Select Committee on European Communities Twelfth Report


191. Renewable energy is a complex field. For convenience, we deal here with the various issues thematically. We begin by considering the overall achievement of the targets and the immediately arising matters of planning and public perception. This is followed by a detailed look at individual renewable sources in order of the contribution projected by the DTI towards meeting the UK's 2010 target, as noted in Table 6 above plus other sources of interest as noted in Table 7. This Part then concludes by considering a range of wider issues.

192. Each of these thematic sections begins with a summary of the views of witnesses and concludes with the Committee's opinions. The recommendations thus spread throughout this Part are brought together in Part 1 of this Report.

193. Reflecting the nature of our evidence, much of this material is strongly focused on the UK scene. We address European issues directly in the section in paragraphs 365 - 387.

Achievement of the Targets

Views of Witnesses

194. As noted in the paragraphs 231 to 305 below, witnesses representing the various individual renewables each felt that their area could play at least some part in meeting targets for electricity from renewables in 2010 and beyond. The Minister for Energy was clear that the interim 5 per cent of electricity from renewables by 2003 was in sight (Q 941). Indeed, he felt that other technologies could fill the gap if wind did not realise his Department's projection of potential (Q 941). The Minister was also confident that the target of 10 per cent of electricity from renewables by 2010 would be met (Q 939). The DTI's 1999 consultation document made clear that, while no one renewable source provided the solution, the aggregate potential was available.

195. The exact mix in 2010 was uncertain, although the consultation document provided three possible scenarios. An analysis by the Institution of Electrical Engineers suggested that no more than 28.8 TWh (rather than the 35 TWh target) could be provided by 2010 (p 263). Various estimates were suggested as to the rate at which renewable energy would have to increase in order to meet the targets. PowerGen, for example, suggested that electricity generation "would have to increase by approximately fivefold by 2005" (p 294).

196. Almost all witnesses doubted whether the very substantial increase in renewable electricity generation necessary to achieve the 2010 target would be delivered. The assessments ranged from "challenging" (Q 74) to the observation that "to meet the 10 per cent target in 10 years time it [the UK] will have to do something on a heroic scale" (p 253). The Association of Electricity Producers noted that "a great deal depends on the strength of the Government's will to secure its target" (p 233).

197. Eastern Generation had decided themselves to set a 10 per cent target for 2010, which would involve commissioning some 400 to 500 MW of renewable generation (Q 442).

198. Environmental organisations drew attention to the strategic importance of renewable energy. The WWF, for example, was clear that "an expansion of a renewable capacity can make an important contribution to the EU and UK reaching their Kyoto commitments" (p 312). The Royal Society for the Protection of Birds argued that "early and meaningful action is therefore vital both in the UK, the EU and around the world" (p 297). CPRE (p 1) and Greenpeace (p 187) argued along similar lines.

Opinion of the committee

199. Given the commitment of the EU and Member States to the Kyoto protocol and the national targets for reducing greenhouse gas emissions, there is a clear imperative for pursuing the development of renewable energy sources. What is now needed from each EU Member State is a clear strategy to show how its target will be achieved.

200. We endorse the consensus view that the UK has the aggregate potential to achieve the targets for electricity from renewables. However, we find it hard to see that this potential will be realised.

201. We note that, in plans for achieving the UK's targets for both 2003 and 2010, the DTI has included the existing 1.3 percentage point contribution from large hydro[71]. As noted in paragraph 106, the draft Directive excluded such provision from the EU targets proposed for 2005.

202. The Minister for Energy's confidence that the target of five per cent of UK electricity from renewables by 2003 will be met appears to rest on the basis that 3,500 MW of NFFO contracts have been placed; that 65 per cent of these proceed to fruition (the success rate assumed by OFFER[72]); and that all projects achieve a 70 per cent load factor[73]. The resulting electricity generation, including all existing hydro, would then be around 17 TWh, slightly above the 15 TWh needed.

203. However, experience suggests that the assumed success rate in implementing new projects is, to say the least, optimistic. Out of 627 MW of projects contracted under NFFO3 in 1994, only 237 MW have been commissioned - a success rate of 38 percent. As the premium rates under NFFO3 will cease in August 2013, projects had to be commissioned by August 1998 for developers to secure premium payments over the full 15 years. It therefore seems unlikely that much more of this outstanding capacity will be commissioned. Consequently, we have difficulty sharing the Minister for Energy's confidence that the UK's 5 per cent target by 2003 will be achieved, even including the existing contribution from large hydro.

204. The UK's 2010 target will require about 3 TWh of renewable electricity production (the output of 450 MW dnc) to come on stream each year. The DTI's own figures[74] show that renewable electricity produced by new sources increased by only 2.15 TWh between 1992 and 1997, an average of 0.43 TWh per year. It is clear that, to achieve 10 per cent of electricity from renewables by 2010 and even with the inclusion of the existing 1.3 per cent contribution from large hydro, the UK must increase the average rate of installing renewable electricity generation achieved recently by a factor of at least seven.

205. If the targets are to be met, our view is that use of all the available renewable energy sources (notably wind energy, particularly from offshore sites) will need to be expanded at the maximum practicable rate.

206. Given the Kyoto targets and the Government's Manifesto commitment on CO2 emissions, it is important to quantify the greenhouse gas reductions from the growth of renewable energy. It was therefore disappointing not to find clear answers in the DTI's 1999 consultation document and supporting papers. Our analysis suggests that the carbon savings from meeting the 10 per cent renewable electricity target will be around 7.6 MtC a year. To this must be added substantial reductions of methane emissions avoided with energy from waste and landfill gas. We urge the Government to clarify the figures as soon as possible.

207. We do not agree with the implication in the DTI's 1999 consultation document that, if wind energy is exploited less rapidly, the development of other renewables can be accelerated to fill the gap. The DTI's own assessments[75] support our view: the waste technologies have a finite resource; and DTI modelling shows a negligible contribution from energy crops by 2010, confirming our own reservations in paragraphs 277 - 279.

208. The Committee therefore shares the majority view of witnesses that the UK's renewable energy electricity targets will not be achieved within the present arrangements. The necessary rapid growth of renewable energy provision requires urgent improvements in not only the various inter-linking policies but also their implementation.


Views of witnesses

209. Most witnesses saw difficulties of securing planning permission and other consents as the main obstacle in achieving the targets. Their views are summarised in the observation by ScottishPower:

"[the target] is technically feasible and can be achieved for a very modest cost in addition to conventional fuels. However, it will never be achieved until it is recognised by those who determine the planning process that all development has impact and that local impact has to be balanced against the improvements to the wider environment" (p 302).

A similar point was made by the Association of Electricity Producers who noted that "There is always some environmental impact arising from electricity production" (p 234). PowerGen expressed similar views (p 295).

210. Friends of the Earth argued that "clearer guidance is needed from the Government to local planning authorities on how to weigh up the benefits of renewable energy and potential local impacts" (p 257). The British Wind Energy Association told us about defects in planning inspectors' reports from public inquiries (Q 155): these sometimes advanced arguments for rejecting wind farms which ran counter to Government planning policy guidelines; and, in some cases, presented inaccurate technical arguments. Eastern Generation also drew attention to anomalous decisions from public inquiries (Q 448). The Minister for Planning appeared to be unaware of this (Q 992). Moreover, the Minister for Energy acknowledged the difficulties of piloting projects of any kind through the planning system (Q 947). Border Wind provided evidence of the difficulties in securing MoD clearance (p 236).

211. Nor were such planning difficulties linked only to large projects with visual implications, such as wind farms. Attention was also drawn to a small community-led hydro project in Scotland, which was also in difficulties as a result of the need to satisfy "far too many Government-funded quangos, each determined to make its presence felt, so that developers are reduced to despair" (p 237).

212. There was an overwhelming view among witnesses that the planning and consent arrangements needed not only to accommodate the national priority for renewables, but also had to be applied in ways that delivered the results (QQ 33, 149, 444, 907). Various witnesses suggested that planning problems might be simplified within a structure of regional targets for renewable energy to secure a more even distribution of development and, in particular, relieve some of the present concentration on the high wind speed regions (QQ 33, 37, 258 and p 257).

213. We were interested to learn that the success rate in the first NI-NFFO round was over 93 per cent[76]. Northern Ireland Electricity (NIE) suggested that this might be due to close discussions between developers and themselves from the earliest stages, together with good communications with planners, government and statutory bodies. In addition, NIE had undertaken to provide binding estimates of connection cost as in early stage, so that any difficulties could be identified as soon as possible (p 289).

214. The Minister for Planning aimed to change and modernise the planning system (Q 975). He also referred to mechanisms whereby regional development agencies would have a stronger role in economic planning "to bring a strategic overview to planning in its widest context" (Q 1003). In addition, he emphasised his wish to clarify and simplify the planning procedures for offshore wind energy (Q 997). The Minister for Energy wanted to see the development of renewable energy built into regional development plans (Q 946).

Opinion of the Committee

215. While there need to be appropriate controls, the present widespread difficulties for renewable energy installations in obtaining planning permission and other necessary consents are a grave hindrance to achieving the necessary growth of renewables.

216. The national policy for renewable energy needs to be a clear and integral part of the planning guidelines. Moreover, planning inspectors should be more clearly held accountable for decisions by reference to those expanded guidelines.

217. We agree with the Minister for Energy and many other witnesses that, within the national objectives, regional targets for the implementation of renewable energy would provide a useful additional context for planning decisions.

218. At the same time, those planning, designing and siting installations can help themselves and the national programme in showing greater sensitivity in their work, coupled with a pro-active approach to the communities concerned.

