Environment, Food and Rural Affairs CommitteeWritten evidence submitted by Association of Electricity Producers
About AEP
The Association of Electricity Producers (AEP) represents large, medium and small companies accounting for more than 95% of the UK generating capacity, together with a number of businesses that provide equipment and services to the generating industry. Between them, the members embrace all of the generating technologies used commercially in the UK, from coal, gas and nuclear power, to a wide range of renewable sources of energy.
The Association welcomes the opportunity to submit evidence to the Environment, Food and Rural Affairs Committee inquiry into the Water White Paper.
General Comments
AEP welcome the higher profile given to the energy industry within the Water White Paper (WWP) when compared to DEFRA’s previous strategic water statements. This highlights the importance of water for energy generation and the fact that this sector is a major water abstractor. Nevertheless, the distinction between water abstraction and water use by the generation sector is vital to understand, that is, the concept of water “borrowing”. AEP therefore also welcome the recognition within the WWP accompanying document, “Case for Change”, that a significant proportion of water abstracted by the energy generation sector is returned back to the aquatic environment near its point of abstraction.
AEP acknowledge that climate change and increased demand may place additional burdens on water resources in the future and that all users must play their part. However, any revision to existing allocation methods that purports to reflect societal economic efficiency must be holistic and recognise the significant contribution that energy, and hence security of supply, plays in society. If there are limitations on future water usage, it is important that more flexible commercial arrangements are put in place that allow the value of water to be discovered together with a smooth transition to these new arrangements. AEP therefore welcome that the WWP has recognised the importance to abstractors of both continued access to water supplies and the importance of ensuring that the new regime does not create barriers to investment, both considerations being key to ongoing security of supply and investment in the generation sector.
Consultation Questions
1. Does the White Paper set out the right principles for customers and the water and sewerage industry for taking forward reform of the market for water supply?
No comment.
2. Are the proposals to protect and enhance water resources, for example on abstraction regime reform, likely to be fully effective?
The electricity supply industry is a major abstractor of water resources as a result of the role of water in cooling circuits in thermal power stations (coal, gas, nuclear, oil and biomass) and also for hydropower generation. The use of water for cooling systems in power generation enables the optimisation of systems to maximise energy efficiency and hence minimise gaseous emissions, including greenhouse gases, per unit of electricity generated. It maximises useful energy output from a given fuel use whilst minimising production of “waste” and the use of raw materials. Other forms of cooling are available (eg air cooled condensers); however, these cool process water less efficiently, which has a direct impact on the overall electricity generating cycle efficiency. Indeed, the use of water for cooling has, for the past few decades, been determined by national regulators as the Best Available Technique for minimising the impact of power generation activities on the environment when taken as a whole.
Water policy should not be addressed in isolation. The Government needs to balance environmental issues, such as those related to water use, with impacts on other environmental media along with energy policy, security of electricity supply, and economics. It is therefore essential that water policy should be addressed in a “sustainability” framework that takes into account social and economic aspects as well as environmental ones.
Major infrastructure assets inevitably sit in particular catchments. AEP are concerned that in the Catchment scale approach the benefits at regional and national scale provided by such assets should be fully recognised.
It is expected that summer river flows will decline substantially over the next few decades in response to climate change and there will be changes in the physical and chemical quality of surface waters. However, it is by no means clear at this stage how the protection of the water environment will be determined in this changing backdrop (in terms of flows, Environmental Quality Standards and ecological metrics, etc.) which will influence the amount of water deemed available for societal use. AEP understand that related research is currently being undertaken at national and European level and we welcome the suggestion at WWP 2.13 that future requirements on water flow would be set with regard to the adapting ecosystems. AEP would urge that when setting future environmental protection goals and associated standards and guidance in the context of Water Framework Directive, Marine Strategy Directive, and receptor-based existing standards, the consequences of all pillars of sustainable development are considered. This includes, in particular, the setting of standards for water resources (eg river flows).
Over 21GW of capacity of the UK’s thermal power stations are due to close by 2025, with 12GW closing by the end of 2015. £200 billion of investment is needed in the sector in the next decade to replace ageing power stations and transform the energy system in the move towards a low-carbon sector. Thermal power stations will form a major component of this programme of investment. It is therefore important that the programme of reform of the water abstraction regime should deliver sufficient confidence to investors as to reliable access to appropriate quantities of water to facilitate these future investments in water-dependent power station assets. Additionally, the transitional arrangements that are required prior to the final reform package’s roll-out should ensure that companies and society are permitted to get value for money from direct and indirect sunk investments in infrastructure which depends on water. AEP look forward to working with DEFRA and the Environment Agency (EA) to flesh out the principles listed in section 2.15.
AEP welcome the proposal to form a national stakeholder group (sec 2.17) in the expectation that this will include appropriate representation from the energy sector.
