Examination of Witnesses (Questions 300
- 319)
WEDNESDAY 20 JANUARY 2010 (morning)
MR NICK
WINSER AND
MR DAVID
SMITH
Q300 Chairman:
I am very pleased to welcome Nick Winser, Executive Director of
the National Grid and David Smith, Chief Executive of the Energy
Networks Association. Both of you heard a bit of our previous
discussion. Let us start where we started before. You have read
the NPSs. In broad terms, do you think they are in a position
where they could be adopted by Government?
Mr Winser: In broad terms, yes.
We are very supportive of the Planning Act 2008, and the NPSs
are an essential part of it. The NPSs should be regarded in the
context of the massive challenges ahead of the energy system,
the challenge of security of supply and low-carbon affordability,
which we all know terribly well is a massive challenge. Certainly
the planning system that we had before the Planning Act was, in
my view, completely incapable of dealing with those challenges.
As a part of the package, this is terribly important in terms
of giving a clear articulation of energy policy and how that impacts
on needs statements, the needs for particular pieces of infrastructure,
what are the issues that should be considered as part of understanding
whether applications should be granted, and, very importantly,
how those issues will be considered. As an applicant, those last
couple are not often talked about a great deal, but they are incredibly
important to us on giving us some predictability about how the
planning system will work and the case that we have to provide,
therefore allowing a sensible discussion with individuals, communities
and broader society about these important projects. So we are
very supportive.
Mr Smith: Again, we are supportive
of these and believe they set out the framework within which companies
can make the necessary investments to meet the low-carbon sustainable
future. Again, we believe that the planning system needs to provide
the three Cs: clarity, consistency, certainty. We believe that
the draft NPSs should be subject to the deepest and widest consultation
process to ensure that they have got the widest agreement and
legitimacy and give the right level of detail to the IPC in their
decision-making process.
Q301 Chairman:
Are you both convinced that the NPSs give that framework to the
IPC? Are they clear enough? Do they have a clear direction?
Mr Winser: My view is that at
the high level they certainly do. We have specific comments on
things that might be clarified more, and there are some omissions
we think; but in general, as a set of documents to consider, we
think they give very strong clarity on all of those issues around
policy and the need case, and how the process will work. They
are in pretty good shape, in our view.
Mr Smith: Again, they are in good
shape, and again there are some minor amendments that we will
put forward in our submissions, but they are only minor amendments.
Q302 Chairman:
I have known you both for a long time and you have been round
the block a bit—several times, actually; but you have got
a lot of experience about energy issues. Some people have said
to me that the over-arching NPS does not really add anything new,
that it is a bit thin and really does not have the direction that
it should have. Is that a fair criticism?
Mr Winser: I do not think it is.
I would put it in the context of the very large amounts of money
that are going to need to be spent on infrastructure, in particular
power generation but all of the infrastructure. According to any
of the observers, undoubtedly hundreds of billions of pounds are
going to be spent. To give the latitude in the NPS for, if you
like, the market with strategic interventions from Government,
to over time pick the most economic and sensible way of meeting
those three huge challenges, seems to me to be a very wise thing
to do. I am responding, I suppose—maybe wrongly—to
the implication in your question: could the NPS pick percentages
more? I think we have to be very serious about the very high cost
of, at any time, ending up picking the wrong blend of solutions
to this and creating inflexibility. I think we have to have faith
that the market plus the strategic interventions will be the best
mechanism over time of getting the right blend. I think they really
hit that point. It is a difficult point to hit, is it not? I think
they have hit that point very skilfully actually.
Mr Smith: Yes, I think they do.
They underpin the Government policy, and that is what they were
intended to do—and I think they have. I have nothing more
to add than Nick's points. I think they are in good shape.
Q303 Sir Robert Smith:
One of the challenges is that because of the timing of when they
have come out, we are having to meet as a Committee while people
are still making their submissions, because we know that barring
some emergency powers act there will be a general election coming;
Parliament will end and start again and it will be ages again
before there is another committee to look at this. You said, though,
that this needed to be subject to the deepest and widest consultation;
do you think they will have that secure foundation, that they
will have gone through the deepest and widest consultation?