Public Perception

Views of Witnesses

219. The Minister for Energy emphasised the need to win hearts and minds for the renewable energy agenda (Q 943). He wanted to see consensus and support for renewable energy being developed at community level, enabling renewables to thrive (QQ 943, 946). Alongside that, the Minister for Planning saw the need for renewable operators to work more effectively in preparing the ground for their proposals with the communities affected (Q 993).

220. Several witnesses emphasised the strong public support for the concept of renewable energy in general, whilst acknowledging that particular schemes may attract adverse reaction (QQ 22, 128). CPRE stressed that it was vital to retain public support but thought that the public needs to be convinced that there is a coherent strategy (Q 33).

221. CPRE also felt that public opposition had been fuelled by the large-scale deployment of wind turbines in some areas (Q 8). Indirectly answering this criticism, BWEA accepted the need for sensitive siting and referred to their consultations with bodies such as CPRE (Q 139). As noted in paragraph 232, BWEA supplied evidence that many public opinion surveys had shown public support for renewable energy including wind farms, and that the principal opposition came from a vocal minority. We also note in paragraph 257 the impact of adverse public perception on planning for waste combustion plants.

222. In Denmark, the Committee was given various booklets explaining Danish energy policy, which were part of the overall strategy of keeping the public informed. (We are not aware of similar material being widely available in the UK.)

Opinion of the Committee

223. Public perception is a key element of the integrated strategy we advocate for developing renewable energy. We see a serious gap between the public's generalised appreciation of the case for renewable energy and a detailed understanding of the issues. If the UK's expansion plans are to be realised, that gap needs urgently to be filled.

224. The first step is to establish the size of the task. We recommend the Government urgently to undertake an authoritative survey of public views on renewable energy matters ranging from general policies to particular types of installation. This should also cover perceptions of other aspects of the wider climate change agenda such as energy efficiency and conservation.

225. Most people probably think in detail about renewable energy only with the stimulus of a proposal for some local installation. Particularly within the hostile planning environment for renewables noted in paragraphs 209 to 212 above, it is vital that the Government and its various agencies, together with the promoters of renewable energy plant, take urgent steps to cultivate better public understanding of the issues and to create a more favourable climate for new proposals in the areas concerned.

226. The size of the task should not be underestimated. Achieving the necessary development of renewable energy - not to mention the wider climate change agenda - will require substantial changes in established behaviours. Policies and strategies throughout the UK and elsewhere in Europe need fully to recognise this.

227. Such changes in public perception can be achieved, as shown by the move over recent years towards unleaded motor fuel. We feel that the UK renewable energy targets will be met only if informed and motivated consumers demand that an improved and integrated policy and strategy framework delivers the necessary growth in renewables.

228. There are some encouraging signs. The EU is developing a "Campaign for Takeoff"[77], an element of which is publicising the case for renewables. Locally inspired and community owned renewable projects have shown that it is possible to cultivate better levels of awareness. As noted in paragraph 364, some consumers are already sufficiently aware of the issues to be willing to pay a small premium for "green electricity".

229. Leaving aside the issue of what the price of electricity should be (see also paragraph 351) and the oddity that there should be a premium for less pollution, the fact that some consumers are ready to pay extra for "green electricity" shows that the higher price is seen as affordable. Indeed, rising standards of living and the effects of competition mean that, as a percentage of total household expenditure in the UK, electricity purchase has fallen from 2.7 per cent in 1980 to 2.2 per cent in 1997[78]. The Government's wish to maintain this trend, as recorded in the DTI's 1999 consultation document, would not be compromised by the very modest extra costs of the renewables programme of some 0.06 p/kWh as discussed in paragraph 356. At the same time, though, we refer to the Danish experience noted in paragraph 390 where it seems that higher costs have actively helped shape the public perception of energy and wider climate change issues.

230. Present modest initiatives need substantial development. Publicity material will not be enough. The same consistent lead should be delivered by every aspect of Government (particularly the planning authorities and numerous related agencies), by the electricity supply and distribution industry, and by all promoters of renewables.

Individual technologies and prospects for their development


Views of Witnesses

231. There was a consensus among the DTI (Q 941), the British Wind Energy Association (BWEA) (p 23) and other witnesses (p 155, Q 890), that wind energy is capable of making a substantial contribution towards a renewable energy target. The BWEA estimated that 6 per cent or more of UK electricity demand in 2010 could be met by the wind power industry (p 23) and argued that no other technology had the capability to deliver contributions of this size at lower cost within that timescale. The BWEA also drew attention to the fact that the wind energy is not resource limited in the way that the waste technologies are (p 24).

232. Country Guardian, describing themselves as "a group which is opposed to commercial wind farms as an acceptable form of renewable electricity generation" did not support the general development of wind energy, acknowledging only the case for small wind turbines for individual farms. They also called into question the technical feasibility and economics of offshore wind (p 245). However, the other environmental groups who submitted evidence were broadly supportive (p 299, p 314, p 257). BWEA emphasised their wish that wind farms should be sited sensitively, but accepted that wind turbines often polarise public opinion (Q 143). They also provided evidence from independent public opinion surveys which showed high levels of local and wider public acceptance of wind farms (p 26). At the same time, a minority was very strongly opposed: there were cases of complaints about noise when turbines were not in fact running (Q 146).

233. The capacity of commissioned wind energy projects is, at some 138 MW, only a small fraction of the 1076 MW which has been contracted under the NFFO rounds[79]. BWEA argued that this was largely due to planning difficulties, noting that the good planning policy guidelines were not always interpreted in the same way by local authorities or by the planning inspectorate and the appeals system (Q 155).

234. BWEA later provided further evidence that planning guidelines appeared to have been ignored by planning inspectors at some public inquiries (Q 981). The Minister for Planning did not appear to be aware of this (Q 992; p 230), nor did he accept that planning arrangements needed to be made more accommodating for wind farms (Q 982).

235. Border Wind Ltd submitted evidence (p 236) about long delays in making progress with a number of wind farms due to MoD concerns. The Minister for Defence Procurement explained (p 273) that his Ministry's concerns - to be discussed with the DTI - included deterioration in radar performance, interruption of line of site microwave links, hazards to low flying aircraft and disruption of underground pipelines and facilities. MoD had raised objections to nine out of 93 wind farm proposals in 1996 (10 per cent), 30 out of 113 (27 per cent) in 1997 and 42 out of 217 (18 percent) in 1998, although the complicated assessments were not yet finalised in 74 cases.

236. Various witnesses (Q 33, p 264) indicated that another reason for wind farm planning difficulties was that the highly competitive nature of the NFFO process encouraged developments on the sites of highest wind speeds, many of which are on high ground and thus very visible. A solution proposed by several witnesses (QQ 33, 37, 258) was to build a regional element into the NFFO process, or its successor.

237. BWEA argued strongly that the offshore wind resource also needed to be exploited (p 24). Plans for full-scale trials of offshore wind were advancing and BWEA expressed the hope that the complicated consent processes could be simplified to avoid the need for separate negotiations with a large number of interested parties (Q 136). National Wind Power expressed the view that "the installation of offshore wind farms in UK waters is unlikely, on present evidence, to commence before 2003". They suggested that the first offshore wind farms would generate electricity from about 5p/kWh, but this should reduce to about 3p/kWh by 2010 (p 284).

238. Several witnesses drew attention to the fact that the wind energy developments in Denmark and Germany have been encouraged by an institutional framework which included tax incentives and encouraged local people to share the ownership of, and profits from, wind farms. (Q 249). The BWEA suggested there was scope for such schemes in the UK, especially for smaller developments (Q 158).

Opinion of the Committee

239. On grounds of cost, technology and resource, it is clear that wind is capable of providing substantial renewable energy. Indeed, it is inconceivable that UK targets for electricity from renewables can be met without much fuller development of onshore and particularly offshore wind energy - though we are concerned that this will not be achieved within the present arrangements. We note the rapid rate which wind energy has been developed in Denmark and Germany in contrast to the modest UK installed capacity[80]. If the UK targets for renewable energy are to be met, the contribution from wind power in each year of the next decade needs to grow at about five times the best annual rate achieved in recent years[81].

240. Planning Policy Guidance Note 22 on renewable energy[82], and regional planning documents all seem to make adequate provision for wind farms. However, there are inconsistencies in applying the planning guidelines which must be resolved. We would favour a general planning presumption in favour of wind farm proposals.

241. It is argued that planning and other consent difficulties reflect public opposition to wind farms. We accept that there is strong opposition to wind farms in some quarters but note the various independent opinion surveys to the contrary.

242. Our visits to wind farms in Northumberland and Denmark convinced us that, thanks to improvements in technology and provided suggested noise limits[83] are met, noise is no longer the issue it was. (By chance, both visits took place in the low wind conditions when perceived noise would be greatest.)

243. We also felt that arguments about visual intrusion can be overstated. We accept there will always be a need for particular sensitivity over siting wind turbines in beauty spots which should be avoided if at all possible. However, in the industrialised settings we saw at Blyth Quay and Avedøre, the wind turbines seemed a positive addition to the skyline. It seems reasonable to suggest that a number of derelict landscapes left over from the industrial age could be improved by their use for wind farms.

244. To avoid the further waste of promoters' efforts and frustration of the national policy for renewable energy, the DTI and MoD should as soon as possible resolve the latter's concerns over wind farms and codify legitimate points into general guidance.

245. We believe it is essential for the Government to pursue schemes of support for community wind projects as a means of actively fostering local interest and support.

246. The offshore wind resource is large, and the means of exploiting it has been well demonstrated elsewhere. We welcome recent DTI initiatives to make up for lost time in the exploitation of offshore wind, and hope to see the first projects in place as soon as possible.

247. To achieve that, we strongly encourage the various interests involved in granting consents to offshore wind installations in the simplification and integration of their procedures, so that the DTI vision of a "one-stop shop" can be realised as soon as possible.