AEP note EA’s intention to examine the possibility of revoking portions of licences that are unused in recent years (sec 3.44) and welcome the recognition of the importance of holding licences of sufficient size for reasonable contingency (an important aspect of providing energy system resilience). AEP take comfort from the fact that the new regime will take account of current licences and the actual volumes used and that the transition regime will not be used to change licensed volumes (sec 2.15).
3. How best can the White Paper’s aims to promote water efficiency and the use of sustainable drainage be implemented?
It is important to note that water use minimisation is not an appropriate goal for thermal power stations ie water efficiency should not be considered as an appropriate end in itself. Cooling systems may broadly be categorised as direct-cooled (once-through), indirect (cooling water recirculated through cooling towers) or air-cooled. Energy efficiency is highest for direct-cooled plant and lowest for air-cooled plant. Gross water use is highest for direct-cooled plant but least for air-cooled. However, net water use is highest for indirect-cooled plant as water is lost by evaporation to provide the cooling effect, whereas water in direct-cooled systems is returned to the water body.
Freshwater bodies in the UK are generally unsuitable for direct cooling systems for large scale power plant as flows are insufficient, but direct cooling may be feasible at coastal and estuarine locations, depending on local environmental constraints. Clearly, it is not feasible to change the cooling arrangements for existing power generation plant. However, nor is it appropriate to assume that once existing, river-based plant closes, new plant will automatically “relocate” to coastal areas in order to gain “unlimited” access to water. Availability of grid connections and infrastructure, fuel routes, waste handling facilities etc must all be taken into consideration and it is therefore more likely that existing sites will be the primary candidates for future, new power station developments.
Optimisation of systems to maximise energy efficiency in thermal power station operation requires water for cooling, with the best results generally arriving with the utilisation of once-through direct-cooled technology. Selecting a cooling method is only one of many factors to consider in a developer’s decision-making process for a proposed new power station. AEP wish to emphasise that for development of long-life, water-dependent power sector infrastructure, it is vital to be able to have reliable access to water which is sufficiently secure and predictable. This will allow commercial development and operation of such projects.
AEP consider the promotion of sustainable and efficient water use may be achieved by:
(1)
(2)
Under these conditions, access to water may be assessed as part of the wider project appraisal process alongside numerous other factors examined during the decision-making process to invest in a power station.
4. Do you support the White Paper’s proposals on affordability of water bills for householders?
AEP recognises the potential for interdependencies and interactions between electricity generators and water utilities. In principle, AEP suggests that a robust evidence base should underpin any programme of reform. That is, the EA should aim to provide accessible, accurate and detailed future river flow and water allocation forecasts to the users of water, in order to facilitate efficient and sustainable distribution of water demand points.
Again, it is important to note that water use minimisation is not an appropriate goal for thermal power stations. Optimal efficiency of thermal power station operation requires water for cooling. Thermal power stations on river locations around the UK employ a variety of cooling methods and the selection of a cooling method for the developer of a power station is only one of many factors to consider in the decision-making process. For the power generation sector we wish to emphasise that for development of long-life, water-dependent infrastructure, it is vital to be able to have reliable access to water which is sufficiently secure and predictable. This will allow commercial development and operation of such projects. By maximising useful energy produced from a given quantity of fuel, use of water cooling provides a valuable contribution to affordability goals for energy bills to householders and businesses alike.
5. Does the White Paper omit any key issues where further policy action is required to ensure sustainable, reliable and cost-effective water supplies?
The energy industry is currently subject to a large range of pressures arising from various policy initiatives from EU and UK government. These include policies on carbon intensity of generation, increasingly stringent emission limits to air, energy efficiency, biodiversity, security of supply, fuel poverty, etc. Some of these will run counter to reducing the water dependency of the industry. One example is that carbon capture and storage will increase the cooling demand of power plant to which it is fitted and hence may result in additional water requirements for power plant rather than allowing any reduction in water intensity. AEP considers that a holistic view and effective integration of the various policies is required. One key aspect is therefore ensuring a suitable volume and reliability of water supply to the sector sufficient to underpin the current and next generation of power stations.
A case in point is the UK’s legally binding renewables and CO2 emissions reduction targets, which could result in up to 40GW of offshore wind by 2030. Water-cooled power stations would be expected to perform a vital role in maintaining the integrity of the UK’s energy system by helping to ensure security of electricity supply during periods when wind generation is not available. Other forms of cooling are available (eg air cooled condensers); however, these cool processed water less efficiently, which has a direct impact on the overall electricity generating cycle efficiency and therefore increase costs. Moreover, air cooling effectiveness decreases faster than water cooling in hot conditions, and is therefore vulnerable to reduced output in future summers, though of course air-cooled plant are not vulnerable to restrictions on water use. This highlights the benefits of diversity within the power sector. The transformation from a largely fossil-fuelled to low-carbon energy system must be undertaken at the lowest economic, social and environmental cost possible. It is therefore essential that water policy should be addressed in a “sustainability” framework that takes into account social and economic aspects as well as environmental ones.
January 2012