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It is proposed that 15 per cent of total energy consumption in the UK should come from wind, sun and water, whether hydro or barrage. That is lower than the average for the European Union as a whole because some countries, for reasons of geography or political decision, have made greater strides in this field. So we asked ourselves a simple question: if the target is 15 per cent by 2020—12 years from now—what

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are the consequences in policy terms that will face the Government and, indeed, face the nation? By total energy consumption we are talking about that from electricity, combined heat and power and transport. On combined heat and power—an extremely important part of our total energy consumption—I pay tribute to the Combined Heat and Power Association for the very sensible and practical representations it has made. It has been very level headed and our committee certainly paid great attention to what it had to say.

I remind your Lordships that only 2 per cent of our total energy consumption comes from renewables at the present time and we are facing a target of 15 per cent. That is a massive challenge facing not only the Government but ourselves as consumers. The committee concentrated on where the bulk of that contribution will come from in the next 12 years, and that is from electricity—specifically from wind power through both onshore and offshore wind turbines.

However, I shall make one or two qualifications and comments about that concentration. We welcome the Government’s agreement in the recent Energy Bill debates to include a feed-in tariff, particularly for microgeneration of energy. We think it is very sensible and can sit comfortably with the renewable obligation certificate regime which encourages the major distributors of electricity to purchase from renewable sources. We did not look in detail at biomass from agricultural crops but we welcome the announcement from Drax, the owner of the largest coal-fired power station in western Europe, which is reported as being willing to invest £2 billion in that new process. We think the target of sourcing 10 per cent of transport energy consumption from biofuel is a real challenge and must be the subject of a further inquiry.

As to water power, we have just about run out of hydro capacity in this country. We are excited by the prospect of a barrage on the Severn but we do not believe that it will be complete by 2020, either the larger barrage of 22 kilometres in length, or the slightly shorter barrage closer to the second Severn crossing. It will be a subject of great consultation, discussion and, I am sure, argument, but because it did not fall, in our judgment, within the time period we were looking at, we do not comment in detail on it.

The final qualification to our concentration on electricity and wind power is that we believe very strongly that the Government should encourage research into other technologies. We do not want wind power to crowd out other sources of renewable energy, and there are many. I mention only one—geothermal—which I am sure in the years and decades to come will be playing an important role.

Before coming on to the contribution that wind power can make, our report states that it is obvious that if we reduce our total energy consumption through energy efficiency measures, the mountain we have to climb is reduced. Therefore we hope that the Government, in the spring of next year at the latest, will come forward with recommendations about improving the rate of energy efficiency and, therefore, a reduction in the total amount of energy we consume. If the Government’s decision is that it is to be 20 per cent, that clearly reduces the target of 15 per cent for

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renewables by perhaps up to a fifth. We should like a policy statement from the Government as soon as possible on that front.

We accept that pursuing a target of 15 per cent for renewables will involve increased cost to the consumer. The Government have to be frank about this and the power generators have to explain the consequences. The charges for those who are emitting carbon under the carbon permit scheme—I understand that in the first round it raised about £50 million—are paid by the power generators and therefore paid by the consumers. The renewables obligation certificate, which is a scheme for encouraging the use of renewable sources of energy, is also paid for by the consumer. We have got to understand that, estimate what it is likely to cost and ensure that we protect the most vulnerable energy users in our society.

I turn now to the issue of wind power. The noble Lord, Lord Broers, spoke a few days ago in your Lordships’ House and I understand his point in questioning the wisdom of pursuing offshore and onshore wind because of the problems of intermittency—that is, that when the wind does not blow you do not get any energy—and the energy producers having to plan for a certain base load coming from conventional coal and gas-fired power stations and nuclear. I shall deal with the intermittency point in a few moments.

The noble Lord, Lord Oxburgh, and my noble friend Lord Dixon-Smith gave evidence. I pay tribute to my noble friend’s experience and wisdom on this subject and look forward to his comments in due course. The noble Lord, Lord Oxburgh, while being cautious about how much reliance should be placed on wind power because of the problems of intermittency, nevertheless welcomed further development of the technology.

We are all aware of the objections from householders, conservationists and many other bodies about the construction onshore of wind turbines that disfigure the countryside, particularly in large, open rural spaces. My noble friend Lord Vinson has written to me reminding me of the problems of construction in Northumberland, and I am well aware of it in my own county of Suffolk. Our report states, however, that one of the consequences for the Government is that if onshore wind turbines are going to make a contribution, then one may have to go back to the Planning Bill, after it becomes an Act, and reduce the threshold size for the responsibility passing to the Infrastructure Planning Commission to perhaps 20 megawatt output. Otherwise, even with onshore wind farms, it will take longer and longer to obtain planning permission, for reasons we all understand.