Views of Witnesses

248. Difficulties have been encountered putting NFFO contracts for municipal waste combustion plant into effect: of the contracted 1,400 MW, only some 200 MW have been commissioned to date (p 250). The Energy from Waste Association (EWA) asked for clearer policy guidelines to ease the necessary planning procedures (p 250). They also urged that more be done to help overcome the obstacles that constrain the development of CHP schemes (p 250).

249. The CPRE had reservations about the visual impact of incineration plants(Q 22), but also accepted that recycling could not eliminate the need for such plant (Q 58). WWF pointed out the difficulties for them in that waste combustion required a guaranteed supply of waste and could thus jeopardise waste reduction policy (p 315).

250. The CPRE was also concerned about emissions from waste incineration plants (Q 69). EWA was confident of the ability of recent and planned incinerators to meet proposed new emissions targets (p 251) and noted that the emissions were, in any case, much less harmful than the methane which would result from sending the waste to landfill sites (p 250).

251. EWA noted that waste combustion was not necessarily the cheapest option for waste disposal, and expressed disappointment (p 250) that the Landfill Tax has not been set at a higher level to reduce demand for landfill further.

252. The average contract price of electricity from waste incineration plants in the last - NFFO4 - round was 2.5 p/kWh. Although this is roughly equal to the pool price, EWA felt that the long-term security of power sales under NFFO contracts was vital to the continuing development of the industry (p 250). Provided present obstacles were overcome, EWA was confident that UK capacity could be built up to 1,000 MW, supplying 2.3 per cent of (present) electricity consumption, or about 7 TWh by 2020 (p 250).

253. Apart from municipal waste, various other agricultural and forestry waste are burned to produce heat or electricity. The Combined Heat and Power Association drew attention to the fact that CHP fired by municipal and industrial waste was now capable of providing electricity for less than the average cost paid by the supply businesses in the UK (p 242). In the UK, plant of 26 MW capacity is operational at present, most with NFFO contracts. In addition, a 31 MW straw-burning plant is currently being built at Ely[84].

Opinion of the Committee

254. The production of waste is substantial. Where recycling is not practicable, other means of disposal have to be found. Subject to emission issues, there are strong arguments in favour of disposal by burning. Reducing the volume of waste going to landfill will also mean lower emissions of damaging methane. In line with conclusions in our 1998 Report[85], where it is practicable to dispose of municipal solid waste and other waste by burning, it makes obvious sense to use the energy for electricity generation or heating purposes.

255. Waste offers a significant source of renewable energy at a price that is now close to being competitive with conventional fossil fuels, even without taking embedded generation and carbon saving benefits into account.

256. Waste combustion is not a glamorous technology. Its image might be improved by raising public awareness of the merits, assisted by continuing work to reduce noxious emissions from the incineration plants. The latter is being driven by proposals for tighter emission limits[86].

257. These perceptions mean that waste combustion plants face particular challenges in getting through the necessary local planning procedures. DETR is revising planning policy guidance on the relationship between land-use planning, pollution control and waste management[87]. We consider that the planning guidelines should be strengthened to give a stronger steer in favour of waste combustion with appropriate health and environmental safeguards.

258. We consider that the development of the resource and the associated technology must continue to be fostered under any new NFFO-style support mechanisms.

259. It was clear from our March 1999 visit to the Masnedø straw-burning CHP plant in Denmark that the power generation economics were unfavourable. Those economics were, though, offset in part by wider benefits of disposing of the agricultural waste and extending public awareness of renewable energy matters.


Views of Witnesses

260. Both The Landfill Gas Association (LGA) and ETSU estimate the UK landfill gas resource to be around 6.75 TWh - approaching 2 per cent of projected electricity consumption in 2010 (p 269)[88]. This would require around 850 MW of generation capacity, of which some 150 MW are already operational[89]. 675 MW capacity has been contracted under NFFO[90].

261. Burning the methane-rich landfill gas is a much better option that allowing that damaging greenhouse gas (about 20 times more potent than CO2 on a 100 year timescale) to escape to the atmosphere (p 270). The energy conversion technology is straightforward and proven, although a modest reduction in electricity generation costs of around 10 percent by 2005 is expected[91]. LGA argued that it was one of the most readily commissioned and cheapest renewable energy technologies available, and was also free of environmental constraints (p 271).

262. Most landfill sites were in unobtrusive locations. The addition of a few small containers housing the power generation equipment rarely gave rise to any planning difficulties (QQ 901-903).

Opinion of the Committee

263. Landfill remains the predominant method of waste disposal in the UK. A potent greenhouse gas is an inevitable by-product. If it is not to be released to the atmosphere, if must be burned to less damaging CO2. Burning landfill gas to generate electricity makes obvious sense and should be strongly encouraged.

264. One of the cheapest of the renewable energy technologies, electricity generated from landfill gas can make a worthwhile contribution towards the UK's 10 per cent renewables target, with additional significant benefits in reducing damaging greenhouse gas emissions from landfill sites.

265. The resource is, of course, limited by the waste that goes to landfill, and the Landfill Tax is intended to encourage a switch from landfill to waste incineration. This will be a gradual process with a proportion of waste continuing to go to landfill for the foreseeable future. In any case, landfill sites have a gas generating life of 10-15 years, so there is already a supply of sites for exploitation of the energy resource. Again in line with our 1998 Report mentioned in paragraph 254, as waste combustion and landfill gas are two sides of the same coin, we strongly encourage the development of policies which allow an integrated approach to energy from waste.


Views of Witnesses

266. The draft EC Directive drew a distinction between large and small hydro, with the boundary set at 10 MW capacity. The 1997 European White Paper envisaged some modest expansion (around 10 per cent) of large hydro capacity. In the UK, the boundary is set at 5 MW, with no new large projects envisaged[92], largely because the impacts of large hydro schemes have included a complex web of effects on the biological, chemical and physical environment (p 247). Some modest upgrading of existing schemes may result in an increase of capacity around 10 per cent[93].

267. The evidence received was thus principally about small-scale hydro (that is, below 5 MW capacity), the only hydro schemes funded under the NFFO. Of the contracted 162 schemes (at an average size of about 750 kW), 67 have been commissioned[94]. While electricity generation costs have been falling, average contract prices in recent NFFO orders have been in the range 3.5 to 4p/kWh. There is a consensus that significant improvements in plant performance are unlikely (Q 131). The DTI has projected that small hydro will produce only one per cent of renewable electricity in 2010 or about 3,800 GWh[95]. The British Hydropower Association suggested that the energy potential of small schemes was over 4,500 GWh (p 236)

268. Gloucestershire County Council (p 258) cited a study[96] which expressed disquiet about excessive environmental concerns standing in the way of useful community-led schemes. A group of crofters in Northwest Scotland has been struggling to develop a 200 kW plant to keep their community viable (p 237). The British Hydropower Association suggested that "there are far too many Government-funded quangos, each determined to make its presence felt, so that developers are reduced to despair" (p 237).

269. Although there is potential for schemes in Scotland in the 2-3 MW range, there have been difficulties in securing planning consent (p 247). Tapping this potential is further limited by the sparse grid infrastructure in many regions (p 237).

Opinion of the Committee

270. Hydro-electric power is a well-established form of renewable energy with no polluting discharges. Further development of large hydro schemes is unlikely and undesirable on environmental grounds.

271. Small hydro does not attract the same environmental problems and, although the resource is not enormous, we consider it should be exploited more systematically, particularly as many schemes are initiated locally.

272. We were concerned to hear of the frustration of various community-led and other small hydro schemes by what seem particularly complex planning and consent structures. We recommend that the Government review the nature and operation of the planning and consent structures for small hydro proposals, with the aim of co-ordinating and streamlining the involvement of the wide range of interested regulatory bodies.


Views of Witnesses

273. British Biogen quantified[97] the potential contribution of energy crops by noting that there were around 1.5 million hectares of agricultural land in the UK surplus to present requirements. If one tenth of this otherwise unused land (around one quarter of present set-aside) were to be used for growing energy crops, then a capacity of 1,000 MW of plant[98] could be installed (p 87). The size of electrical plant would range from 100 kW to around 30 MW. A limiting factor is the need to transport the fuel to the power station (Q 393).

274. While forest residues and other agricultural waste products can be burned in conventional plant (Q 404), this is not considered a viable economic option for energy crops. Interest is centred on the development of gasification plant as a means of increasing the efficiency of energy crop combustion (Q 712).

275. British Biogen pointed out that good practice guidelines for the growing of short rotation coppice had been accepted by several environmental and wildlife organisations (Q 406). Public perception of energy crops was generally favourable, as the income from the crop was seen as going into the local community (Q 406).

276. The present economics of energy crops require EU set-aside payments to bring generation costs down to realistic levels (Q 436). While such payments may apparently be claimed at present, there is some doubt whether this will continue. A decision seems some way off, as it is linked to reform of the Common Agricultural Policy (Q 798).

Opinion of the Committee

277. Crops are widely perceived as having a high energy potential. While there is no commercial energy crop project operating in the UK at present, ten projects (with a total capacity of 86 MW, and at prices in the range 5.5-8.7p/kWh) have been awarded NFFO contracts. However, we see substantial problems inhibiting the development of energy crops for electricity generation.

278. The costs of generating electricity from energy crops seem likely to remain high, even if areas of land within sensible distances of the power plants can be found and commercially effective gasification plant is developed. Discounting the costs of the "fuel" for the electricity generator, the economics still seem unfavourable, requiring substantial subsidy to make the overall operation worthwhile. We note that the flagship demonstration plant[99] at Eggborough in Yorkshire is grant-aided by the European Commission, so the real costs are significantly higher than the minimum NFFO price of 5.5p/kWh.