Mr Smith: I think where we are—there
is obviously the pre-consultation process as well so we can go
through that. I think the consultation on them—we have been
through this quite a while—as the Chairman said, we have
been around just a little while now. We know that the planning
system did not work properly and we knew we needed to make changes.
We have made representations, sometimes individually to you, to
DECC and others. We believe it is in a good place. There are some
things to be done, but on the question whether they are in a good
enough situation to go forward, I believe they are in a good way
to go forward. There are lots of things that we will still need
to do. We will need to work out lots of them—obviously transmission,
but distribution needs to be looked at in the same way, and we
need to make sure that the difference between transmission and
distribution is very, very clear and seamless. We also need to
make sure that the difference between what happens on DECC consents,
the Town and Country Planning Act and the IPC is absolutely seamless,
and that there is not one going off in one direction and another
going off in another direction.
Mr Winser: I think this is a really
good set of documents, so please do not misinterpret what I am
about to say. These will inevitably never be perfect. They should
evolve to changing requirements, but it is important to recognise
what having these in place would give us compared to what is currently
in place. I know there are some very legitimate debates going
on about the overall structure of the IPC and what it should do
and so on but, as I read it, there is a great deal of support
for the NPSs cross-party. I think that is absolutely right because
they have brought this moment of realisation that we were just
bereft of any useful articulation and definition of these things,
and I think we have all had a sort of a real "aha" moment
of how vital the NPSs are. Over the last few days I have looked
through these and thought these are really good documents and
they are not replacing a different set of documents that does
the same work; they are replacing a complete absence of this stuff.
Inevitably there will be things that we will comment on in them,
which over the course of time may well need to be amended. This
is a dramatic step forward, just in the situation of these documents,
as they stand—really dramatic. We have very, very stark
scars on our backs related to the existing planning process and
trying to get infrastructure built; so to have these in place
is so important.
Q304 Dr Turner:
I am not surprised to find representatives of your industry supporting
these planning statements given, as you say, the scars on your
backs that you have suffered from the planning system; the many,
many years that it takes to get a grid line established, for instance.
One of the important things which has caused planning delays in
the past is establishment of need every time. Do you think that
the National Policy Statements adequately establish need, so that
it never needs to be an issue for planning decisions as far as
energy-generating capacity and infrastructure is concerned; or
would you like to see any amendments to reinforce it?
Mr Winser: I think that in a different
era, almost any other era looking at the developments of the energy
system that—it is a good question now—it would be
an even more appropriate question almost at any other time. Why
do I say that? The studies we have made of the path to 2020 to
2050—and not just ours, virtually all of the other organisations
that have put out public studies—we have scrutinised all
of those and there has been lots of work by DECC, obviously, looking
at those, and we will see some sign of that in the next few months.
What comes out of it is that the targets we have got ahead of
us are extremely hard to meet. They are very challenging. In saying
in EN-1 that all of these types of low-carbon generation need
to be encouraged on to the system broadly, the implication being
that with the set-up interventions and the market as it works,
if people feel that those low carbon-generation types make sense
from an economic perspective, taking account of those interventions,
that, yes, they should be generally regarded as a good step forward.
I think the maths say that that is just right; we will need massive
amounts of energy efficiency, massive amounts of decentralised
generation, and we will still need very, very substantial forms
of all of these types of technology to get us anywhere near to
these targets. Just at this point, the way this is drafted is
actually not very contentious because we need generally a following
wind to get to these targets.
Q305 Dr Turner:
What the NPS does not at present do, in the process of setting
out the need for energy, is seek to dictate the mix at present.
The mix is quite important, especially for your industry because,
for instance, the grid requirements for nuclear are very different
to the grid requirements for large-scale renewable offshore wind.
Do you think it would be helpful to have greater detail in the
expression of need so that you have justification for any of the
many variations that are going to be needed in remodelling the
grid in the future?
