Memorandum submitted by the Association
of Electricity Producers
ABOUT AEP
1. The Association of Electricity Producers
(AEP) represents the many different companies, both large and
small, that make the electricity upon which the UK depends. Between
them, AEP members account for more than 95% of the country's electricity
generation capacity and embrace all generating technologies used
commercially in the UK—coal, oil, gas, nuclear power and
a range of renewable energy technologies.
UK ENERGY CHALLENGE
2. The UK faces a major energy challenge.
About a quarter of our existing electricity generating capacity
is scheduled to close before 2025 either because power stations
are reaching the end of their operational lives or because they
cannot comply with air quality legislation. Proposals for tighter
limits on emissions are likely to cause a significant additional
quantity of coal- and gas-fired plants to close by the early 2020s.
These power stations will need to be replaced simply to keep the
lights on.
3. The UK is committed to challenging climate
change and renewable energy targets. The power generation sector
will be central to the delivery of these and electricity producers
have committed to delivering a carbon neutral electricity sector
across Europe by 2050. This will require huge investment in new,
low carbon forms of electricity generation, such as renewables,
nuclear and fossil fuels with Carbon Capture and Storage.
4. The large expansion in renewable electricity
(a six fold increase over the next 10 years) will lead to overall
levels of power generating capacity rising to compensate for the
variable output from many of the renewables being built. In the
medium term, more power generating capacity may also be needed
to meet an increase in the use of low carbon electricity in applications
such as electric cars.
5. Increased levels of generation capacity,
some of which will be located in areas far from the existing transmission
network, will also require new and upgraded electricity network
infrastructure to carry the electricity from where it is generated
to where it will be consumed.
6. Massive investment in new energy infrastructure
is therefore essential to maintain power supplies and reduce carbon
emissions. Estimates suggest that companies will have to invest
about £100 billion by 2020 and up to £100 billion more
in the following decade.
7. These are very large sums of money and
people that would like to invest in the UK's electricity industry
will not do so unless they are confident that they will get a
worthwhile return on their investment. The UK must be an attractive
place in which to invest in energy infrastructure—around
the world, there are many other industries and countries competing
for investment.
NEED FOR
REFORM OF
THE PLANNING
SYSTEM
8. A business-like planning system that
avoids intolerable delays is crucial to the delivery of this massive
investment in new power stations. The UK needs a timely, efficient
and predictable planning process because if the perceived risks
to project development are greater in the UK than elsewhere in
the world, then necessary investment in the UK is unlikely to
be forthcoming. The old way of doing things—approval for
Sizewell B power station took six years from application to consent—is
no longer sensible.
9. The Association therefore firmly supports
the package of measures in the Planning Act 2008, which provides
developers with assurance of an efficient consenting process,
with decisions being taken by an independent body on the basis
of clearly defined principles and on fixed timescales.
10. Energy companies that apply for planning
consent would naturally like to secure it and will strive to bring
forward the best possible applications in the light of community
consultation and the guidance given by the new energy National
Policy Statements (NPSs). However, even refusal in a timely way
is much better than the old regime when the process dragged on
for years and projects became too expensive to pursue.
EFFECTIVENESS OF
THE DRAFT
NATIONAL POLICY
STATEMENTS
11. The Association considers that NPSs
are a vital and integral part of the Planning Act regime. Developers
need certainty that issues of established national policy will
not be opened up to review during the examination of every development
proposal, increasing uncertainty and delay.
12. The suite of energy NPSs must establish
a clear and stable policy framework for nationally significant
energy infrastructure projects and provide the Infrastructure
Planning Commission (IPC) with unambiguous guidance on the application
of national energy policy in a planning context. This will allow
the IPC to accept the national benefits of energy projects and
focus on the assessment of their local impacts.
13. It is not just the IPC that will benefit
from the new NPSs. They will also provide developers, local communities
and other stakeholders with clarity on the criteria against which
projects will be assessed. We consider that the energy NPSs do
in general, as currently drafted, provide all parties with the
necessary certainty.