279. EC[100] and DTI[101] assessments are that crops make a significant contribution only in scenarios when all renewables are stimulated, and that contribution is invariably less than that of wind. (Our colleagues on the Science and Technology Committee are undertaking a concurrent enquiry into non-food crops, including energy crops.) We do not see how energy crops could make a significant cost-effective contribution to renewable energy targets for 2010. While the position may improve over the longer term, it seems to us that cost of electricity from energy crops will always be towards the more expensive end of the renewables spectrum.


Views of Witnesses

280. The Severn Tidal Power Group (STPG) (p 305) suggested that the proposed Severn barrage could supply around 17 TWh annually or some 6 per cent of the electricity demand of England and Wales. This would save emissions of 16 MtC annually. Although intermittent, the source would be wholly predictable. Professor Fells (p 253) also supported the construction of the Severn Barrage, arguing that the UK would need to do "something on a heroic scale" to meet the 10 per cent target, and that the barrage would also provide environmental and employment benefits.

281. STPG estimated the project to cost £10 billion. If started now, it could be operational by 2012. Construction would bring significant regional benefits. While the capital costs of construction were being repaid, electricity costs would be around 7p/kWh[102]. Thereafter, electricity costs would fall to some 0.5 p/kWh. Electricity production (at lower prices) would continue long after the capital cost were repaid: the barrage would have a virtually indefinite life, though mechanical and electrical plant would need replacing from time to time.

282. STPG's submission made no reference to environmental effects. The WWF listed a number of concerns, principally related to the adverse effects on migratory birds and wildfowl: they considered the "significant environmental costs outweigh the benefits" (p 313).

283. The National Grid Company noted that "extensive connection works and infrastructure reinforcements" would be needed, and that "increased pump storage capacity to cope with the varying output of a large tidal barrage may be necessary" (p 280). Dr Elliot provided a clear explanation of the difficulties of assimilating the very large peak power output from the barrage which, on most occasions, would not coincide with the peak demand on the electricity network (Q 287).

Opinion of the Committee

284. Even if construction started now, the Severn Tidal Power Group's evidence is that the barrage would not produce electricity in time to contribute to the 2010 targets. There is, though, a question whether this or other barrage schemes should be planned for the longer term. The tidal resource is substantial. An EU assessment found scope for 64 GW of installed capacity, generating 105 TWh/year of electricity, with almost half this resource in the UK[103].

285. We note that there are very few operational tidal barrage schemes anywhere in the world. The nearest is the tidal power plant on the Rance estuary in Brittany built some 25 years ago. It generates 250 MW at peak, a mere 3 per cent of the 8.6 GW peak projected for the Severn barrage which would be one of the most productive sites in the world for tidal power. The general absence of such schemes seems due to the combination of high costs and environmental effects, both as detailed in a series of authoritative studies over the last 15 years[104].

286. The high capital cost, the long construction period and the risks associated with such a large single project mean that it will always be difficult to raise finance for the Severn barrage in the traditional way. Moreover, there are likely always to be more cost-effective short-term solutions to energy needs. But a project of this magnitude needs a much longer term view, looking forward 50 and more years when energy pressures are likely to be much more intense. As the need for renewable electricity increases in future, the presently adverse initial economics and the environmental aspects of large scale barrages may look different. We recommend the Government to keep the matter under review.

287. There may be earlier scope for exploiting the large tidal resource in smaller schemes. We recommend the Government ensure that the opportunities here are thoroughly evaluated in the light of technical developments and, as appropriate, implemented for both demonstration and energy purposes.


Views of Witnesses

288. Moves to exploit tidal streams, are relatively new. There is no commercial scheme anywhere in the world. In his evidence, Peter Fraenkel argued that, as the devices would resemble wind turbines, the various components of the technology were already available (QQ 178, 187). Although marine current velocities were lower than wind, this was more than compensated for by water's higher density. For the same power output, marine turbines would be about one third the size of their wind counterparts. The output would also be more predictable. Design was also simpler: as the turbines would be close to the sea bed, strains on the foundations and supporting masts would also be less than for wind; nor did provision have to be made for such extremes of flow (p 41). Given reasonable success in the proposed demonstration phase, the production and installation of turbines could start around 2007 (Q 198).

289. The resource is large (Q 192), with about 20 TWh available annually around the UK at less than 10 pence per kWh (Q 239). The DTI has estimated that about 1.4 TWh would be available annually by 2010 at 5p/kWh or less[105].

290. While the 1997 European White Paper does not explicitly identify any contribution from this source by 2010, the Commission has recently funded a number of research projects and demonstration schemes are actively being planned (pp 38-40, QQ 227, 228). Projected cost levels (£1,500 to £3,000/kW) were similar to those of early wind turbines and could be expected to fall in the same way with increased production levels (Q 190, p 41).

291. Sites of the strongest tides and currents would be well scoured and thus unlikely to be supporting marine flora. Environmental effects should therefore be minimal (Q 217). Study also suggested that installation in the prime sites would rarely involve problems for navigation since sources would be close inshore (Q 184).

Opinion of the Committee

292. Given the size of the resource and the apparently straightforward way of tapping it (by combining aspects of marine engineering with wind turbine technology), it is surprising that exploitation of energy from tidal streams is not further advanced. We consider that there are strong arguments in favour of supporting the development. However, the technology needs to be demonstrated on a worthwhile scale, and we welcome the demonstration projects now being planned.

293. We would also encourage those involved in tidal streams to consider with offshore wind providers the scope for sites combining their technologies, with cost savings in construction, electrical connection and maintenance.


Views of Witnesses

294. The annual UK wave energy resource is estimated at 2 TWh at the shoreline, and around 120 TWh near-shore[106]. Some witnesses argued that this energy should be used as a contribution to renewable energy targets (QQ 29, 100, 282).

295. The DTI had carried out extensive research into wave energy until 1983, but had judged that the costs of the offshore devices were too high and that development times were likely to be lengthy[107] (Q 706). However, a limited programme had continued, leading to construction of a small shoreline device on Islay. The European Commission has also been funding research in recent years, and various experimental devices have been commissioned. Three wave power projects (with a total capacity of 2 MW, at prices in the range 6-7p/kWh) were awarded contracts under the third Scottish Renewables Order (SRO3) in early 1999.

296. Wavegen Ltd, manufacturers of one of the devices given contracts under SRO3, argued that shoreline devices were much simpler to operate and maintain than offshore devices (Q 524). While some civil works were necessary for shoreline wave energy devices, the devices were compact, noise was masked by wave noise, and so the environmental impact was very small (p 122). They also suggested that the oscillating air column principle used in their devices could also be incorporated in offshore machines (Q 524).

Opinion of the Committee

297. The absence of any commercial or near-market devices points to the fact that, although the wave energy resource is undoubtedly large, the technology will not be able to make a substantial contribution to renewable energy supplies in the short and medium-term. We note that the 1997 European White Paper makes no explicit mention of the technology in its assessment of the likely renewables contribution by 2010.

298. Given the size of the resource, we welcome the research into the exploitation of shoreline wave power and hope the projects find success.

299. We doubt whether, with presently available technology, wave energy generation machinery installed offshore could long withstand the extreme forces of the sea, though the research projects should be watched with interest.


Views of Witnesses

300. The British Photovoltaic Association (BPVA) stated that there was around 760 kW of installed photovoltaic (PV) capacity in the UK (p 70). With determined growth, PV might contribution up to half a per cent of electricity supplies by 2010 (or 5 per cent of the UK's 10 per cent target) or some 300 MW (Q 317). The 1997 European White Paper envisaged 3,000 MW of capacity in the EU by 2010.

301. BPVA has set a target of the UK's capturing 15 per cent of the world PV markets by 2010 (p 71). The market is presently worth around £1 billion per annum, with a turnover for UK companies of around £75 million, and is growing at around 25 per cent per annum.

302. The market growth was due to a number of government schemes, such as the German 100,000 roof programme (p 70), plus a strong export market with "enormous potential. PV technology can help transform the lives of some two billion people in the developing world who do not have access to even basic electrical energy services". In the UK, although the DfID "have been very supportive... they do not like to associate themselves with exports". The BPVA "believe that the two are completely compatible, that you can alleviate poverty and promote sustainable development in the developing world" (Q 313).

303. PV in Europe is "too expensive[108] compared to grid electricity at the moment" (Q 298). ETSU's assessment[109] of the take-up of photovoltaics is broadly consistent with the views expressed by BPVA. They forecast a negligible contribution to electricity supplies by 2010 and expect generation costs in the most favourable locations in 2025 to be around 6p/kWh.

304. Despite the high costs, BPVA argued that PV panels could be used as cladding on buildings (QQ 299 & 300), and architects Feilden Clegg suggested that costs were similar to those of granite or marble cladding (p 254).

305. We noted that a demonstration PV house in Oxford[110] generates as much electricity as it consumes, though actual generation and demand do not match. While the owner is paid at the lower "pool" price for surplus electricity exported to the distribution network, imports have to be paid for at the full domestic rate. The BPVA advocated "net metering" as a means of encouraging take-up (p 73).

Opinion of the Committee

306. The principal markets for PV are for off-grid applications, particularly in developing countries, although there are specific applications in the UK. It is clear that the contribution of photovoltaics to UK and European electricity supplies by 2010 is likely to be small.

307. Given the potential global importance and the rapidly expanding market, the primary aim of a continuing photovoltaics research programme is to help industry retain and expand a share of world markets. We consider that this support should continue.

308. If costs of manufacture, construction and operation[111] can be sufficiently reduced, there may be scope for some worthwhile UK installations, which will also help raise public awareness. We note the good case for calculating the costs of integrated PV by reference to the incremental costs of PV panels above those of other cladding materials.