Mr Winser: No, I do not. I think
the way it is drafted is appropriate to the time we are in. To
take your example, should it be nuclear or offshore wind; would
it be more helpful to us in justifying transmission lines to connect
those up? No, the answer very clearly in the analysis is that
we need every bit of nuclear that can come forward in the next
decade or so and every bit of offshore wind as well; so to have
to pick percentages would not meet this point.
Q306 Dr Turner:
I am not suggesting that, but does the NPS sufficiently make the
point that you have just made in its expression of need?
Mr Winser: I think it does, and
taken with the other commentaries on where we are, both the transition
plan from DECC and the work of the Climate Change Committee, all
the time we are hearing this continued reinforcement of the need
to get all of these low-carbon sources and more on to the system
as quickly as we can. When you think about what we are going to
find out in the next decade, hopefully about the economics of
CCS, to enable a flexible structure where we can learn those things
and where that can play through and we can see the market plus
the interventions lead to things coming forward, that I think
will turn out to be cheaper for society to meet the two other
goals, security of supply and low carbon. I think this is the
right recipe.
Mr Smith: I think what the NPS
does say, and which we welcome, is that a failure to put the necessary
network infrastructure in place will reduce reliability on energy
systems and potentially damage local, regional and national communities
and economies; so that is something we welcome. We know that new
electricity network infrastructure will provide crucial national
benefits, and we must keep that in mind. We do not build lines
in isolation; there are interconnections.
Q307 Dr Turner:
What about the timing of developments? Obviously there needs to
be co-ordination between provision of the grid infrastructure
and the development of whatever generation source is being provided.
You do not want to find a generating source sitting there isolated,
and neither do you want to see a grid line being built with nothing
feeding it. Do the NPSs have any bearing on this sort of co-ordinated
planning right?
Mr Winser: They very carefully
negotiate that difficult issue I think, rightly, because one of
the huge benefits that can come of the Planning Act is single
consideration of a total-need case. In general, to integrate the
source of energy that you need to transport it therefore is a
very valuable thing. What the NPSs recognise, though, is that
that will not always be the best way of taking forward the applications.
Why? Just to give you a simple example, I will pick a number out
of the air, so do not take this to mean this is my particular
view. Say, it takes ten years to build a nuclear power station
and the associated infrastructure: we would very much expect that
consenting the line would take longer than consenting the power
station, and that building the line would take less time than
building the power station. You can see that if they both start
at the same point in time, you would expect the consenting to
perhaps optimally be done at different moments. Why would the
consenting for the line take longer? I think the engineering timescales
for building the infrastructure are clear but, in terms of the
consenting, the nuclear power station, consenting a particular
site with all the implications of just dealing with that relatively
confined issue, obviously on the line you are going across many
miles of terrain through many different communities, impacting
different individuals, and, indeed, traversing a lot more different
environmental areas. So the flexibility built in to enable us
to bring an integrated application or to bring applications that
will be considered in different timescales is very important.
I am sorry, this is a long answer! There is another flexibility
in there which is about the need for strategic transmission investment,
and that is very important too because generally we have worked
for the last couple of decades on the basis that to make sure
we do not build unnecessary assets with all of the implications
of that, that we do not build anything without a clear signal
from a generation source that it is going to be there. The world
has changed a lot, though, when you consider that some transmission
investment is now prompted by a multitude of small—say,
in the case of wind farms—wind farms in a remote part of
the country. The need to be able to bring forward a plan for strategic
transmission investment is built in here, and that is terribly
important as well, without having to link that up with the individual
applications, which may come in at all different moments in the
calendar from all of the different wind farms, which in aggregate
justify the transmission lines. This is quite tricky stuff, and
actually the NPS has done a fantastic job of picking up those
nuances.
Q308 Charles Hendry:
Could I ask a question specifically about gas. Is there not a
major discrepancy between the National Grid's assessment of the
likely role of gas and the Government's assumptions for the role
of gas as set out in the NPS? In the Government's Low-Carbon
Transition paper it talks about gas by 2020 being down from
40 per cent of the generating mix to 29 per cent. There are pictures
you have got and which Ofgem has set out which suggest it could
be double that, 60 per cent; and that, therefore, creates a massive
difference in terms of the infrastructure need which is necessary.