The committee believes that the real challenge and opportunity lie offshore. As regards planning, I commend what the Crown Estate has done in the third round, which is underway at the moment, of inviting bids for planning permission, essentially, offshore. It has gone about that in a positive way and I am looking forward to the outcome. It will certainly be much bigger than the second round.

The committee is attracted to the technology of laying under the sea a grid cable, essentially—perhaps around the whole of the United Kingdom—so that wind farms can be constructed not only in the North

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Sea but in the western approaches off the Northern Isles. If all the power generated could be transmitted using direct current and then converted to alternating current in due course—I understand that there is Swedish technology to create that—that would deal with the intermittency problem because the wind has to be blowing somewhere around the British Isles at any one time.

As to the grid, we welcome what Ofgem is doing in looking carefully at how it can encourage the grid to invest ahead of connection from not only renewable sources but conventional sources, and also making sure that the queuing system is a proper queue of those who have finance and planning rather than simply on the basis of those who have applied in the past. We think Ofgem is moving in the right direction.

Finally, I am sure that my noble friend Lord James of Blackheath, whose experience dates back to the oil and gas industry 20 or 30 years ago, will have comments to make on the supply chain—the creation of the supply mechanism for new turbines, barges and drilling systems. However, I make the point that the Swedes, the Germans, the French and the Danes have already responded to the opportunities offshore in the United Kingdom and we should welcome their manufacturing companies into this country.

Can offshore wind be a significant contributor by 2020? I believe so, and our committee believes there is a chance that there could be such a contribution so long as planning consents come on time, one hopes, by 2013; that turbines are ordered—there is certainly capacity around the world; and that we have the lifting barges to lift the turbines and place them into the seabed. Some industrialists are forecasting 25 gigawatts of capacity coming out of round 3 by 2020, and if you add what happened in round 2—6 gigawatts are likely to be in production by 2020—that is a large contribution to our target.

I end by referring to the challenge. It is not only an organisational challenge for the Government but a challenge for us as consumers. In the Second World War Lord Beaverbrook was charged by the then Prime Minister, Winston Churchill, with increasing aircraft production, and he took substantial executive powers to get the programme delivered. We believe that something like that has to happen; there are too many government agencies involved, and some form of renewables commission should be in place in order to deliver the objectives that the Government may accept. Those, like my noble friend Lord James and myself, who were involved in the development of the oil and gas industry in the North Sea in the 1970s remember that industry responded quickly. Incentives were given, there was clear planning guidance and great success was achieved in a relatively short period of time.

I look forward to the contributions of those who know a great deal more about this subject than I do. I beg to move.

Moved, That that this House takes note of the report of the European Union Committee on The EU’s Target for Renewable Energy: 20% by 2020 (27th Report, HL Paper 175).—(Lord Freeman.)

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3.11 pm

Lord Bradshaw: My Lords, I do not know whether I qualify as someone who knows more about the subject than the noble Lord, Lord Freeman, but I reiterate the great urgency of the situation if we are to meet our renewable targets. At the same time, I sound a note of caution for any Government of whatever colour about what will happen if there are power failures and the lights go out. We need to get a move on in the energy field.

With regard to wind power, it is something of a puzzle to me that when I went to Wellington in New Zealand last year, the first place I was taken was up a hill to see a wind turbine that was a tourist attraction and to which large numbers of people came because they thought it was well worth looking at. If ever the old adage “beauty is in the eye of the beholder” held any truth, it was certainly not contradicted there. We react with shock horror to wind farms, but they are actually not permanent blots on the landscape, if that is how people wish to refer to them; they could be taken down and improved. Much of the resistance should be taken care of in the most sensitive areas, but I am sure we are going to have to agree to wind farms in many areas.

It was rather appropriate that we should have had a Planning Bill and an Energy Bill at the same time as the committee was deliberating. I am disappointed that we are still talking about 50 megawatts being the lower limit, as it were, for the Infrastructure Planning Commission. That may have to be revisited—a lower limit should be appropriate.

Regarding the domestic feed-in tariff, it was evident to the committee on our visit to Brussels that in both Germany and Spain a good deal more energy is generated at home by photovoltaic cells. While one might say that the Spanish have a lot of sunshine so this method might be appropriate, I am not aware that it is any sunnier in Germany than it is here. However, it has the advantage of a feed-in tariff that gives generous levels, which would encourage more people to fit photovoltaic cells. If we are going to have two-way meters, and if we are not going to pay large grants to people, there has to be some financial incentive to people to go ahead and put these in. A big industry could be set up quite quickly to install them. The things on people’s roofs have very little impact on the environment because many of them can be easily hidden away.