Research and Development

Views of Witnesses

309. There was a general welcome for the research and development funding available from both UK and EU sources. Some witnesses compared UK funding levels unfavourably with those elsewhere in the EU. There were several calls for increased funding, which reflected perceptions of the likely time scale on which the technology concerned might make a worthwhile contribution to either energy or manufacturing, and the magnitude of that contribution (p 256, QQ 29, 107). (It should be noted that all witnesses submitted their evidence before the DTI announcement on 30 March 1999 that funding levels are to be increased.)

310. The British Wind Energy Association, for example, stressed the very large potential of offshore wind energy (Q 158). Other particularly mentioned sources were marine current energy, wave energy and photovoltaics. As several of the technologies were related to the sea, Shell Renewables Ltd suggested that the formation of a research centre for marine technologies might be appropriate (Q 552).

311. Several witnesses stressed the need for research and development initiatives to support longer-term options for renewable energy as well as near-term ones (QQ 246, 507).

Opinion of the Committee

312. Given the massive increase in generating capacity needed to secure the UK's 10 per cent target for electricity from renewables, the Committee considers that appropriate research, development and demonstration projects are vital. We therefore welcome the DTI's March 1999 announcement about increased funding levels, albeit from a low base, to around £18 million per annum in 2001/02. We also welcome the complementary Engineering and Physical Sciences Research Council's expanded programme for university research into renewable energy and the enabling technologies, with up to £3.5 million per annum for new research projects.

313. To ensure that the benefits are maximised, these funds will need to be carefully targeted. We generally support the overall approach indicated by the DTI in allocating priorities between short-, medium- and long-term projects. However, we feel the funding criteria should be applied with a degree of flexibility to ensure that the development of technologies with real potential for the longer-term is not unduly inhibited.

314. As noted in paragraph 299, we remain sceptical about the prospects of harnessing offshore wave energy. We do not support the idea of a dedicated research centre for marine renewables, as this could entrench divisions between the various technologies.

315. The availability of research, development and demonstration funding from EC sources is welcome, and we encourage continuing liaison between Member States and the EC[112] to ensure that, as far as practicable, the funding streams are complementary.

316. Given the potential, we would encourage manufacturing industry to consider investing more in research and development of renewables.

Manufacturing and Employment

Views of Witnesses

317. While the main purpose of developing renewables plant was to generate power, several witnesses drew attention to the added bonus of consequent investment, manufacturing and employment opportunities (pp 71, 25, 256). A report commissioned by Friends of the Earth[113] argued that renewable energy is generally more labour intensive than fossil fired generation during manufacture and construction. Drawing further from that report, Friends of the Earth suggested that implementation of the UK's commitment to produce 10 per cent of electricity from renewables by 2010 might create some 94,000 new jobs (p 256). The DTI's 1999 consultation document was more cautious, suggesting 10-45,000 new jobs.

318. There would be significant local or regional aspects to such benefits. Moreover, strong manufacturing and export opportunities were available in some technologies, especially in wind[114] and photovoltaics (p 71).

319. This is borne out by information we received from the Danish Wind Turbine Manufacturers Association and others during our visit to Denmark in March 1999. The Danish wind turbine industry had a turnover of over Euro700 million, and provided some 10,000 jobs in Denmark (and another 6,000 world-wide). More generally, renewable energy technology was Denmark's third largest industry with a very substantial export base, having some 60 per cent of the world market.

Opinion of the Committee

320. As endorsed in the DTI's March 1999 consultation document, a strong argument in favour of expanded renewable energy provision is the consequent investment, manufacturing, employment and export opportunities. Disappointingly, the consultation document provided no estimate of the investment required. Our calculations are that, to meet the 2010 target, renewable energy provision needs to be expanded by some 450 MW dnc each year (which would yield an annual output of some 3 TWh). At an average cost of around £1,800 per kW[115], this gives an investment figure of about £810 million a year for the next decade. This is similar to the average annual investment in gas-fired generation since 1990.

321. The manufacturing and employment opportunities have clear regional and local dimensions. They lend additional support to the arguments we have made in favour of regional planning for renewables.

322. We note that other countries are already very active in promoting their renewables industries for export purposes. Given the global opportunities, we strongly encourage the Government and UK industries to ensure that Britain is, in terms of both the manufacturing base and promotion abroad, well positioned to take advantage of export opportunities.

Electricity system issues

Views of Witnesses

323. Neither the National Grid Company (p 275) nor Eastern Generation (Q 456) saw any problem in operating the network with electricity from intermittent renewable energy sources up to the 10 per cent target for 2010. Indeed, the National Grid Company saw no difficulty in going beyond that given the ability of the national system, by design, to accommodate instantaneous changes of up to several hundred megawatts. The interactions with the system would become increasingly complex and significant as the total amount of intermittent generation approached 20 per cent of total capacity.

324. There would be scope to go beyond that proportion, but not without limit. Regardless of intermittency, the National Grid Company noted possible problems with voltage support and frequency control affecting the overall stability of the system if embedded generation grew greatly beyond the 20 per cent mark (p 275).

325. The National Grid Company also noted the possibility that a disproportionate amount of new renewable generation would be in the North thus tending to increase the dominant North to South power transfer pattern. The Company's charging system reflected this imbalance with appropriate financial incentives and penalties. However, because renewable generation was connected to more local networks (as "embedded generation"), it would be influenced by such charges only to the extent that they were reflected in the tariffs offered by the local distribution company (p 276).

326. The National Grid Company (p 280) and the Institution of Electrical Engineers (p 264-6) drew attention to possible problems if some local networks became the focus for large amounts of embedded renewable generation, and generation exceeded local demand.

327. Dr Catherine Mitchell took a very positive view of the opportunities for distribution companies to become more active in encouraging local generation, as this might be a more cost-effective option than reinforcement of the distribution network (Q 97). The Association of Electricity Producers also drew attention to the fact that "renewable energy schemes connected in the right locations can be beneficial to the local distribution system" (p 235). Dr Mitchell suggested that the forthcoming split between the distribution and supply arms of the Regional Electricity Companies would enable them (subject to appropriate regulation) to pursue least-cost options, rather than simply maximising their revenue and profit (Q 93).

328. On the other hand, Dr Walt Patterson of the Royal Institute of International Affairs suggested that the growing importance of renewable energy and of small-scale generating units heralded a move away from traditional electricity systems towards ones in which many small decentralised generators deliver to consumers nearby. He advocated encouragement of this trend to facilitate major contributions from renewable energy (p 293).

329. Eastern Generation drew attention to a potential problem where the first renewable generator in a particular region might become liable for significant costs in reinforcing the network, whereas subsequent generators would reap the benefits of the connection being in place (p 101). The Office of Electricity Regulation (OFFER) sounded a note of a caution on moves to analyse distribution costs too closely, as they felt this might lead to higher charges for rural consumers (Q 648).

330. OFFER also stressed the importance of trying to shape any new arrangements so as to encourage generation at times when the electricity is of most value to the system, that is during the winter and near the time of daily peak demand in the early evening (Q626). They declined to comment on the possible advantages of the introduction of a regional element into any new NFFO-style support mechanisms (Q650).

331. OFFER indicated that they were waiting for clearer guidance from the Government about their role in relation to renewable energy (Q 611). In the meantime, although claiming a constructive role (Q 609), they emphasised their responsibility to protect customers from high prices and suggested that their job was simply to present facts to enable the Government to make the policy (Q 610).

332. Among others, the British Wind Energy Association (p 27) and the WWF (p 315) noted the need for the certification of electricity from renewable sources. With a view to developing "green energy markets", such certification would remove confusion over what generators produced and what consumers purchased.

Opinion of the Committee

333. In the light of the evidence from the National Grid Company and our visit to Denmark (where there are plans to generate nearly a third of electricity from wind), we are clear that there are no insuperable problems in operating the UK electricity network with substantial amounts of renewable energy, including intermittent sources, well beyond the present 10 per cent target.

334. We do not accept, however, that the grid and centralised generation will ever become superfluous or even the junior partner. The necessary stabilising role of the grid must remain. This means that there is a limit - albeit a high one - to the amount of embedded generation that the national and local systems can accommodate. We encourage the National Grid Company and others to do further work to establish what those limits are, and what the additional cost of adjustments might be as those limits are approached.

335. We note OFFER's view that the present system of allocating distribution charges ensures rural customers are not penalised. However, while the location of communities is fixed, there can be flexibility over the siting of new generation. In particular, we recommend that distribution companies should identify locations which might benefit from the installation of renewable energy plant, as precedented by the National Grid Company's "generation opportunities" for larger plant. This would increase understanding of the system-wide benefits of small-scale generation in some areas. Indeed, the fact that generation opportunities vary regionally adds further weight to the concept of regional policies for renewable energy.

336. More generally, some complex issues need to be resolved if renewable energy is to be assimilated within the electricity system on fair terms. The benefits and problems of renewable generation need properly to be assessed. Factors in that assessment include: an awareness of national renewable energy policy; the need for equity in allocating costs of new connections between prospective renewable generators; the need for intermittent renewable sources to have guaranteed access to the distribution network when they are generating; and the particular circumstances of rural customers. To avoid either discouraging the growth of renewable electricity generation or complicating life for others, the Committee strongly encourages the parties involved to work towards devising simple solutions. The NFFO process is admirable in this respect: it guarantees supported renewables (including intermittent sources) access to electricity networks. As discussed further in paragraphs 360 to 362 below, it is vital that this simplicity is retained.

337. OFFER has a crucial role in not only devising the rules for renewable and other generators' access to the system but also in setting the tone of dealings with the (normally smaller) renewable generators. Given the national policy and priority for developing renewable electricity sources, OFFER should take a much more pro-active role in their promotion.

338. Under the Electricity Act 1989, OFFER's exercise of regulatory responsibilities has to take into account "the effect on the physical environment of activities connected with the generation, supply or transmission of electricity". This seems unacceptably vague. We understand OFFER's terms of reference are being reviewed in preparation for the proposed Utilities Bill, and urge that the wider climate change agenda be reflected in a much more positive steer on the Regulator's environmental responsibilities.