Can you comment on whether the NPS adequately addresses the needs
that you think will be there?
Mr Winser: I was puzzling a bit
about this. I am not sure where those gaps exactly come from.
I think it is pretty well accepted, as per the National Grid tenure
statements, that we would expect gas use itself to be relatively
level or maybe decline slightly year on year. I think any analysis
of the generation market and domestic use and how quickly you
might transition from that sort of says that seems a common-sense
thing to say. I think there may be some gaps arising here because
of a confusion between how much gas a country is going to need
and how much it is going to import. I am not sure where this issue
comes from, but I think it is agreed that gas demand will either
be flat or slightly decline and actually the proportion of that
gas that will be imported will continue to rise strongly. In 2003
we basically got all of our gas from the UK continental shelf,
broadly, and this winter obviously we are experiencing about half
of it coming from the UK continental shelf, with all of the new
importation facilities having come on very, very strongly to contribute
to that security of supply—a great success for the industry
and for policy, in my view—but we do know that the UK gas
is going to continue to decline, and that is well anticipated
by most observers. The degree of importation of gas against that
relatively flat profile will rise, and I think that is maybe where
the confusion is arising; so more gas will be imported, and because
it will be imported into places which do not line up with where
the North Sea gas necessarily landed, therefore we will need to
build significant new transmission pipelines to carry imported
gas from, say, new LNG (liquefied natural gas) importation terminals.
That is what is going on in this area.
Q309 Charles Hendry:
There is some discrepancy because the Low Carbon Transition
Plan says that the level of imported gas will remain static
because the overall use of gas will decline significantly, whereas
you are predicting the level of imported gas is going to go up
to perhaps 70 per cent or 80 per cent of the total demand; so
there is a major difference between where the Government starts
off on this and where the National Grid starts off on this. That
also has very significant implications in terms gas storage: seven
pages out of nearly 700 pages of the NPSs are on gas storage.
Do you feel that the NPS, both on the gas infrastructure and in
terms of pipeline connections and indeed on storage, gives the
significantly robust message that is necessary in terms of allowing
you to develop the necessary facilities?
Mr Winser: I am not sure—what
timescale are you quoting those figures over—is that 2020?
Q310 Charles Hendry:
That is 2020, page 80 of the Low Carbon Transition Plan.
Mr Winser: Our view is clearly
articulated. We will look at that as part of putting in our comments
and we will try to clarify that, but our view is very clearly
that usage will be flat or declining slightly over that sort of
period, and that imports will rise. We will certainly go through
that process, so thank you for that, Charles; we will make sure
we pay some attention to it.
Chairman: Let us move on again. Apart
from nuclear, the NPSs do not have a spatial dimension.
Q311 Mr Weir:
We have heard a lot of evidence about the lack of the spatial
dimension, and, Nick, you were talking about the transmission
networks in answer to a previous question. Are you satisfied the
draft NPS for electricity network infrastructure does not discuss
particular corridors for the networks?
Mr Winser: Yes, that is a great
question. We are satisfied again that this is the right sort of
place to pitch these documents. Clearly, some things are very
well defined about where the transmission lines will need to run,
for a start where it will need to start in terms of where the
power station is going to be, and not quite so clearly where it
needs to end because there are, obviously, different points where
you can then connect new infrastructure into the grid that we
have got. Even the start and the end points of the corridor are
not always straightforward and clear. We think the right place
for this is for this to be a legitimate part of the discussions
that will be made in the IPC with the NPS as a backdrop, to look
at the various routing options specifically and try to balance
the environmental impact on the various corridors against the
cost of either taking a less direct route or undergrounding. The
big message for me is that when you look at the number of permutations
for the start and finish points and the number of permutations
in between all of those start and finish points, you probably
cannot do that work in the NPSs, so that is a place where the
IPC really needs to think about what is the right corridor against
quite well-defined criteria in the NPSs.
Q312 Mr Weir:
If the IPC is looking at a large new power station, will they
also look at the line and grant permission for that line; or are
you into the position where individual local planners will look
at aspects of a line?
