have to pay, yes.

Dr Turner: Do you not think the comparison you should make is between the cost of subsidising wind in Germany as compared to the cost of subsidising wind in Britain, and if you look at that in terms of euros per gigaWatt I think you would find it would possibly come out cheaper in Germany.

Chairman: We will leave that hanging in the air, Minister. Gordon Marsden?

Q407 Mr Marsden: Minister, I am encouraged by what you said about the need to revisit the incentives of microgeneration but there is another problem, is there not? At the moment the cost of purchasing and installing microgeneration is pretty high and companies, if they are going to bring down those future costs, will need to develop the mass market but they are not likely to make a big investment in that mass market unless there is a reasonable expectation. One might say it is a chicken and egg argument or that they are caught between a rock and a hard place but, on the specifics of targets, why has the Government so far not produced a target for microgeneration?

Malcolm Wicks: We discussed this, I remember, when Mark Lazarowicz, our colleague, brought forward his Private Members' Bill, and I think the main argument against the target at the present time is that it is too soon. There has been so little deployment and some of the technologies are relatively unproven, I think, for example, micro wind turbines are still, as it were, feeling their way to some extent. There could come a time, I would not rule it out, that it might be feasible to present a target, but I do not think it is there yet.

Q408 Mr Marsden: I accept that but, pushing you a bit more, Dr Johnson said the prospect of hanging concentrated the mind wonderfully so will not the prospect of there being a target, and a significant one, concentrate the minds of both the people who want to install and the people who want to manufacture? What I am saying is that I accept the point you are making but, again, is the direction of travel where you are looking at this seriously, or is this just a blue sky idea for the future?

Malcolm Wicks: No, it is more than that. We are doing a great deal. We - being in this case the Department for Communities and Local Government - are looking at the planning issues there and recently made an announcement, so it is now much easier to fit solar panels, for example, and I hope soon it will be much easier to fit micro wind turbines. In many cases you will not need planning permission to do some of these things in the future, and in my experience that is really quite helpful; we do really want to make it easier for people who might be feeding their microgenerated electricity back to the Grid to get their ROCs in an easier way. We also have a low carbon buildings programme, which some criticise and say that we are not spending enough on, but it is a difficult issue how much you should spend. Certainly through phase 2, which is community buildings and public service buildings, there is some 40 million to try to bring forward microgeneration.

Q409 Mr Marsden: On that particular issue do you feel that your colleagues in other departments, for example, are doing enough to recognise the steer that you are giving them? For example, the predecessor committee to this Committee did a major inquiry into building schools for the future, Sustainable Schools, and one of the criticisms that was made in that report was essentially that Building Schools for the Future (BSF) was powering ahead, charging ahead, without many of these elements being properly in there for schools and for local authorities. That is just one example but there will be other major public procurement projects. Are you confident you have those points you are making sufficiently embedded in other departments to make the step change that you are talking about?

Malcolm Wicks: I am not an expert on the school building programme, although clearly there is a huge opportunity there, but I am committed myself to make sure we spend some of our no carbon building programme money on existing schools - not so much to give them a bit of clean energy supply but all the more because of the educational impact on children, and I have seen this in schools. In the Ashburton learning academy school and the library and the adult learning centre in Croydon you have a whole array of photovoltaics, they have a panel that shows the children how much carbon is being saved, and when I spoke to the young geography teacher it was very exciting to hear how she is using that as a way of teaching her subject, so I think there is an educational issue here. To take the very encouraging example of DCLG, which I have mentioned already, the Government is now committed that by 2016 we will only build in this country zero carbon housing. Now, there are all sorts of issues about what we mean by zero carbon housing, what is the definition, does it all have to be on-site renewables or can it be slightly off-site - all those issues are being discussed - but that is going to drive forward production of thermal efficiency, materials, design and renewables, and local energy systems, distributed energy, to make that a reality quite soon, by 2016.

Mr Virley: If I may add, there have been over 200 schools who have now benefited from grants and the low carbon buildings programme, and in the Budget there was a commitment that all new public sector buildings, in addition to the zero carbon homes commitment, should be zero carbon from 2018, so there are some significant steps forward there.

Q410 Mr Marsden: Finally, if you are not going to set an immediate target how do you get some momentum behind microgeneration, and can you set out what the timeline is likely to be to consult on the new strategy for supporting microgeneration technologies?

Malcolm Wicks: We will be consulting on our initial ideas on renewables in general including microgeneration in the summer, and we will be producing our final strategy document as soon as we can thereafter. There is a need for urgency because of the European targets.

Q411 Mr Marsden: So in the autumn, would that be fair to say?

Mr Virley: March. The negotiations will probably take the best part of a year to complete, so we will not know the final shape of the Directive, the targets and the flexibilities in the Directive, probably until the early part of next year.

Q412 Mr Marsden: But the United Kingdom Government's position will be clear by the autumn?

Malcolm Wicks: We will be consulting this summer but not producing the final strategy until the spring of next year because we will not know what the final details of the Directive are, including the flexibilities.

