Memorandum submitted by Scottish Power
Limited
1. Scottish Power Limited is a subsidiary of
Iberdrola SA and is a major UK energy supply, networks and generation
business. This evidence is given on behalf of ourselves, our parent
company, and ScottishPower Renewable Energy Limited (the UK's
leading renewables developer and another subsidiary of Iberdrola).
References to "ScottishPower" and "we" are
to any or all of the above companies as the context requires.
2. ScottishPower is an energy business that provides
electricity transmission and distribution services to more than
3 million customers, supplies over five million electricity and
gas services to homes and businesses across Great Britain (GB),
and operates electricity generation, gas storage facilities and
associated energy management activities in the UK.
3. ScottishPower Renewable Energy Limited is
part of Iberdrola Renovables, which is 80% owned by Iberdrola.
Iberdrola Renovables is the largest developer of renewables globally.
Among our projects is the Whitelee wind farm which, at 322MW,
is the largest onshore wind farm in Europe.
4. Iberdrola is also a major producer of nuclear
power in Spain and is partnering with GDF Suez SA and Scottish
and Southern Energy plc with a view to undertaking new nuclear
build in the UK, including a proposed power station of up to 3.6GW
on land adjacent to the existing nuclear complex at Sellafield.
5. ScottishPower is still studying the extensive
documentation prepared by the Government in its proposals for
national policy statements (NPSs) on Energy. Accordingly, this
Memorandum constitutes our initial thoughts based on our study
and consideration of the proposals to date. We will be continuing
to develop and refine our thinking ahead of our oral evidence
to the Energy and Climate Change Committee scheduled for on 27
January 2010 and our response to DECC's consultation, due on 22
February 2010.
SUMMARY
6. According to Ernst and Young,[272]
£199 billion of new infrastructure investment will be required
in the UK energy system prior to 2025 to ensure security of supply,
climate targets are met and the UK economy remains competitive.
7. We believe this unprecedented level of investment,
which will be needed in every type of energy related infrastructure,
requires radical reform of the planning regime, which at present
is a major obstacle to investment. A clear and stable long term
policy framework for nationally significant infrastructure projects
(NSIPs) which delivers timely and sound decisions on planning
applications and provides greater clarity for developers and investors
is needed as a key enabler for energy policy in the next decade.
8. We are therefore strongly supportive of the
draft NPSs for Energy and believe that the Committee should recommend
that Government formally approves (designates) them.
9. We firmly believe the Energy NPSs provide
a coherent and practical framework within which the Infrastructure
Planning Commission (IPC) can assess future planning applications
for energy infrastructure and are wholly supportive of the IPC
using the NPSs as the primary basis of their decision making for
NSIPs. We also support their use as material considerations for
both local planning authorities on smaller-scale energy projects,
and the Marine Management Organisation (MMO) when considering
sub 100MW projects in the marine area.
10. It is important to ensure the NPSs contain
the right amount of prescription and flexibility to help the IPC
make decisions on planning applications. We would urge the Committee
to recommend that (subject to our comments below and in our forthcoming
response to the NPS Consultation), the NPSs are retained as structured
and to resist any calls to reduce the content or level of detail
currently contained within the NPSs, which we believe to be needed
and of critical importance to those who will rely on them in the
submission of applications for NSIPs and/or the IPC. We would
also add that inserting a review mechanism (we note the Planning
Act 2008 requirements for review, but consider an express life-span
should be referred to in the NPSs) would provide even greater
certainty allowing operators and investors to plan beyond the
dates that are currently used (such as the 2025 cut off date used
in EN-6).
11. We are supportive of the need case for new
energy infrastructure, as set out in EN-1 and the implementation
of pre-agreed timescales for decisions by the IPC. We believe
both these measures to be significant and vital steps forward
in facilitating much needed speedier decisions.
12. We believe that a diverse energy portfolio
is extremely important and we are encouraged that Government is
allowing developers to decide on the most appropriate and commercially
viable technologies within the agreed framework.
13. We ask that the Committee recommend to Government
that Dungeness is re-considered for inclusion within the list
of sites for new nuclear development within EN-6. We believe the
exclusion of Dungeness to be premature, particularly given the
uncertainties over some of the existing 10 sites and the implications
this may have on competition in nuclear new build and on security
of supply. In our view, there is insufficient evidence to conclude
at this stage that compensatory measures could not be identified,
or that there is not an over-riding public interest in making
the site available.