Mr Winser: We are certainly expecting
the IPC to look at the line. We would imagine that the IPC, in
granting consent for the power station, if it indeed did, would
take a view on the total environmental impact of the power station
plus the line. To come back to my previous comment about these
things maybe being simultaneous or not, in the case where they
were not, I think it is quite acceptable that the IPC would then
look at, against the NPSs the power station, within its mind clearly
that a line was going to have to be built, but without at the
point of granting consent for the nuclear power station having
settled exactly on the technology and the corridor for the line.
It seems to me that just on an engineering basis that it is quite
possible to do that; you would be able to take a broad view of
what was likely to be needed to connect the thing in when you
granted consent; and then the IPC, if the two applications were
not simultaneous, would come back round and say, "And now
we have granted the consent for the power station with fully in
our minds the sort of impacts the line would make; but now we
come back and look at the line, the exact technology, and routing
the corridor, as part of the transmission line permission."
That seems to be viable and the only sensible way of proceeding
actually.
Q313 Mr Weir:
The Electricity Network Strategy Group Report 2009, A Vision
for 2020, does focus on the spatial aspects of distribution
of future generation sources. Why would that approach also not
have been appropriate for the NPS?
Mr Winser: Where you have got
some constraints on the permutations going into this, it is certainly
appropriate then to look at corridors and try to work out what
they might be. The backdrop to the NPS is that it is trying to
provide an environment where we can bring forward applications
against the very many different possible generation options and
where they might connect in; and also, I guess, the combinations
of generation. When you think of nuclear on the coast with potentially
large offshore wind out at sea, in the same area, to be able to
bring those together and say, "Okay, having looked at that
together, this is the sort of thing we need to build on; these
are the corridor options that seem to be available", that
seems, again, to be the right blend of flexibility and proscription.
Mr Smith: Following the ENSG,
we have taken a very active role in the work that was set up on
looking at the distribution system and the whole smart grid system,
and that has been recognised in the reports that have come out
recently. We know there will be, allegedly, a 31 per cent increase
in population, so on the distribution system that will mean we
need to look for some flexibility about where those population
centres and clusters are going to be developed. That will have
some impact on the lines and where those lines are built, particularly
if it is in areas of low line usage in places like Norfolk and
Suffolk, et cetera. Spatially it is quite difficult for us to
say that is where it is going to be at the moment, but we need
that flexibility, as Nick said, to be able to look at that and
come back to it constantly.
Mr Weir: I presume the lack of the spatial
element in the NPSs apart from nuclear make it impossible to have
it specifically for the line in any event without altering the
other ones.
Chairman: Could we return to an issue
we talked about before with previous witnesses, that is the relationship
between the IPC and the existing planning system. It is clear
that there are overlaps here.
Q314 Dr Whitehead:
David, you mentioned a little earlier today your view that there
should be a seamless transition between the IPC and the planning
system. The Chief Planning Officer of DCLG wrote in November to
planning officers in local authorities saying they should have
regard to an NPS when making their local decisions. Is that what
you mean by seamless transition or do you think that is insufficient?
Mr Smith: It needs to take account
of it because of course most of the IPC decisions are at the transmission
level. We are saying that at the distribution level they need
to be taken account of as well. You cannot have something that
would skew decisions that we would be making on the distribution
level, and that is exactly what I meant they need to take account
of, and I was generally referring to that guidance—take
account of, be aware of and make sure you follow that.
Q315 Dr Whitehead:
Other witnesses to our inquiry have suggested that maybe "have
regard" should be replaced by "required": do you
think that "have regard" is sufficient in terms of the
infrastructural issues related to major projects?
Mr Smith: It is a difficult semantic
one. I think you could replace "have regard". We are
saying you need to be aware that whatever sort of national infrastructure
you are building, you need to take account of the fact that the
grid is going to be building big infrastructure projects. We will
be building projects; some of them will be big projects, some
of them will be smaller projects. We need to make sure that there
is a seamless transition between the two. I would be comfortable
with the words I used.