Q413 Mr Marsden: Minister, you said in a speech two years ago to the University of Brighton that you saw a future where solar panels, heat pumps and even micro wind turbines are seen on every street. Do you still stand by that?

Malcolm Wicks: Yes, I do. That is what I would like to see, and some of the R&D technology is now very encouraging. I was at the launch the other day of the Baxi micro CHP boiler, for example, so those ideas about combined heat and power are now, as it were, getting into the kitchen, or wherever and, again, that is an example of R&D in the private sector.

Mr Marsden: Thank you.

Q414 Dr Iddon: BERR and Ofgem are currently undertaking a review of the United Kingdom electricity transmission system. When will the final report appear, and how will the findings of that report be taken forward? Are you anticipating any primary legislation will be necessary, for example?

Mr Virley: The Transmission Access Review report we are expecting in May, and that work is under way at the moment. That will obviously feed into our overall consideration in the renewable energy strategy, and provide an important building block. There is a range of options being looked at, including the system that is used in other countries that is called "connect and manage", as well as others, and we are considering the means of implementation of those final recommendations, which will be part of the overall renewable energy strategy.

Q415 Dr Iddon: And will any primary or secondary legislation be necessary?

Malcolm Wicks: That work is still under way so it is just not possible to say at this stage.

Q416 Dr Iddon: In a previous evidence session we had people representing the transmission system in front of us and I was left with the distinct impression that it was all a mess, really, in that we have capacity standing idle waiting to be connected, particularly in Scotland 9.3 gigaWatts could be connected tomorrow. Would you agree it is a nonsense that we have access to the Grid based on date of application, which leads to the crazy situation where we have readiness for the Grid now queuing behind systems that have not been built yet?

Malcolm Wicks: That is why we are reforming it. I understand the criticism.

Q417 Dr Iddon: So the Government are intervening?

Mr Virley: National Grid have published proposals about what to do about the queue in Scotland which will mean changing some of the current order of schemes in the system, and that again will form an important part of our steps towards the renewable energy strategy.

Q418 Dr Iddon: When are you expecting the current mess to be sorted out? Within a year?

Mr Virley: It is a gradual process. There are a large number of projects in the queue at the moment, so it is work under way, and National Grid are focusing on the issue at the moment.

Q419 Dr Iddon: I got the distinct impression there might even be court cases if people did not get access according to the present arrangements. Are you anticipating any problems of that kind?

Malcolm Wicks: We are not satisfied with the present arrangements, which is why we are reforming them.

Q420 Dr Turner: The draft EU Directive would mean guaranteed access to the Grid for renewable generators and priority access for their output. How will that Directive, assuming that it is implemented, affect your plans for dealing with the Grid problems?

Malcolm Wicks: We are reflecting on the issue about priority access; I do not think we are convinced by that. We need to look at that very carefully. It sounds attractive but, as we were discussing earlier with your colleague, we need to get the balances right here between base load energy and how we manage this new world, really, of quite a heavy reliance on wind energy and complications maybe with the Severn Barrage one day as well in terms of that, so I do not think we are going to commit ourselves at this stage to saying that is the right approach. It is slightly more difficult or technical.

Q421 Dr Turner: So you will not implement the Directive?

Malcolm Wicks: We are discussing it.

Mr Virley: Negotiations are under way about what "priority access of renewables" means for the moment. It is a very detailed and technical area and we would expect those negotiations to continue for the best part of a year.

Q422 Dr Iddon: With or without that Directive, in order to take the frustration out of the renewables industry where they are queuing to get access to the Grid, would it not be sensible if the Government, irrespective of that Directive, as I said, persuaded the current generators to share present capacity with the renewable generators?

Malcolm Wicks: I am not sure I quite understand the question, sorry.

Q423 Dr Iddon: As I understand it, the renewable readiness which is there now, 9.3 gigaWatts in Scotland, cannot get access because the current generators are taking full capacity on the Grid. Can we not persuade the current generators to share that capacity with the renewable generators?

Mr Virley: There are complex issues there. We do have a market-based system and a system of connection that is managed by National Grid. They have published proposals for reprioritising the queue as it currently exists in Scotland, and we do expect those proposals to have some effect. Obviously it is a big concern for us to make sure renewables can have the access they need.

Q424 Dr Iddon: Turning now to management of the Grid, when we have substantial amount of renewable capacity connected, people talk about intelligent management of the Grid and about demand-side management, which I do not think they have at the moment, at least not to cope with the large amount of renewable capacity coming in. What plans are there for better management of the Grid in future?

Malcolm Wicks: As I said in answer to your previous question, we are working with National Grid at the moment about future scenarios where you could have a considerable amount of demand management and a considerable amount of heat/electricity storage on the system which could change the dynamic in terms of energy demand in this country. So that work in terms of long-term scenarios is under way with National Grid and Ofgem at the moment.

Q425 Chairman: Just coming on to planning, Minister, which is a major issue, in evidence to the BERR Committee you stated that the National Policy Statement for energy would contain a list of offshore wind sites suitable for development. Will those sites be subject to environmental impact studies? How is that process going to work?