14. Finally, the NPSs must play a significant
role in defining the approach of all consenting regimes, both
the local and regional planning regimes as well as the IPC and
the DECC Consents team. We would emphasise the importance of the
interrelationship between the NPSs and the hierarchy of the existing
suite of planning policies, statements and guidance being made
clear to all stakeholders within EN-1.
THE ENERGY
CHALLENGE
15. In all future scenarios, independent commentators
suggest that up to £200 billion of new investment will be
required in the UK energy system in the next decade or so to ensure
security of supply, climate targets are met and our economy remains
competitive.
16. The Climate Change Act 2008 sets a statutory
target of reducing greenhouse gas emissions by 80% by 2050. The
EU Renewable Energy Directive has set the UK a legally binding
target of achieving 15% of all energy from renewable sources by
2020 which requires the level of electricity generated by renewables
to increase from 5.5% today to around 30% by 2020.
17. Furthermore, it is predicted that within
a decade the UK could be importing 60-80% of its gas, which will
require new gas import, reception and storage facilities as well
as significant investment in the integrated gas transmission and
distribution networks to enable gas to reach the market.
18. In the medium to long term, decarbonisation
of the electricity mix is essential, particularly through new
investment in large scale renewable generation, coal with carbon
capture and storage and nuclear. Stronger and smarter electricity
networks are also needed to ensure low carbon generation assets
are connected up and performing to maximum efficiency, to ensure
the connection and integration of distributed generation and to
accommodate potentially significant shifts in load as the transport
industry becomes more dependent on electricity as the favoured
fuel source.
19. The unprecedented level of investment that
will be needed in every type of energy infrastructure at the necessary
pace to meet Government's energy policy goals requires radical
reform of the planning regime, which at present is a major obstacle
to investment. In our view, a clear and stable long term policy
framework for nationally significant infrastructure projects which
delivers timely and sound decisions on planning applications is
needed as a key enabler of energy policy in the next decade.
THE PROPOSALS
FOR NATIONAL
POLICY STATEMENTS
FOR ENERGY
20. We greatly welcome and are supportive of
the Government's reforms to the planning regime through the Planning
Act 2008. This package of reforms will deliver greater certainty
for developers of NSIPs and a timelier and more efficient decision
making process, making a major contribution to the achievement
of the Government's energy policy objectives.
21. We similarly welcome the proposals for the NPSs
for Energy. The proposals generally provide a concise and helpful
outline of the Government's energy and climate policy and underpin
the Government's integrated package of reforms being implemented
through the Planning Act 2008.
22. We believe that, subject to our comments
below and in our forthcoming consultation response, the proposals
for the NPSs for Energy provide a coherent and practical framework
within which the Infrastructure Planning Commission (IPC) can
assess future planning applications for energy infrastructure.
As such, we see the NPSs as being vital to establishing the policy
framework necessary to enable the very substantial infrastructure
investment programme needed to meet Government's energy policy
goals of reducing carbon emissions whilst ensuring the future
security of the UK's energy supplies, and at the lowest possible
cost.
Content and Detail
23. On the whole, we support the content and
level of detail used within the NPSs, as well as their integrated
nature, and we are wholly supportive of the IPC using the NPSs
as the primary basis of their decision making for consenting NSIPs.
If read in conjunction with the relevant draft technology specific
NPS, the draft Overarching Energy NPS in the main gives very good
and clear guidance to applicants to enable them to submit an application
which contains the information necessary to allow the IPC to reach
a decision on whether or not to grant development consent. We
believe that NPSs will be invaluable not only to the IPC but also
to developers, as well as local authorities, members of the public
and any other interested parties.
The "Need" Case
24. We are supportive of the clear and robust need
case for new energy infrastructure set out in EN-1 and believe
this to be a significant and vital step forward in facilitating
the decision process in relation to energy related infrastructure
planning applications. Local planning processes are ill-suited
for reviewing overall energy policy objectives, and it makes a
great deal of sense to address these aspects at a national level
through the debate on the draft NPSs. We agree with the document's
assessment of need which states beyond all doubt the need and
urgency for the entire range of energy related technologies covered
by the NPSs.