One thing that we discussed which concerned me was the question of certificates of origin, which would be traded and which give people confidence that what they are buying results in good being done. I am thinking of garden furniture, where a certificate of origin is often a label tied around the chair that you buy saying, “The teak from which this was made was harvested in sustainable forests in Indonesia”. I just do not believe it. We need to have a system of certificates of origin where we can have confidence that the people trading them have genuinely saved the carbon and have done so for a long time, not just last week or something. It must be a continued saving, going into the future. I also look forward to the efficiency targets, which I know are coming in the spring.

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The last thing I want to say concerns the management of the grid. Far be it from me to cast aspersions on witnesses who came before us, but Ofgem was not very convincing. In my view it was extremely cautious, it referred to the objectives that were set for it by the Government and it had to have the needs of present-day consumers in the forefront of its mind. To some extent, if you take the needs of present consumers too much into account, it could be at the expense of consumers in years to come. There may well be a price to pay immediately in order to get the whole process going. I hope that Ofgem will address this issue, as it must also address the issues of the management of the grid.

The grid, as we know, was designed with the idea of central power stations radiating outwards. It is likely that a lot of this renewable energy will be generated on the periphery of the United Kingdom, and we will have to be able to bring it towards the centre. Again, this seems to be an urgent problem that goes beyond the immediate economics of the next two or three years.

3.18 pm

Lord James of Blackheath: My Lords, I should declare my interests in this matter. I have obviously been a member of European Union Sub-Committee B and therefore a participant in the construction of this report. In an earlier life, I was chairman of North Sea Assets plc and of British Underwater Engineering which played a very large part in the supply chain for the development of the North Sea.

I should correct one impression given by my noble friend Lord Freeman: I am deeply pessimistic about the levels of investment in this round similar to those which were made to support the North Sea. The North Sea development was a disaster for the investors, for the principal reason that we did the job too quickly. As a result, the dockyards of Leith and Aberdeen are today full of ships that have not sailed for 25 years, the cost of which has never been fully paid back to the investors. I think that there will be a completely different structure when it comes to getting the finance for this: people will not invest in the individual ships, which are very short for what we need now. Some form of corporate entity will have to be created to give some form of equity participation in the eventual proceeds of the energy created. Without that, I do not think that anyone will have any chance of a fair payback. That is a very important point which is not in the report as such.

My primary concern today is about the supply chain, which is in a dire state. Before doing so, let me say that 10 days ago I attended the 8thmeeting of theEuropean renewable energy conference in Budapest, which came up with one or two surprising outcomes. My noble friend Lord Freeman referred to the fact that geothermal energy is a big issue for the future, and it may be. It was brilliantly presented in Budapest by a very attractive 28 year-old Hungarian physicist, who has just got the Nobel Prize. And she has got four children already—one wonders what she does in her spare time.

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Geothermal is capable of heating the entire world twice over with the resources taken out for one year. In so doing, the earth would replenish the entire removal of geothermal within six months; it is therefore eternally renewable. However, I understand that there is a big problem with sulphur generation and that it will not be usable—cleanly usable—until the sulphur problem has been eradicated, but I am assured that in time it will be. We need to bear this in mind for the future.

A minority view among committee members was that we might be getting pushed by the 15 per cent target by 2020 into an enormous expenditure of uncertain outcome to buy something which may not represent value for money by 2020 in comparison with what else is available at that time. However, we must take it as a given that 15 per cent by 2020 is the target that must be achieved, and everything I say from now on is therefore in that context. We have to recognise that we may have to try to turn what we have got by 2020 into an even bigger opportunity and become the powerhouse for the whole of Europe by adding our wave capacity on to our wind capacity, in which case an enormous income could be generated to this country’s benefit in years to come.

The other factor which came late to the Budapest proceedings I undertook to relay to the Government, and I have not had a chance to do so until now. I was approached outside the conference by one of the commissioners from Brussels, who asked me what my reaction would be to the creation of a North Sea association. I asked him to explain this. He said that such an association might be sponsored by Brussels to require every country which bordered on to the North Sea to give up the sovereignty of its shoreline in order to gather together the entire wind resources. We take the intermittent point, but it is not intermittent for the North Sea as a whole. Overall, the wind is blowing somewhere in the North Sea every day at the necessary level for generation. If there was one central control over the whole North Sea, the theory goes, there would be enough to provide fuel for the whole of Europe. That is what is in the mind of those in Brussels.