Malcolm Wicks: They will be subject to environmental impact studies, they are now, and indeed in a way we draw a bit from the environmental assessments we made when giving licences for offshore oil and gas drilling, so the Department has quite a history of managing those environmental assessments and they will, of course, continue, yes.

Q426 Chairman: So it will not just be left to the developers?

Malcolm Wicks: No. We have expertise in the Department on that already.

Q427 Chairman: Projects of less than 50 megaWatts will be decided by local authorities rather than the Infrastructure Planning Commission, that is the arrangement, yet 30-40 per cent of the renewable electricity projects will fall below that threshold. Can you explain the reasoning behind the 50 megaWatts cut-off point?

Malcolm Wicks: The Planning Bill and the new Independent Planning Commission is designed to tackle what has often been quite considerable delays in terms of very large scale infrastructure projects. I repeat what I said earlier, it is not just in the energy field, so I guess it comes down to a definition of what we mean by "large scale", what falls above the line and under the line, but the Department did not feel that every planning application should go to the new Independent Commission.

Q428 Chairman: No, but the point I am making is that you mentioned earlier, and it was a staggering fact, that 18 gigaWatts of electricity is either within the planning system, most of it - 220 wind farms are within the planning system - and yet we know, and we have heard from many witnesses we have spoken to, that in fact the local authority planning system is what is bogging down this whole process. They just cannot get them through the planning system at all, and yet this very significant 30-40 per cent of what is proposed is going to depend on that. In other words, how on earth are you going to make progress if we are going to have the current system as simply a NIMBY system applying to many of these new applications?

Malcolm Wicks: I could introduce you to some of your NIMBY colleagues on this, and I do not say that flippantly, of course, because I know many parliamentary colleagues who one day will make great speeches about the importance of climate and renewables and then in their own back yard, often perfectly properly, will be on the side of local residents campaigning against the wind farm. I have had many adjournment debates on that - and I will not say from which benches, Mr Willis, but you can guess. But I would not call it NIMBYism; I would say that perfectly properly there is local opinion about this, some for and some against, and on some of these larger projects, because at the moment they come to us, sometimes I have agreed with them going ahead but sometimes I have disagreed, and I would have thought that is what planning should be about. I hope that the planning statement on renewables, the fact we do training with planning inspectors to bring them up to scratch on these issues, will see more projects come to light, but I would not myself say we should remove this from the local authority and that local opinion should never have its say, otherwise the tide will turn against wind farms.

Q429 Chairman: The point is that if you reduced it from 50 megaWatts to, say, 20 there would be a significant difference, would there not, where you have relatively small wind farms which, in fact, the local authority has every right to be involved with?

Malcolm Wicks: Yes.

Q430 Chairman: These are big projects, the 50 megaWatts?

Malcolm Wicks: Yes, but the IPC, the Independent Planning Commission, is set up to deal with very large scale, although obviously it is a matter of judgment where you draw the line.

Q431 Dr Turner: There is a different issue for marine projects, not that there are water NIMBYs because it is much less of a problem, but the 50 megaWatt limit is an obvious problem, or will be for the next few years, because they are not at the state of development to deploy 50 megaWatts or more at a time, and you will be aware that a very significant percentage of the cost of the SeaGen project was attributable to the environmental impact study. It is just as intensive, takes just as long and costs just as much to produce a 1.2 megaWatt installation as it would if they were installing 50 or more megaWatts, so can I put it to you that the 50 megaWatt limit is not appropriate for marine installations? Would you be prepared to reconsider that?

Malcolm Wicks: I am willing to put that question, that concern, to my colleagues in DCLG. I do not feel I have the expertise to comment on it except to say that the marine environment and the seas are becoming a crowded place, there are many different concerns and many different users of the sea, there are ecological issues and it is always a question of trying to weigh up and balance all of these factors, but I think it is perfectly appropriate that marine technology, like any other bit of kit in the sea, should be subject to an environmental assessment, but I will relay your concern to my colleagues in the other department.

Q432 Chairman: Could we ask you to relay another couple of concerns, just going back to the on-land planning system? Planning policy Statement 22 is what gives the general policy advice to local authorities, yet we have heard, particularly from a company RWE Innogy, that different local authorities interpret that planning guidance in extreme ways. Now, surely it is a sensible move for the Government to say: "Let's give very clear guidance in terms of that particular policy statement"? Also would it not be possible for there to be a screening mechanism before local authorities consider applications, so that they are not, in fact, dealing with very speculative applications which bog the system down?

Mr Virley: I think the National Policy Statements that the Minister mentioned earlier will be very important here in terms of setting the framework for local authorities, and then they will be translated into local and regional strategies, so that clear guidance will be coming in the form of the National Policy Statements.

Q433 Chairman: When?

Mr Virley: During the autumn of this year we will be consulting on the draft of the National Policy Statement for renewables.

Q434 Chairman: We do have a small group of questions on skills but I would like to write to you on that matter, if we could. Thank you very much indeed for your presence this morning.

Malcolm Wicks: It is nice to be back, Mr Willis.