Memorandum submitted by ABB
1. ABOUT ABB
1.1 ABB is a leader in power and automation
technologies that enable utility and industry customers to improve
performance while lowering environmental impact. The ABB Group
of companies operates in around 100 countries and employs about
120,000 people, in the UK ABB employs around 2,600 people. Technology
plays a key role for ABB with our nine research centres, 6,000
scientists and 70 university collaborations across the world,
of which several are in the UK. ABB is one of the largest providers
of transmission grid plant and equipment to connect round 2 and
proposed round 3 offshore wind farms to the UK and European grid
systems.
1.2 ABB is the pioneer of HVDC technology and
has the largest installed base globally. This particular technology
will be required for the large-scale connection of offshore wind
in Europe and the other countries throughout the world. The development
costs associated with this technology and the lead times to manufacture
and establish capacity are substantial and early visibility coupled
with a good level of confidence is essential to ensure production
capacity and engineering resource is made available in time to
meet the proposed UK and European renewables 2020 targets.
2. EXECUTIVE
SUMMARY
2.1 The Government's vision should be to
facilitate the expansion of a fit for purpose electricity infrastructure
which is designed to deliver sufficient capacity in advance of
the renewable connections requests.
2.2 A more whole-life cost analysis should be
carried out to assess the true value of early deployment of underground
transmission links which attract far less public objections and
which facilitate the early connection of renewable energy. It
is also important that the current planning reforms are seen through
as expeditiously as possible.
2.3 It is important that the Government
continues to work with industry to provide the leadership and
direction for improving the training and certification of our
future workforce. This also requires that industry and university
establishments are much more closely aligned.
2.4 A workable and predictable offshore
transmission regime, with minimal regulatory uncertainty, is essential
to ensure that the UK remains an attractive location for the investment
necessary to aid the Government in meeting its renewable energy
targets.
2.5 The need for interconnectors with mainland
Europe is substantial if the Government is to meet its renewables
targets. Electricity interconnectors using HVDC technology will
be particularly effective at renewable resource levelling, facilitating
energy security and allowing energy trading to occur.
2.6 The existing transmission system can
be enhanced and optimised by the use of smart grid technology
which adds a new level of dynamic control to the existing network.
2.7 The development and deployment of smart
grid technology to meet the challenge of the 2020 targets requires
a step change in transmission and distribution company research,
development and deployment activity.
3. WHAT SHOULD
THE GOVERNMENT'S
VISION BE
FOR BRITAIN'S
ELECTRICITY NETWORKS,
IF IT
IS TO
MEET THE
EU 2020 RENEWABLES TARGET,
AND LONGER-TERM
SECURITY OF
ENERGY SUPPLY
AND CLIMATE
CHANGE GOALS?
3.1 The Government vision should be to facilitate
the expansion of a fit for purpose electricity infrastructure
which is designed to deliver sufficient capacity in advance of
the renewable connections requests. The transmission and distribution
networks should function to support one another rather than independently.
Sufficient flexibility should be allowed for in the regulatory
process to ensure risks and uncertainties associated with generation
mixes can be accommodated. It is essential that a highly co-ordinated
approach is adopted with a single design authority responsible
for the long term planning of the transmission and distribution
system. A piecemeal approach driven by apparent short-term cost
savings will fail to deliver the network required to meet the
UK Government's 2020 targets.
4. WHAT ARE
THE TECHNICAL,
COMMERCIAL AND
REGULATORY BARRIERS
THAT NEED
TO BE
OVERCOME TO
ENSURE SUFFICIENT
NETWORK CAPACITY
IS IN
PLACE TO
CONNECT A
LARGE INCREASE
IN ONSHORE
RENEWABLES, PARTICULARLY
WIND POWER,
AS WELL
AS NEW
NUCLEAR BUILD
IN THE
FUTURE? FOR
EXAMPLE ISSUES
MAY INCLUDE
THE USE
OF LOCATIONAL
PRICING, OR
THE AVAILABILITY
OF SKILLS
4.1 ABB anticipates that a number of the
required transmission system upgrades may well be difficult to
construct in time, due to the very lengthy planning processes
and resource-consuming public inquiries. Many of these objections
are brought about by the use of overhead transmission lines. ABB
holds the view that a more whole-life cost analysis should be
carried out to assess the true value of early deployment of underground
transmission links which attract far less public objections and
which facilitate the early connection of renewable energy.
4.2 While progress has been made on planning
reforms in the UK, it is important that the reforms are seen through
as expeditiously as possible. At present, planning issues add
to the considerable uncertainty in the resource planning processes
for project deployment in the UK. For example, delays on overhead
line transmission grid infrastructure projects due to excessively
long UK planning inquiries impact negatively on the confidence
of resource allocation to these projects by suppliers and contractors.