Q316 Dr Whitehead:
Clearly, as far as major projects are concerned, such as power
stations and indeed transmission infrastructure to a considerable
extent, the local planning authority would have the responsibility
for deciding on the planning of associated infrastructure which
is not necessarily transmission; things like road access and other
associated matters. Do you think that those sorts of arrangements
would really create a seamless transition? I have in mind, for
example, the interesting passage of the London Array under existing
planning arrangements, where the question of the landing sub-station
was a major issue as far as the local planning authority was concerned,
and indeed it held up the progress of the application considerably
as a result of the determination of that. How do you feel that
sort of infrastructure consideration fits in with your view?
Mr Smith: I think that this would
form a national significant infrastructure project, and it should
not arise. Yes, you are absolutely right that the London Array
one was there. We are committed to this very holistic approach
to the planning process. There is the need to look at these on
these kinds of projects. Very much as Nick talked about earlier,
there is a possibility of being able to include different bits
and pieces and, indeed, at some times leave different bits and
pieces out, based on the right thing. What we have been saying
very much all the way through this process, and we will say it
in our submission again, is that there needs to be flexibility
around the different elements of the project, with the option
for each in their own right to be submitted. Indeed, if you need
connection or deeper reinforcement of the electricity work, that
may need to be in; some things may need to be out but we need
to strike a right balance. It is all about striking the right
balance to this and making sure—again going back to my initial
point—that there is clarity, consistency and certainty for
the projects.
Q317 Dr Whitehead:
What is your view on this, particularly in terms of infrastructure—
Mr Winser: I think it is a matter
of striking a balance. I think it is a very good line of questioning.
We must think through and make sure that we do not build a process
here where we consent the main plant items through IPC and then
we are frustrated by having got, let us say, permission for the
power station, the line, the sub-station, but we cannot get the
equipment to the sub-station site because we cannot get access
roads. We have to be pretty serious about that. We will give that
some more thought and send some comments, because it is right
to try and balance that and look as much as we sensibly can to
the local planning authorities and provide that flexibility; but
we must not create something where but for the want of the single
nut and bolt that the whole thing cannot work.
Q318 Dr Whitehead:
Is it your initial view that therefore the idea of a locationally-specific
NPS designation pretty much would override a range of local considerations
on associated infrastructure? I received the idea from your previous
answer that perhaps that requires some further thought. What is
to stop you—
Mr Winser: I think as long as
the applicant has the opportunity to bundle up everything that
is needed into a single application, then the flexibility to not
do so is fine. We need to make sure we have the opportunity to
get all the bits that we need applied for together, though, to
make sure that we do not fall into the hole that your question
has rightly brought out. It is a good one and we will think that
through a bit more and just think about access roads—which
I am sure my people have—and all of those things, which
are excellent examples of this issue.
Chairman: Finally, let us talk about
an issue we are both familiar with, which is the environmental
impact of new power lines.
Q319 Dr Turner:
Are you happy with the way the NPS deals with environmental impact
assessments? You have particularly strong and clear generic issues,
which arise wherever you put a power line—the visual impact
and the question of EMFs—so the impact needs to be measured
in terms of site specificity. Do you think that the NPS makes
this clear? Does it handle it?
Mr Smith: Yes, I think we welcome
the approach taken. On the electricity networks the factors influencing
site selection by developers, we fully support the principles
of compliance with Schedule 9 of the Electricity Act 1989. On
the general assessment principles, again, we come back to this
point: we have always and consistently supported the holistic
planning approach that I have set out, and at the same time there
is a need to separate out some network projects. We welcome the
recognition of that. On climate change adaptation, we welcome
the emphasis on the need to adapt our energy infrastructure to
the effects of climate change. Finally, we support the principles
set out on mitigation. I think those are there. I will come on
to EMFs in a moment, but I think on the suite of environmental
impacts those four for me are the particular ones that I would
want to say were there, and am glad are there.
Mr Winser: The NPS helpfully spells
out for us, as applicants, which things we need to cover, and
then how the IPC will consider those issues. We very much welcome
that.
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