339. As noted in paragraphs 228 and 364, we welcome the emerging "green markets" for energy. If consumer trust is to be retained in such "green energy" schemes, the need for robust certification of renewable energy is essential. In mid-July 1999, the Energy Saving Trust is launching a Government-backed accreditation scheme to brand and promote renewable energy for both domestic and business use in the UK. We welcome this initiative. Certification will also be essential in the context of cross-border trading and, in paragraph 382, we note that this should be a feature of the eventual Directive.

Financial support

Views of Witnesses

340. While a few renewable technologies, such as landfill gas[116], can deliver electricity at prices approaching those of new base-load gas-fired plant (around 2p/kWh), most are still above it. Some, such as wind[117] are only a little above that price and seem likely to reduce costs further. Others, such as biomass and particularly photovoltaics (see also paragraph 303), are more expensive and seem likely to remain relatively so.

341. There was wide-ranging acknowledgement that the UK's NFFO mechanisms had been very successful as a means of driving down prices (QQ 248, 8, 27). However, it was seen as having been less successful in delivering the desired growth of electricity generation from renewables (QQ 27, 52). This was contrasted with the substantially greater expansion of capacity in Denmark and Germany under their fixed premium price schemes for renewables, albeit at higher costs to the consumers for all electricity (Q 85).

342. As we learned on our visit to Denmark, there are other factors involved. In that country, finance for renewable energy developments was often raised locally, which tended to increase the chances of success at the planning stage. In addition, individuals who invest in renewable energy projects received tax incentives, which also encouraged widespread participation from the community. There was a strong feeling that this community involvement was highly influential in encouraging the rapid deployment of renewable energy. Witnesses were keen to see such involvement facilitated in the UK (p 26).

343. The DTI's consultation document was originally to be published in late 1998. After a wait of many months, it was published right at the end of the period in which we took evidence. Its absence meant that none of our witnesses was able to address the questions it raised about new NFFO-style support mechanisms. Dr Mitchell and the Association of Electricity Producers mentioned the concept of an obligation on suppliers, but neither gave it wholehearted endorsement (QQ 112, p 234). The Electricity Association suggested that the NFFO system could perhaps be continued as it had worked very well (Q 344).

344. With a degree of prescience, the Non-Fossil Purchasing Agency was alone in providing a discussion document dealing with new NFFO-style support issues in the round (p 285 - and see also paragraphs 360 to 362 below). However, many of our other witnesses mentioned a number of points that will be highly relevant to the debate on such support mechanisms.

345. The cost of NFFO support for renewable energy was calculated by reference to pool price. However, it was argued that proper account should be taken of the "embedded generation" benefits of renewable electricity installations. Being relatively small, these are normally connected to local distribution networks rather than regional and national grids. The electricity would thus be sold immediately at commercial or domestic rates and should have a higher value then electricity from large coal or gas-fired plants distributed through the grids (Q 113). In addition, other witnesses noted that the pool price of electricity takes no account of the external costs of generation from fossil fuels (pp 256, 303).

346. There was a wide range of estimates for the extra annual cost to the electricity consumer (by 2010) of meeting the UK's target of 10 per cent of electricity from renewables. OFFER suggested £600-675m (p 136). Dr Mitchell was emphatic that this was far too high (Q 94). DETR's 1998 Climate Change consultation paper proposed £300-400m. The DTI's 1999 consultation document suggested £35m (sic) to £455m, while noting that "the price paid for embedded generation" - which would put the annual cost at around £175m - "would probably be the best representation of the cost of alternative sources of generation". The value of embedded generation had been established as a result of an auction in mid-1998 for output from NFFO1 and NFFO2 projects (p 296).

347. Several witnesses drew attention to the fact that NFFO support for renewables was significantly less than the recently terminated support for nuclear provision (QQ 53, 279). The DTI's 1999 consultation document noted that renewables support in 1998/99 was £130m, compared to "the £1,200 million originally used to support nuclear capacity".

348. A number of witnesses advocated "net metering" as a means of encouraging small renewable energy installations, usually on the domestic scale. Such arrangements, which are not uncommon outside the UK (particularly where the generator is not a net exporter of electricity), pay consumers the same price per unit of exported electricity as they pay to purchase electricity (QQ 270, 846; p 300).

349. Eastern Generation gave us details of their "green market" scheme under which consumers paid a small premium for guaranteed "green electricity" (Q 472). While there were various schemes of this kind, Eastern's seemed distinctive in using the premiums to build up a green fund for financing more renewable energy projects. The Electricity Association, sounded a note of caution as a survey had showed that the take-up was disappointing relative to the level of interest shown in initial surveys (Q 372). Shell (Q 512) suggested that "five to six per cent [of consumers] have been willing to pay more for so-called green energy".

350. Quite separate from the issue of new NFFO-style support mechanisms, discussions under the Review of Electricity Trading Arrangements (RETA) were proceeding on a wholesale reform of the electricity trading. Witnesses were concerned that this Review was being dominated by the interests of the large traditional generators (Q 927). They pressed the case for the typically smaller renewable generators to be properly accommodated within the new structures, and expressed the hope that new NFFO-style support mechanisms would be developed alongside RETA so that the two meshed together (Q 927).

Opinion of the Committee

351. In the DTI's 1999 consultation document, the Government restated its commitment to secure energy at competitive prices and made clear the need for the price of renewable electricity to come nearer to that from traditional generators. However, for as long as the price of electricity generated from fossil fuels ignores the external costs of pollution, we are clear that renewables are being set an unfair target. This is not special pleading for renewables, but a simple application of the "polluter pays" principle, advocated in the Government's recent White Paper on sustainable development[118].

352. The Government's proposed Climate Change Levy (see paragraph 123) is intended in part to reflect such external costs of pollution[119], but it seems to us a very crude way of doing so. In particular, it seems absurd that electricity generated from renewable sources will be taxed in this way. We urge the Government to re-examine the scheme to ensure that renewable sources receive positive encouragement. In view of the 0.5p/kWh gap between the average cost of renewable electricity and the market value noted in paragraph 355, if electricity from renewables were exempt from the proposed 0.6p/kWh Levy, a substantial proportion of that electricity would then be available at competitive prices.

353. As noted in paragraphs 245 and 228, we see a strong case for encouraging community-owned renewable energy schemes as a means of fostering local interest and support. We invite the Government to consider financial incentives for this, perhaps by redirecting some of the proceeds from the proposed Climate Change Levy.

354. The cost of securing the UK's target of 10 per cent of electricity from renewables by 2010 is a key financial issue. We were very disappointed to find such a wide range of estimates in the Government's two recent consultation documents. If that really represents the present state of knowledge, it seems inexcusable. If, on the other hand, firmer figures are available, they should be presented as the basis for necessary decisions about future arrangements.

355. In the meantime, a working figure is required. The DTI's 1999 consultation document estimated that the cost of the proposed mix of renewable generation would be 3.5p/kWh[120]. That figure is 0.5p/kWh higher than the 3p/kWh market value of generation from small renewable energy projects[121]. Multiplying that 0.5p/kWh by the 35 TWh[122] needed to meet the 10 per cent target in 2010 gives £175m (at 1999 prices) as the UK extra annual cost[123]. We offer this as the best working estimate, noting that it is the mid-range figure to which the DTI's consultation document appeared to give guarded support.

356. That support cost[124] needs to be put into perspective. In 1999 terms, it would add around 0.06p/kWh to the cost of all electricity or some 1 per cent to all electricity bills (£3 per annum for the average domestic user[125]). That 0.06p/kWh is a tenth of the 0.6 p/kWh Climate Change Levy proposed for non-domestic electricity - which is itself at the low end of the estimated external costs of fossil generation. It is also about one-sixth of the annual levy for the nuclear industry, which ran from 1990 until privatisation in 1996, when debts of at least £2 billion were written off[126]. Even if the cost were, say, as much as double our working figure, we would not regard the higher support cost of 0.12p/kWh as excessive.

357. It is also important to note that the premium paid for renewable electricity under the NFFO arrangements is incorporated into the cost of all electricity and thus met directly by the consumer. It is not a subsidy from the taxpayer - nor is that proposed for the future[127]. If the premium were met by the taxpayer instead, it would not alter the overall cost calculations. Nor (because of "opportunity cost" issues) would the true costs be altered if the Government were to take over and "write off" a proportion of the capital costs[128] of developing renewable energy sources.

358. Another key financial issue is the question of suitable new NFFO-style support mechanisms. Given the need to speed up renewables provision by a factor of at least seven, this is overdue.

359. We are disappointed that the DTI's 1999 consultation document provides no more than a helpful review of the options. Although there has been some support for an "obligation on suppliers", there are clear disadvantages in this, particularly as the rapidly increasing number of suppliers will make it increasingly difficult to track them.

360. A scheme which combines flexibility with simplicity, and which also retains the competitive elements of the NFFO, has been proposed by the Non-Fossil Purchasing Agency (NFPA) (see paragraph 344 above). Capacity based Orders would be made, as now, and that capacity would be secured through competitive tendering by an agency such as the NFPA. Contracts would run for 15 years, again as now. A key difference is that electricity from renewables would be auctioned by the agency. This side-steps the difficulty of fixing a reference price. The price at which the energy is sold would probably be lower than the cost price of the more expensive renewables, and the overall difference between the cost and value of the energy would fix the size of the levy.

361. This arrangement would not exclude the possibility of the additional economic benefits of embedded generation being taken into account in the selling price of the energy. The selling price would also reflect the value of the energy if, for example, it was likely to be available at times of the demand and so the proposal fits the market criteria suggested by OFFER.