4.3 With regard to addressing skills issues,
ABB is delighted to be involved with several UK universities,
the Power Academy and the Power Sector Skills Steering Group on
skills development. Through this work, we understand the challenges
posed by availability (or otherwise) of skilled engineers. The
UK is not alone in having a shortage of skilled engineers; it
is a problem that exists across the world. It is important that
the Government continues to work with industry to provide the
leadership and direction for improving the training and certification
of our future workforce. ABB believes that industry and government
need to work together to develop a fit for purpose skills and
training strategy. This requires that industry and university
establishments are much more closely aligned so that academic
and theoretical learning is tuned to the needs of industry. It
may also require that greater financial support—both public
and private—is provided to engineering undergraduates and
post-graduates.
5. WHAT ARE
THE ISSUES
THE GOVERNMENT
AND REGULATOR
MUST ADDRESS
TO ESTABLISH
A COST-EFFECTIVE
OFFSHORE TRANSMISSION
REGIME?
5.1 ABB is committed to helping the Government
to achieve the UK's contribution to meeting the EU's 2020 renewable
energy target, which in turn will improve security of supply and
reduce dependency on non-EU imports. The UK is competing in the
international marketplace for increasingly scarce resources for
the timely deployment of renewable generation. A workable and
predictable regime, with minimal regulatory uncertainty, is essential
to ensure that the UK remains an attractive location for the investment
necessary to aid the Government in meeting its targets.
5.2 The proposed offshore regulatory regime is
viewed by many as being overly complex, time consuming and lacking
in a long-term strategic view. Multi-level tendering in an environment
that will lack overall co-ordination may well lead to a non-optimal
offshore transmission system and hinder the ability of the supply
chain to plan with any degree of confidence.
5.3 A strategic and coordinated approach
to offshore subsea networks which link offshore renewables and
also interconnect with Europe will deliver a better solution in
the long term.
6. WHAT ARE
THE BENEFITS
AND RISKS
ASSOCIATED WITH
GREATER INTERCONNECTION
WITH OTHER
COUNTRIES, AND
THE PROPOSED
"SUPERGRID"?
6.1 If the Government intends to reach the
target of 32 per cent of electricity supply from renewables then
the need for interconnectors with mainland Europe is substantial.
Wind power is variable but in the main predictable and offers
a substantial source of carbon free energy. However demands on
the electricity system may well require the use of energy storage,
demand management and electricity interconnection to the rest
of Europe. Electricity interconnectors will be particularly effective
at renewable resource levelling. This levelling will allow supply
excess and shortages to be spread around mainland Europe. This
type of approach both facilitates energy security and allows energy
trading to occur. HVDC technology is well advanced, and with a
strong 50-year track record any of the risks associated with interconnection
with Europe will mainly come from non-technical factors.
7. WHAT CHALLENGES
WILL HIGHER
LEVELS OF
EMBEDDED AND
DISTRIBUTED GENERATION
CREATE FOR
BRITAIN'S
ELECTRICITY NETWORKS?
7.1 The UK transmission system was not fundamentally
designed for very high levels of embedded and particularly distributed
generation. However the existing system can be enhanced and optimised
by the use of smart grid technology which adds a new level of
dynamic control to the existing network. By the careful and co-ordinated
application of this technology, much higher levels of embedded
and distributed generation will be possible without any impact
on the current high levels of reliability that customers enjoy
in the UK from the electricity supply system.
8. HOW CAN
THE REGULATORY
FRAMEWORK ENCOURAGE
NETWORK OPERATORS
TO INNOVATE,
AND WHAT
IS THE
POTENTIAL OF
SMART GRID
TECHNOLOGIES? IS
THERE SUFFICIENT
INVESTMENT IN
R&D AND INNOVATION
FOR TRANSMISSION
AND DISTRIBUTION
TECHNOLOGIES?
8.1 A smart grid is an infrastructure that
puts the emphasis firmly on active rather than passive control.
A good analogy is in the control of traffic on a busy stretch
of motorway. During off-peak periods, cars can drive freely with
no speed restrictions other than the maximum speed limit. But
in the rush hour the warning signs on the overhead gantries are
used to impose speed limits on specific lanes. So by restricting
the speed of movement of individual streams, congestion is avoided,
optimising the flow of all traffic. More intelligent control of
power flows in the transmission and distributions systems will
allow higher utilisation even during high demand periods. Smart
grids will grow through evolution rather than revolution.
8.2 The development and deployment of such smart
grid technology to meet the challenge of the 2020 targets requires
a step change in transmission and distribution company research,
development and deployment activity.
8.3 ABB currently spends approximately six
per cent of its revenue on research and development. However Ofgem
only currently requires utility companies to spend 0.5 per cent
of their network revenue on research, development and innovation
deployment. In the light of such a large scale engineering challenge
for UK transmission and distribution companies to address, a target
of 0.5 per cent would appear to be inadequate. Utility companies
should be incentivised to initiate and deploy large scale network
demonstrators of new technologies and where such deployments are
successful attract adequate rates of return.
March 2009
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