There would also be a plan to build an artificial island somewhere in the region of the Dogger Bank to act as a massive substation for the gathering and transmission of all the created fuel into whichever country paid. Each country’s generation would cease to be its property and would have to go into a central pot. We would then have to buy back from the central pot what we needed for our own purposes. This sounds like a thoroughly bad idea to me. When he asked for my reaction, I said that it was not for me to comment, but I reminded him that when Shakespeare wrote that ours was a fortress built by nature bound in by the triumphant seas, I did not think that he had it in mind to give away 800 miles of our battlements to him. The Government should monitor closely what Brussels has in mind, because I suspect that there is a subplot to this: it does not like the plans that have come in from everybody; it is disappointed by the outcome; it has seen that the North Sea in isolation, if centrally controlled, can do the job for the whole of Europe; and there may be some attempt to strong-arm a grab on the all the resources that it needs.

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The supply chain, which is the critical factor, is seriously limited by the fact that it first of all requires a variety of types of vessel of which hardly any exist in this country. Your Lordships should understand what is involved in a turbine. They cost about £2.5 million each and weigh 570 tonnes. They variously stand between 70 and 100 feet above the sea level, with 500 tonnes of the construction out of sight below the surface of the water. The other 65 or 70 tonnes sticking up on the top are the bit that you see.

I am not as optimistic as the noble Lord, Lord Freeman, about there being plenty of turbines available in the world. I think that there are only three manufacturers of turbines at present: REpower, Suzlon and Siemens. Without doubt, Siemens’ turbines are the state of the art. It is encouraging to hear that Siemens has in construction in this country a factory into which it intends to bring the manufacture of a certain number of the turbine gearboxes, which are critical. The Government should look towards developing the warmest and closest possible relationship with Siemens, with a view to trying to secure from it as much of this forward product as they can. They will need at least 3,000 turbines for the scheme to work, and they should see to it that they are being delivered. There is a two-year waiting list to get a single turbine at the moment, so they do not have long to get it up and running.

Another development that the Government should watch very closely is the floating turbine. A prototype is being tested in the Gulf of Locarno, called, somewhat promisingly, the multi-brit-ariba. It could be the answer to a quick fix. If it is made feasible, it will be ideally placed for manufacture on land before being shipped out and placed in position. All that will be needed is for it to be connected. However, the prototype has a nasty habit of severing the transmission lines for whatever it generates, therefore rather undoing its own good work.

The creation of a turbine as an operational unit requires first of all that a foundation is sunk into the sea bed. The foundation comprises something resembling a huge Lego brick of reinforced steel, a number of which have to be piled, one on top of the other interlocking, to a height of at least 10 metres and sometimes 30 metres. It then has to be hammered into the sea bed to a minimum depth of 10 metres by an explosive piledriver. There is only one ship available in this country that can do this and it is called the “Jumping Jack”, which has been used to construct pretty well every one of the wind farms that we have in this country.

I am told that three more are in construction, but that that is it, and that they are all booked out until 2020. We must therefore find some more. I asked Anni Podimata, who chaired the conference in Budapest, whether the renewable energy arm of the European Union would assist by compiling a register of every piece of equipment available, and whether we could have a list of all the ships, what was available and which components were resourced. I received a discouraging reply. She said: “No, we couldn’t possibly do that; it would be outside our brief; and, in any event, you haven’t got a problem with ships, because

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now that the billionaires are hit by the recession and can’t afford to buy any more yachts, you can go to the yacht builders and get them to build your ships for you”. I asked her whether she was a direct descendant of Marie Antoinette, because it sounded rather like the cake and the bread story to me—I do not expect to be invited back next year anyway. Driving the stack of foundation Lego bricks into the ground requires a hammer to hit it at the force of 44,000 pounds impact. The first impact will probably drive the pile about 1 metre into the ground. By the time you get to your 30th or 40th impact, you are lucky to get 2 centimetres out of it—so it is a long, slow process. Putting every turbine up takes an average of six weeks in each case and the total cost, including material, is £2.5 million.

Turbines can be manufactured, laid out flat and taken out on a flat barge but, when they get to sea and to the place of construction, they have to be lifted to their full height, which means that you have to have a marine boom crane with a minimum carrying capacity of 65 tonnes, which is the actual weight of the final component that you have to put on top of the foundation. There are no such cranes available in this country. You might be able to make some if you follow the Venetian solution used in building the tidal barrier in Venice, by making large floating pontoons, covering them with a steel plate and then driving a crane onto them and securing it by bolting it down. But you would have a very dodgy centre of gravity and you would not want to be too near one of those when it is picking up 65 tonnes.

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