Energy and Climate Change CommitteeWritten evidence submitted by RWE Npower Renewables Ltd (SEV36)

RWE Npower Renewables is one of the leading developers of onshore and offshore renewable technologies in the UK. Our existing portfolio includes onshore and offshore wind, hydropower and biomass projects. RWE Npower have thermal generation assets in England and Wales and as a group RWE is one of the largest inward investors into Wales.

RWE does not have any current involvement with the Cardiff-Weston Barrage proposal under consideration in this consultation. RWE through its operational assets would have a keen interest in the potential impact of any future energy generation within the Severn Estuary area. Potentially directly affected projects and operational assets include thermal generation (most notably at Aberthaw) and renewables both offshore (e.g. Atlantic Array) and onshore. Our overall concern is that the barrage is a significant infrastructure project which has been considered and rejected several times previously. The Corlan Hafren proposals are at an outline stage and therefore there are significant unknowns and uncertainties at present. We therefore consider that we do not have the required detailed information to substantially comment on the viability and environmental and socio-economic impacts which could result from the proposals.

RWE Npower Renewables and its predecessor companies has been considering tidal range proposals tabled for the Severn Estuary since 2005. On this basis our initial considered responses are presented below.

What contribution could the Cardiff-Weston Barrage make to UK energy security and climate change objectives?

Previous studies1, most recently in 2010, suggest the at the Cardiff-Weston Barrage could have a capacity of 8.6GW generating approximately 16.5 TWh/yr or 5% of current UK electricity consumption. However, the direct and indirect impacts of the Cardiff Weston Barrage on existing power generation and transmission require careful consideration. A scheme of this size would have requirements for major changes to grid and other infrastructure.

We are concerned that through Levy Control Framework the substantial size of this one scheme and its requirement for government support mechanisms could significantly offset the development of other established renewable generation technologies. Therefore, the direct investment benefit from this scheme is not as attractive as first presented. A spread of investment in a number of proven technologies, projects and development companies presents a lower risk profile and cheaper option to the UK.

What risks and opportunities could it pose with regard to flooding in the Severn estuary, and how might any risks be mitigated?

The Severn Barrage if appropriately designed and operated could be used to provide flood protection from tidal surges and sea-level rise for properties upstream from the Barrage although the future benefits from this would require detailed modelling and evaluation. However, conversely the barrage does have the potential to exacerbate existing flooding in some upstream areas within the lower Severn region. Therefore, this is currently a significant area of uncertainty with the proposals.

What risks and opportunities could it pose to wildlife and habitat in the Severn estuary, and how might any risks be mitigated?

Risks and opportunities to wildlife and habitat would need to be quantified through the Environmental Impact Assessment. We are concerned that the size of this scheme could result in unacceptable environmental impacts requiring significant derogation to European Directives despite the initial mitigation outlined by the Corlan Hafren proposals of lower velocity (“fish friendly”) turbines and reduced permanently flooded area.

What lessons can be learned from the successful development of La Rance tidal barrage in France and other tidal power projects?

No Response.

What risks and opportunities could it pose to local employment and community, and how might any risks be mitigated? In particular, what are the consequences for current ports, fishing and aggregate extraction industries in the estuary?

The project would require substantial local employment. However, there could be distributional consequences of a future scheme on industry within the Severn Region. For example, the potential for detrimental impacts on Bristol Ports and other industries upstream from a barrage need detailed consideration. Port impacts could include changes to water level regime and access; siltation and dredging requirements and delay and cost to pass through barrage locks.

The significant material requirements for the scheme are likely to exceed local resources requiring imports to the area, potentially from overseas supplier sources.

Would the project require support under the proposed new Contracts for Difference mechanism? If so, approximately what level of strike price would be required to make the project economically viable?

Yes, the project is likely to require significant support under the CfD mechanism. DECC’s own feasibility report2 in October 2010 suggested that the levelised cost of electricity from the Cardiff Weston scheme on the basis of a 10% cost of capital is around £300/MWh (page 7 in the report). A revised economic assessment is not available from Corlan Hafren but unless the new proposals are a significant capex reduction from the previous estimates this does suggest that such a strike price may be difficult to justify for consumer affordability against future benchmarks for alternate low carbon technologies of ~£100/MWh and government’s aspiration to move to technology neutral auctions.

How does the company plan to engage and consult the community in the development of the project?

No Response.

Are the proposals in breach of EU legislation, and if so how will this be addressed?

No Response.

Are any other proposals for tidal power projects in the Severn estuary currently under consideration?

There have been several proposals for tidal power projects in the Severn Estuary previously proposed some of which remain currently under consideration. We are concerned about the impact of the Cardiff-Weston Barrage (as one of the larger schemes) could negate the development of other smaller proposals which are more cost effective with potentially lower impact on the environment. For example, we believe a coastally attached lagoon approach at ~1GW capacity may provide a better initial value for money with significantly lower capital cost. RWE would wish all viable options for tidal range within the Severn Estuary to be evaluated and are not committed to any project at this stage.

What could be the wider international implications of the scheme for UK engineering and UK low-carbon industry?

Investment in the Severn Barrage could divert investment away from other renewable technologies within which the UK has a substantial international role. The number of suitable international sites for tidal barrages are limited and all would require significant national government funding. It is considered that export opportunities could be limited.

November 2012