362. If the UK is to develop the momentum to achieve the targets, decisions on new NFFO-style support mechanisms are needed urgently. Subject to some minor caveats, we commend the model suggested by the Non-Fossil Purchasing Agency as seeming to satisfy all the key criteria without the complexity of other solutions. Our caveats are that there must be:

(a)  sufficient flexibility to allow regional differences in renewable energy capacity; and

(b)  adequate provision for small schemes at the community level.

363. Given the need to encourage as wide a spectrum of generation as possible, we recommend that steps are taken to develop and implement a general policy for "net metering", subject to adequate (but not prohibitive) safety standards. This would positively encourage small schemes for homes and small businesses. Reasonable limits could be placed on the volume of electricity exported, to prevent such a scheme being exploited by larger commercial generators, together with conditions about exporting less than is imported.

364. We are encouraged by signs of growth "commercial" renewable energy which can compete without subsidy and in "green electricity" which provides consumers with electricity from renewables at a small premium. To encourage these, we urge the Government to ensure that the Review of Electricity Trading Arrangements properly accommodates the distinctive characteristics of renewables and that the eventual implementation takes full account of the renewable electricity targets.

The European dimension

Views of Witnesses

365. Commission officials traced the origins of the proposed Directive back to the Directive on the internal market in electricity[129]. That made specific mention of support for renewable energy (Q 774). The draft Directive had been withdrawn after lobbying, led by wind energy developers in Germany (QQ 776-778). However, a projected working paper[130] would discuss most of the elements intended for the Directive (Q 778). The principal imperative behind the renewable energy programme was seen as the need to meet environmental targets (Q 794).

366. The Commission saw the European research and demonstration programmes as vital in encouraging the development of renewable energy technology (Q 783). The research programmes were designed with the assistance of Member States although, in the selection of projects, work might be funded in areas not supported by national governments (QQ 811-812). In order of competitiveness, the suggested ranking of technologies was: wind, hydro, biomass solar thermal and photovoltaics (QQ 795-800). The main aim of the programme was to move the most mature technologies towards full competitiveness within about six years (Q 806).

367. Commission officials nevertheless accepted that the target of 12 per cent primary energy from renewables by 2010 set in the 1997 European White Paper was challenging, and noted that success would depend on a number of factors such as the reform of the set-aside provisions of the Common Agricultural Policy (Q 809).

368. The rate at which liberalisation of the electricity markets proceeded was also an important factor in the development of renewable energy sources. However, competition on completely fair terms would not be achieved "unless the critical problem of internalising the external costs in terms of the environment is addressed and solved" (Q 821).

369. Meanwhile, the Directive had been drafted to address the problems of renewables appearing to be more expensive than traditional sources and therefore needing support. The Commission noted that fixed price support mechanisms had certainly produced renewable capacity, but not necessarily in the cheapest locations (Q 822). They had also produced large profits for some renewable generators (Q 824). They favoured competition-based support mechanisms to encourage innovation and lower prices (Q 822) but recognised that support schemes would need to cater for the fact that renewable energy technologies were at various different stages of development (Q 829).

370. European Members of Parliament (MEPs) saw renewables as part of an overall strategy on climate change (Q 740) which also included energy efficiency and conservation (Q 750). Job creation (Q 739) and exports were also important. The total size of the renewables market would grow to about ?1,000 billion during the next few years. Major companies were repositioning themselves to take advantage of the opportunities which would arise (Q 748). The establishment of a European export agency for renewable energy had also been proposed (Q 743).

371. MEPs were confident that public opinion supported renewable energy (Q 749), pointing to the success of schemes in which consumers paid some 15 per cent extra for green electricity. It was noted that the price premium for renewables reflected the fact that the external costs of fossil fuels had not been reflected in their price (B116).

372. The proposed EU target of 12 per cent primary energy consumption from renewables by 2010 was thought to be realistic (Q 741) and MEPs emphasised that the target was accepted by the European Parliament, the Commission and the Council. They accepted that it would not necessarily be easy to double renewable energy consumption as a substantial proportion of the existing contribution came from large hydro projects. Mrs Ahern MEP thought that strong guidance from the Commission in the form of the Directive would assist the renewable energy market (p 167), but it was important to establish the right framework. The UK's NFFO and similar mechanisms had been successful in driving prices down but had been less successful in expanding capacity.

373. The MEPs felt it important to look at renewable energy potential on a regional basis, as there will be variations (Q 750), and to ensure integration with European policies in other areas, including agriculture (Q 762). They favoured a firmer legal base for renewables. The proposed Directive would be important and an equivalent to the Euratom Treaty should also be considered (Q 770).

374. The views of the Brussels-based Non-Governmental Organisations (NGOs) who gave us evidence were generally consistent with those of the MEPs and Commission officials on the maturity of the various technologies. Greenpeace expressed strong reservations about both waste incineration and landfill, and felt that more emphasis should be placed on waste reduction and recycling (Q 862).

375. Nevertheless Greenpeace thought that the European Union's target of 12 percent of primary energy from renewables by 2010 was achievable (Q 838), although Eurelectric were unsure (Q 855). Greenpeace pointed to the rapid developments in some Member States during the past few years. They noted that the most rapid growth had taken place in Germany and Spain where fixed price support mechanisms were in place, often giving generous returns to developers (Q 839).

376. Although progress with electricity liberalisation was uneven across Europe, it was not felt that this was necessarily a bar to the development of renewables (Q 851). The NGOs suggested that an action plan was needed to ensure renewables progressed towards the targets and drew attention to possible conflicts with agricultural policy (Q 857). They drew attention to manufacturing and employment opportunities in renewables (Q 858).

377. In addition to the accepted environmental imperative, Climate Network Europe suggested that another key issue was the need to reduce energy imports into the European Union, which could reach 70 per cent by 2020 (Q 866). Cogen Europe also noted that, given the growth in energy consumption since the 1990 reference date, the EU's target of an eight per cent cut in emissions would, in practice, require a reduction of about 16 per cent from expected levels in 2010 (Q 872). It was argued that recognition of external costs and of the value of embedded generation would both enhance the outlook for renewables (Q 871). Electricité de France (EdF) noted that "every method of electricity generation has at least one disadvantage" (p 248).

378. EdF drew a distinction between "increasingly competitive" technologies, such as wind power, and others at the pre-competitive stage. In line with UK witnesses, they suggested that "public authorities, both national and European, should give priority to the subject of renewable energy and equipped themselves with a means of achieving it." They also supported the views of the National Grid Company in arguing that "constraints imposed by the efficient functioning of the electricity network" should be taken into account.

379. Several UK-based witnesses also queried the feasibility of the European Union achieving its target of 12 per cent primary energy from renewables by 2010 (pp 23, 76, 98). EdF (which had been opposed to the national targets in the withdrawn Directive) was emphatic that the target "will be almost impossible to achieve" (p 248).

Opinion of the Committee

380. We were encouraged to find that the driving forces behind the development of renewable energy sources in Europe are the same as those in the UK. We were also interested to note the additional imperative of cutting down on fuel imports. As in the UK, it is important that renewable energy sources are seen across the EU as part of an integrated approach to reducing greenhouse gas emissions, alongside other measures such as energy efficiency.

381. The development of renewable energy across Europe is hampered by inadequate recognition of the external costs for electricity from fossil fuels and of local embedded generation benefits. In the short term at least, financial support schemes are needed to bridge the gap. As the necessary support schemes for renewables involve electricity consumers paying extra costs, mechanisms need to be broadly similar to avoid market distortions when electricity is traded across national borders. We therefore accept the Commission's logic in pressing for a degree of consistency in the proposed Directive.

382. As a direct corollary, there is a need for certification of renewable energy sources, which should remain a feature of any Directive.

383. Given our evidence base, we cannot comment on Europe-wide targets with the same confidence as those for the UK. However, the proportion of renewable energy used in the EU has increased by only one percentage point since 1990. Reaching the EU's target of 12 per cent of primary energy from renewables by 2010 will require a sustained three-fold increase in the annual rate of utilising renewable energy. Only decisive policies and determined action will enable the target to be achieved.

384. Much of the responsibility for that will fall on individual Member States. Experience suggests that success is far from certain. We therefore positively welcome the EC stimulus on renewable energy.

385. We consequently look forward to the reinstated Directive on renewable energy. We also welcome the Commission's "Campaign for Take-off" (see paragraphs 110 to 113). Taken together, these provide sensible starting points to enable the EU to make progress towards its Kyoto targets.

386. At the same time, the European Commission needs to be aware of the ways in which its many other policies interact with the desired progress on renewables. A particular issue is the reform of the set-aside provisions of the Common Agricultural Policy with its implications for energy crops.

387. As for national governments, the EU's approach to renewable energy and the whole climate change agenda needs an integrated and sustained effort - with Member States - to deliver the desired outcomes.

Leadership and Action

Views of Witnesses

388. The views of many witnesses testify to their feelings of frustration at the fragmentation in UK Government policies. Instead of repeating their evidence here, we draw on our visit to Denmark in March 1999 to illustrate how sustained leadership can lead to positive action.

389. At our meeting with the Danish Minister for Environment and Energy, Mr Svend Auken, we were given details of the Danish approaches to climate change issues, energy efficiency[131], combined heat and power schemes and renewable energy. The Danish Government's action plan for energy, "Energy 21" is an integrated approach to all the relevant issues needed to ensure that Denmark meets its commitments to greenhouse gas reductions. The plan runs to 2030, is costed and includes a wide range of initiatives to be taken by the Government in each energy sector. Shortly before our visit, proposals for a competitive financial support mechanism for renewable energy sources had been tabled which, from discussions with representatives of the renewable energy industry, appeared to meet with general approval.

