Memorandum submitted by Helius Energy
INTRODUCTION TO
HELIUS ENERGY
Helius Energy plc is a developer and operator
of renewable biomass power plants in the United Kingdom and elsewhere.
The group focuses on building two sizes of project—large
plants above 60MWe and smaller 5-8MWe GreenSwitchTM units. The
group is also developing commercial technology to produce an organic
soil conditioner (GreenFieldsTM) for use in agriculture from distillery
co-products.
The company was listed on the London Stock Exchange
AIM in January 2007 and was awarded Section 36 consent for a 65
MWe plant at Stallingborough in North Lincolnshire in June 2008.
As originally set out in the company's AIM admission document
it has pre-sold the Stallingborough project, with a continued
interest in the project for the next 24 years.
It has applied for consent under Section 36 of the
Electricity Act to develop a 100MWe biomass power plant at Avonmouth
on the Bristol channel, and is seeking further development sites
in the UK. Planning permission was recently awarded for the Group's
development of its first GreenSwitchTM plant at Rothes in Morayshire.
ANSWERS TO
QUESTIONS
Helius Energy has answered those questions where
it feels qualified to give a response and which are relevant to
its activities. These answers are presented below.
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?
Britain should have an electricity network that is
capable of both maximising the use of medium and large-capacity
generation with even base load (e.g. nuclear, gas, large scale
biomass, etc) and facilitating the use of intermediate renewable
generation technologies (wind, marine, etc). Access to the system
for renewable and low carbon projects should be simplified and
the time required for projects to obtain necessary grid connection
must be speeded up if the EU 2020 target is to be met.
In order to achieve these objectives the grid must
be able to utilise appropriate connections at all levels (end
use micro-generation, connection via local distribution networks
and direct grid connection for very large projects). The system
must also be capable of utilising new developments and technologies,
not only in terms of generation, but also energy storage.
How do we ensure the regulatory framework is flexible
enough to cope with uncertainty over the future generation mix?
In order to cope with uncertainty over the precise
generation mix, regulation should focus on core areas such as
network capacity and reliability, overall greenhouse gas emission
reduction from generation and distribution et cetera.
Government and the regulator should not try to "pick
winners", but should support the use of existing, proven
technologies while at the same time structuring regulation in
such a way as to embrace new technology developments when they
become proven.
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.
The potential skills required for the UK to
meet the EU 2020 targets and its own 2050 targets should not be
underestimated. This applies equally to individual skills and
the necessary infrastructure to enable the UK to carry out large-scale
engineering projects, both in terms of established technologies
such as biomass, and for more "unique" schemes such
as the Severn barrage. The Renewables Advisory Board (RAB) is
currently reviewing the skills and key milestones necessary for
the UK to meet its 2020 targets.
Planning remains a key issue for generation projects.
For technologies such as biomass, energy-from-waste, anaerobic
digestion, et cetera. the ability to connect to the grid will
be a key factor in site selection and this needs to be reflected
in planning decisions if undue generator strain on the grid is
to be avoided. While the new Infrastructure Planning Committee
goes some way to address these for larger schemes (above 50MWe),
potential issues will remain for projects below this threshold.
An increasing focus on renewable heat and CHP
will also affect the selection of potential development sites
and while large industrial users are likely to have access to
suitable transmission hook-ups, for smaller community schemes,
increased flexibility in the electricity grid will be required
if the Government is to achieve its ambitions for the use of renewable
heat. However, a robust grid will facilitate the use of heat pumps
and solar thermal technologies in urban areas, which can then
be powered by renewable and low carbon generation plant elsewhere.
What are the issues the Government and regulator
must address to establish a cost-effective offshore transmission
regime?
Helius Energy is not qualified to answer this
question.
What are the benefits and risks associated with
greater interconnection with other countries, and the proposed
"supergrid"?
Potential benefits of a European "supergrid"
include increased market access for UK generators and greater
flexibility to manage the UK supply and demand.
The risks include a perceived reduction in energy
security, although in the case of Europe, most of the generators
will be operating in the UK, making political security less of
an issue, except where power is reliant on "risky" generation,
such as the use of Russian gas in eastern Europe.
More practical risks are that having the back-up
of a "super-grid" will prevent sufficient investment
in the UK's own generation and transmission. We have already seen
this in attempts by the UK Government to "trade" its
commitments under the 2020 targets and such an approach is broadly
rejected by the renewables industry (as shown by the published
summary of responses to the UK Renewable Energy Strategy consultation)
on both political and practical grounds.
What challenges will higher levels of embedded
and distributed generation create for Britain's electricity networks?
Well-designed, embedded and distributed generation
will create challenges, but a robust distribution system should
be able to incorporate these. A bitter challenge is likely to
be provided by increased levels of micro-generation (We) under
the proposed feed-in tariff system. Consequently the new support
scheme (as well as support for heat) needs to be designed so as
to allow maximum uptake and technology support, while facilitating
grid connections and power export.
What are the estimated costs of upgrading our
electricity networks, and how will these be met?
As a generator, Helius Energy does not have sufficient
information or experience of distribution in order to allow it
to answer this question. However, we would refer the Committee
to recently reported figures from the electricity networks strategy
group (ENSG) suggesting that an "Investment of up to £4.7
billion is needed to ensure the electricity network is prepared
for new renewable and nuclear infrastructure that will be built
by built by 2020".
How can the regulatory framework ensure adequate
network investment in light of the current credit crunch and recession?
Access to finance is an increasing issue for the
renewables industry in the UK and further afield. Helius Energy
has recently proposed a potential solution based around the concept
of Energy Infrastructure Mutual Funds to both DECC and BERR and
a similar approach could be adopted for investing in the electricity
network.
How can the regulatory framework encourage network
operators to innovate, and what is the potential of smart grid
technologies?
Helius Energy does not propose to answer this question.
Is there sufficient investment in R&D and
innovation for transmission and distribution technologies?
Helius Energy does not propose to answer this question.
What can the UK learn from the experience of other
countries' management of their electricity networks?
Helius Energy does not propose to answer this question.
March 2009
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