25. We would however ask that the projections in
relation to the drop in demand for gas and its impact on the level
of UK gas imports by 2020 be reconsidered, as this falls well
short of our own and others' estimations of around a 60-80% gas
import dependency. While a great deal of work is under way to
meet the Government's ambitions for energy efficiency, renewables
and nuclear, to the extent that any falls short, gas is likely
to have to fill the gap. It would not be prudent to limit consenting
of gas import and storage infrastructure to the level that assumes
100% success in all other policy areas. As such, given that we
believe the need case for gas infrastructure projects may be even
greater than assumed within EN-1, it does not seem appropriate
that the stated need for these types of infrastructure projects
be limited (as per paragraphs 3.9.8 and 3.10.8).
Agreed Timescales
26. The implementation of pre-agreed timescales
for decisions by the IPC will also be essential in enabling the
UK's progression to a low carbon energy system in a timely and
efficient manner.
Diversity of the Energy Mix
27. It is widely accepted that the best way to achieve
the energy security and affordability our country needs is through
a diverse mix of technologies. We are encouraged that Government
is allowing developers to decide on the most cost-effective and
most appropriate technologies within the agreed framework and
we believe this to be the best way of bringing forward the most
commercially viable low carbon technologies. Although we understand
that current wave and tidal projects fall well short of the megawatt
threshold for consideration by the IPC, we ask that their existence
be referred to in some way within EN-3.
Holistic and Individual Applications
28. Whilst we welcome the statements that holistic
consents are encouraged where possible, we also support the recognition
in the NPSs that individual consents are permitted for particular
aspects of a project that can be considered as a NSIP in their
own right. While holistic consents are the ideal, single applications
are often very difficult to achieve in practice due to a range
of technical, environmental or commercial reasons. For example,
different aspects of the development may have different lead times
or be required to be in place at different stages. Accordingly,
flexibility on this issue is vital in bringing forward much of
the new energy infrastructure projects necessary to meet Government's
energy security goals as well as the carbon reduction and renewable
energy targets.
Impacts and Mitigation
29. We are particularly supportive of the guidance
provided within the technology specific NPSs on the key impacts
that need to be considered when selecting an appropriate site
for a particular project of nationally significant infrastructure
and how to mitigate them. On the whole, we believe the inclusion
of this information to be valuable to developers and the IPC in
their decision making. We believe however that where any mitigation
measure is indicated, the NPS ought to make clear that it is only
intended to highlight possible mitigation that could be considered,
and that it will not necessarily be appropriate to apply that
particular mitigation in all cases.
Spatial v Non-Spatial
30. We welcome the spatial approach taken within
the Nuclear NPS (EN-6). We agree that a non-spatial approach for
the remaining technologies is the most sensible approach as we
believe seeking to identify sites would be an unnecessary and
complex exercise as the market is best placed to determine where
and when to develop these particular projects. However, we would
ask that the spatial nature of the Crown Estate leasing process
be referred to within the Renewables NPS (EN-3).
Exclusion of Sites in EN-6
31. We welcome the fact that EN-6 identifies that
all nuclear new build sites listed are stated as needed and are
not alternatives to each other; this is particularly important
for investor certainty. However, we suggest where potential sites
for new nuclear development have been excluded from EN-6, this
does not preclude them being considered for Nuclear development
in the future, should circumstances change. A statement to this
effect would be welcomed.
32. It is stated "the Government does not consider
it appropriate to include more than 10 sites in the NPS at this
stage". In our view, there is no satisfactory evidence explaining
the rationale for this 10 site limit. In addition, it is at odds
with the evidence used in EN-6 to support the requirement for
including a minimum of 10 sites: "it is necessary to include
all 10 sites in this NPS to ensure that sufficient sites are available
for development and to allow energy companies to fill a significant
proportion of the 25GW of new capacity even if a number of sites
fail at the project level."
33. In particular, we do not support the Government's
reasons for discounting Dungeness and we therefore do not agree
with the exclusion of Dungeness from the list of sites. We believe
that these should be re-assessed with a view to including Dungeness
in the list of sites in order for the IPC to assess the impacts
of a new nuclear build at the project level. We would ask the
Committee to make this recommendation to the Government.