390. From our discussions, it seemed clear that there was good awareness of energy issues at all levels of Danish Government and society, influenced by the high price of energy for the consumer[132]. Denmark provides a model of an integrated approach to energy and climate change policy not only in its formulation but also the even more important delivery.

391. This is what we understand the Ministers for Energy and for Planning to mean when they advocate "joined-up Government" (QQ 941, 946, 1002). The Energy Minister indicated his readiness to demonstrate this through the institution of an annual document pulling all the various threads together (Q 954).

392. However, as noted in paragraph 388, the bitter experience of many of our witnesses is of anything but a co-ordinated and coherent approach either to the making of policy or, in particular, to its crucial delivery. To help provide a focus for that integration, the Confederation of Renewable Energy Associations advocated the establishment of an over-arching Renewable Energy Agency (p 212). We also received evidence of a similar body in Denmark (p 38). The Institution of Professionals, Managers and Specialists argued that "targets may be more readily achievable if there was greater co-ordination across Government" (p 267). The Local Government Association's 1998 statement on sustainable energy policy[133] urged the Government to bring coherence to the UK's fragmented policies and structures.

Opinion of the Committee

393. Early in this Report (paragraph 97), we made clear our view that renewable energy is only one facet of the policies needed to tackle the broad-ranging environmental issues facing the UK, Europe and the World. It is unacceptable that the UK cannot deliver an integrated policy in the renewables industry.

394. All our witnesses agreed that, if the UK's renewable energy targets are to be met, clear and long-term policies are already overdue for implementation. The prospects for this coherence of purpose and action seem poor given the present fragmentation of responsibilities. Putting on one side the implications of devolution, the main responsibilities are split between the DTI (main energy policy) and DETR (planning and energy efficiency). Alongside them are: the Treasury with its general financial oversight (and, with Customs and Excise, the proposed Climate Change Levy); MAFF with its interest in energy crop and biomass issues; and MoD with its interest in wind farm proposals. Many other bodies - at national, regional and local levels - have an official involvement in energy and environmental issues. All of these have the power to work with or frustrate Government policies.

395. We do not know what lay behind the long wait for the DTI's 1999 consultation document eventually published the day before the Minister for Energy gave oral evidence to us. Given what we know of the underpinning work and the importance of the ground it covers, we are sure that it would have been possible for this to have provided real impetus to the renewable energy scene. Instead, it failed to answer some key questions and deferred increasingly urgent decisions yet again, perhaps reflecting lack of will across the Government as a whole. We could certainly have hoped for a more emphatic statement of the Government's lead than provided in the opening summary of the Document:

"the Government intends to work towards the aim of achieving 10 per cent of the UK's electricity supply from renewables".

396. We applaud the Minister for Energy's enthusiasm. That energy and vision needs urgently to be converted into real action across the whole Government machine. To deliver the seven-fold acceleration in the growth of renewables required to meet the present UK targets, we recommend the Government urgently:

·  to declare unequivocally that "the target is to achieve 10 per cent of the UK's electricity supply from renewables by 2010" - and their determination to reach that target;

·  to put in place all the necessary policies to achieve that target, particularly as regards new NFFO-style support mechanisms, regionalisation of the targets, active support and incentives for community-based renewable energy proposals, and improvements in the planning and consent arrangements;

·  to communicate these policies widely, enthusing consumers and others about the importance of meeting the targets; and

·  to make all relevant public bodies clearly accountable for progress towards the targets.

397. To help facilitate all that, the Government should examine ways in which the currently fragmented responsibilities can be brought more closely together. We regret that, in the UK, there is no realistic prospect of bringing the principal matters relating to energy under the control of a single ministry. Consequently we recommend the establishment of a "renewable energy agency", with real teeth.

398. In the meantime, we welcome the Minister for Energy's agreement to our suggestion of an annual report drawing together all the threads of progress on renewable energy matters. We hope that such reports will indeed chart the massive progress needed to meet the UK's targets.

71   defined as installations rated at 10 MW or more. Back

72   Fifth Renewables Order for England and Wales, OFFER, September 1998. (OFFER's advice to the Secretary of State.) Back

73   Average load factors in 1997 were lower than this (Digest of UK Energy Statistics 1998, DTI, The Stationery Office 1998). Back

74   Digest of UK Energy Statistics 1998, DTI, The Stationery Office 1998.  Back

75   R-122, ETSU 1999. Back

76   As noted in paragraphs 202 and 203, success rates in England and Wales are much lower. Back

77   See paragraph 110. Back

78   Digest of UK Energy Statistics 1998, DTI, The Stationery Office 1998. Back

79   R-122, ETSU 1999. Back

80   330 MW in the UK, compared to about 2,900 MW in Germany and 1,450 MW in Denmark. Back

81   The best rate of growth in recent years was 34 MW dnc in 1993 (Digest of UK Energy Statistics 1998, DTI, The Stationery Office 1998). If wind power is to deliver 34 per cent of the 10 per cent target (the median figure in the DTI's 1999 consultation document), around 160 MW dnc will be needed in each year from 2000 to 2010. Back

82   PPG 22, Department of the Environment and Welsh Office, February 1993. Back

83   The assessment and rating of noise from wind farms, R-87, ETSU 1998Back

84   R-122, ETSU 1999. Back

85   Conclusion xlix in Sustainable Landfill, House of Lords Select Committee on the European Communities, 17th Report, 1997-98, HL Paper 83. Back

86   European Commission proposals for which have been the subject of a concurrent study by Sub-Committee C, as noted in paragraph 145.  Back

87   Evidence to Sub-Committee C (see paragraph 145) Back

88   also R-122, ETSU 1999. Back

89   R-122, ETSU 1999. Back

90   R-122, ETSU 1999. Back

91   R-122, ETSU 1999. Back

92   R-122, ETSU 1999. Back

93   R-122, ETSU 1999. Back

94   R-122, ETSU 1999. Back

95   R-122, ETSU 1999. Back

96   Study of Hydropower in the Stroud Valleys. A report produced by Water Power Engineering in association with HEBE, for Gloucestershire County Council, December 1994. Back

97   There appears to be some uncertainty as to land area required for a given electrical capacity. While the written evidence from British Biogen suggested 150 hectares would be needed to support the annual generation of 1 MW, they suggested 250 to 300 hectares under examination (Q 390). Back

98   This could generate about 6.5 TWh, or about 1.6 percentage points of the UK's 10 per cent target. Back

99   An 8 MW combined cycle gas turbine, fuelled by short rotation coppice. Back

100   The European Renewable Energy Study, Energy for Sustainable Development Ltd for DG XVII, 1996. Back

101   R-122, ETSU 1999. Back

102   However, the ETSU analysis of costs (Tidal Energy R-96, 1996) is clear that the assumed repayment period to achieve this price level would be 120 years. A more normal repayment period of, say, 30 years would yield a price of around 8.5 p/kW. Back

103   R-122, ETSU 1999. Back

104   Most recently, in Tidal Energy, ETSU R-96, 1996. Back

105   R-122, ETSU 1999. Back

106   R-122, ETSU 1999. Back

107   R-122, ETSU 1999. Back

108   In a Parliamentary debate on 25 May 1999, the Minister for Energy quoted costs of 35-50p/kWh. (House of Commons Official Report, column 267.) Back

109   R-122, ETSU 1999. Back

110   A research study of which (Demonstration Project for a 4kW Domestic Photovoltaic Roof in Oxford, ETSU S/P2P00236/00/00) was completed in January 1999 by the School of Architecture, Oxford Brookes University.  Back

111   assisted by the introduction of "net metering", considered further in paragraphs 348 and 363. Back

112   Where two Directorates General - XVII and XII - both have an interest in these matters. Back

113   Cutting CO2,- Creating Jobs: An Economic Analysis of Policies to Cut UK CO2 Emissions by 20 per cent or More. A report by Energy for Sustainable Development for Friends of the Earth, October 1998. Back

114   Offshore Wind Energy, Border Wind, for Greenpeace 1998. Back

115   R-122, ETSU 1999. Back

116   R-122, ETSU 1999. Back

117   R-122, ETSU 1999. Back

118   A better quality of life: a strategy for sustainable development in the UK, Cm 4345. Back

119   At the proposed 0.6p/kWh, this is at the low end of the range of estimates for such external costs. The upper end of the range would be at about 1.5p/kWh (Pricing Pollution in a Competitive Market, Windpower Monthly, May 1996, as referred to in Q 919). Back

120   For comparison, the average price for renewable electricity under NFFO5 was 2.7p/kWh. Back

121   See paragraph 12 of Appendix 4. Back

122   The 10 per cent target in 2010 would require a projected 38 TWh annually, from which 3 TWh has been subtracted for the output of large hydro which is mature enough to need no additional support. Back

123   This is a tenth of the projected annual yield from the Climate Change Levy - see paragraph 123. Back

124   This is separate from the investment in R&D discussed in paragraphs 309-316 for which the Government accept direct responsibility. Back

125   The average UK domestic yearly electricity bill is some £300. (Digest of UK Energy Statistics 1998, DTI, The Stationery Office 1998.) Back

126   British Energy Share Offer Prospectus, p 94, 1996. Back

127   We understand that the Government regard such support costs as "hypothecated tax", counting as part of the DTI's budget. Although this allows clear identification, the sum is not actually a part of Government expenditure. Back

128   On the lines of the substantial subsidies made in the UK and elsewhere to the development of nuclear energy. Back

129   The 1997 European White Paper. Back

130   Since published - see paragraph 108. Back

131   Denmark consumes no more energy now than it did in 1970, thanks to a combination of conservation and efficiency measures. Back

132   Compared to the UK, domestic consumers in Denmark paid about half as much again per unit of electricity in 1997 (Energy Sector Indicators 1998, DTI). Back

133   Energy services for sustainable communities: the local government position, Local Government Association, 1998, ISBN 1 84049 066 7. Back

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