14. We support the style and format of the
suite of draft energy NPSs, which:
— set out established energy policy;
— determine the need for new energy infrastructure;
and
— provide information on the specific impacts
of energy infrastructure developments, what details should be
included in an application, how they should be assessed and possible
means of mitigating them.
15. When they are finally approved, these
documents will help make the planning process for large projects
more business-like and will give more confidence to investors.
We therefore consider that the draft energy NPSs should in principle
be designated, avoiding alterations which could undermine their
effectiveness.
16. We welcome Parliamentary scrutiny of
and public consultation on the draft NPSs. Following this process,
the government should designate the energy NPSs as soon as possible.
For the new Planning Act regime to function as envisaged, all
the parts of the package of reforms must be in place. Unnecessary
delays in designating the NPSs would create further uncertainty
for developers and hamper the UK's ability to meet its energy
and climate change challenges.
ESTABLISHING NEED
FOR NEW
ENERGY INFRASTRUCTURE
17. The Association welcomes the NPSs approach
to establishing need for new power generation in the context of
the UK's pressing security of supply and carbon reduction priorities.
However, we consider that the need case could be further strengthened,
emphasising the critical importance of investment in all new energy
technologies. The NPSs should make clear that the IPC should give
substantial weight to the need case for each technology.
18. The draft Overarching Energy NPS makes
it clear that "companies should be permitted to determine
the individual projects to bring forward within the strategic
framework set by Government". We strongly support this approach,
which reflects established energy policy, and consider that it
would be deeply inappropriate for the NPSs to attempt to prescribe
the electricity generation mix.
19. In a competitive market, energy companies
are best placed to determine which power stations need to be built
in the light of market signals and strategic policy direction
from the government.
20. It is essential that the need for low
carbon technologies is spelt out in the NPSs, but they must also
contain sufficient flexibility to allow developers to determine
exactly which projects are promoted. This flexibility is needed
to allow the market to respond, given the urgency with which established
technologies will need to be deployed in order to ensure security
of supply, future changes in energy markets and policy, and the
fact that not all projects that are consented will necessarily
be built.
NON-SPATIAL
NATURE OF
THE NATIONAL
POLICY STATEMENTS
21. The Association supports the fact that
the energy NPSs, with the exception of the Nuclear NPS, do not
specify the locations where new power generation infrastructure
can be built.
22. Decisions on where to locate plant are
affected by a range of technical, economic, commercial, environmental
and operational factors, which the companies bringing forward
development proposals are best placed to assess. We do not consider
that the NPSs could effectively establish where plant should be
built and any attempt to do so would take significant resource,
potentially delaying the introduction of the NPSs, and risk putting
the NPSs quickly out of date.
ACCOUNTING FOR
CARBON
23. The Association considers that market
mechanisms can deliver long-term, cost-effective emissions reductions,
given the right framework conditions. The government should continue
to press for a robust EU Emissions Trading Scheme, and take other
steps as necessary to ensure that the right incentives are in
place to secure investment in low carbon technologies in the UK.
The Committee on Climate Change has recently been established
to provide an independent check that climate objectives will be
delivered. Its role is to highlight any shortcomings and recommend
options for further measures for the Government to consider.
24. Within this wider framework, we therefore
do not think that the IPC should need to consider the overall
carbon impact of the generation mix when assessing individual
project proposals. Climate change policy drivers will have been
taken into account in the guidance in the Overarching and technology
specific NPSs.
MAKING NPSS
A PRIMARY
CONSIDERATION IN
LOCAL AUTHORITY
DECISION MAKING
25. The draft NPSs set out national policy
and provide the IPC with an indication of how to assess the national
need for energy infrastructure and the local impacts of a project.
We consider that these principles should be applied equally to
projects that are classed as "nationally significant"
and those that fall outside of the IPC's remit. A large proportion
of renewable energy projects in particular will fall to local
authorities for determination. We therefore consider that the
NPSs should be a primary consideration for local planning authorities
when taking decisions on energy infrastructure, as they will be
for the IPC when considering larger projects.
January 2010
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