34. The Government's assessment notes that,
unlike other sites, construction at Dungeness will require direct
land take from an internationally designated site of ecological
importance. However, we believe there is insufficient evidence
to conclude at this stage that compensatory measures could not
be identified for the new nuclear build site at Dungeness and
we consider it premature to exclude it from the draft NPS. Indeed,
the Government's own assessment states that "further assessment
supported by detailed data at the project level will be required
before it can be concluded whether a nuclear power station development
can be undertaken without adversely affecting the integrity of
the Dungeness to Pett Level SPA."
35. As part of the Government's public consultation
process surrounding this draft NPS, it is clear that there are
certain sites attracting significantly more opposition than Dungeness
and these sites are likely to be deployed later in the 2017 to
2025 period than would be feasible for Dungeness. This is a particular
concern for two of the three Cumbrian sites (where, as the Government
also notes, there may also be practical problems preventing the
development of all three sites) We note that Dungeness has a grid
connection agreement for a transmission capacity of 1,650MW with
a connection date of 2016 (which under EN-6 would mean that, should
Dungeness come forward to the IPC as a listed site, the IPC would
be guided to attach significant weight to this potential early
deployment).
36. Given the risk of sites not making it through
at the project level and the risk of sites being removed from
the NPS due to the consultation process, it is necessary to ensure
there are sufficient sites available. We believe that it would
be prudent to assume that at least one site (possibly in Cumbria)
falls by the wayside at the NPS stage and that therefore Dungeness
may be needed to achieve the target of 10 sites. Given the importance
of nuclear power in achieving a low carbon, secure energy supply,
we think that there may well be an imperative reason of overriding
public interest for developing the site.
37. We also note that the sale of an option
of Dungeness or Heysham was identified by the EU Commission as
a necessary remedy to preserve competition in the nuclear new
build market following the takeover of British Energy by EDF.
With Dungeness potentially excluded from the NPS, and Heysham's
land area limited as a result of the SSA process, we would question
whether the objectives of the divestment are being achieved.
Alternative Sites
38. We welcome the consideration of alternatives
required in EN-1, however we would ask that the Committee recommends
that the NPSs make clear that the IPC should take into account
the urgency and importance of individual projects and ensure that
only genuinely viable alternatives are considered so as not to
cause unnecessary and time consuming delays.
CHP
39. We support the requirement for a developer to
explore opportunities for CHP as set out in EN-2. We would however
ask that the guidance makes clear that the IPC should only require
developers to propose CHP where it is economic, where it is technically
feasible to do so and where there is a practical application/need
for the surplus heat. CHP should not be a continuing condition
in any event because of the possibility that the company providing
the heat load goes out of business.
Gas Storage and Reception Facilities
40. Development of new gas infrastructure, including
storage, is critical in all future energy scenarios. The NPS should
ensure the gas infrastructure capability is sized to meet the
larger import dependency for 2020 and beyond that as we state
above.
Adaptation
41. While we recognise the importance of adaptation
to mitigate climate change, due to the high level of uncertainty
as to the actual changes that will arise as a result of climate
change, we would ask that the NPS also supports the option of
active monitoring as an alternative to implementing measures far
in advance.
Clear Statements of Government Policy
42. It is helpful that the NPSs provide a process
for generic issues to be addressed on a global basis—through
the debate on the NPS—rather than at each specific planning
consent. We welcome the fact that the Government has chosen the
NPSs as the most appropriate vehicle to address these important
matters eg in relation to electric and magnetic fields (EMFs)
and the availability of arrangements to deal with nuclear waste.
We believe this to be sensible and in accordance with the need
for a timely and well-founded decision making process.
Beyond 2020
43. We would ask that in due course Government further
consider the energy infrastructure requirements and investment
needed beyond 2020 and the implications that may have on the projects
that are considered prior to 2020. This should not delay early
designation of the NPSs.
CONCLUSION
44. We firmly believe that the Committee should
recommend that Government formally approves (designates) each
of the draft NPSs for Energy as quickly as possible, taking account
of the points made above. This will enable the substantial infrastructure
investment programme needed to meet Government's energy policy
goals of reducing carbon emissions whilst ensuring the future
security of the UK's energy supplies to get underway as soon as
possible and at the lowest possible cost to the UK economy.
January 2010
272 Ernst & Young, July 2009 "Securing the
UK's Energy Future-Seizing the Investment Opportunity". Available
at
http://www.centrica.com/files/results/interim09/Interim09_EY_securing_energy_future_jul09.pdf Back
| 
