The Economics of Renewable Energy - Economic Affairs Committee Contents


Memorandum by the Campaign to Protect Rural England, Devon

  Security of Supply of Energy is at risk, as indeed is Security of Supply of Food. We are aware of capacity gap foreseen by EDF for 2015, and of capacity shortfall currently in South Africa where there is civil unrest. We are also aware of the outages that occurred on 27 May. Irrespective of Climate Change, there is clearly a need to build proper power stations now in UK.

  Renewables do have a role to play, but will not replace capacity nor do base load. In Devon, we have been opposing on-shore wind turbines on landscape grounds and on generation (load factor) grounds. With knowledge of the wind availability, it is possible to calculate load factor (LF). Some turbines will not reach the subsidised financial break even of LF 18%. This would lead to the abandonment of these large machines in our countryside; all of them, if ROC subsidy is withdrawn, as LF needed is 40%.

  We do support nuclear power. However, there does need to be clarification of various factors, including:

    (a) Waste disposal—glassification etc.

    (b) Regulation—acceptance (or not) of French/US A certification for EPR 1600/AP1000. as timescale is crucial.

    (c) Market—confirmed price and market for nuclear electricity.

  This is probably not the place to question the Climate Change dogma, but pursuing Renewables to reduce CO2 is massively expensive. No doubt the committee has this in mind.

INTRODUCTION

  Set out below are comments upon questions raised by HL Committee in the note dated 25 April

2008. Numbered paragraphs reflect the list of issues mentioned.

1.  UK Energy Policy

  There is no such specific policy. Instead we have a market experiment, with priority given to reduction of C02 emissions, based upon morbid fixation of the fear of "Climate Change". Totally irrespective of Climate Change, UK needs to concentrate on Security of Supply and build some proper Power Stations. A possible mix would be 30-30-30-10 (Coal, Gas, Nuclear, Renewables) based upon capacity ie MW.

  One needs to define what are "Renewables"—eg Wind, Wave, Solar, Tidal—all of which are intermittent, so that none of them will do Base Load. The Royal Academy of Engineering ("RAE") talks about "Nuclear and other Renewables". Although 95% of used nuclear fuel can be reprocessed and reused, Nuclear probably does not come within the ambit of the common use of the phrase "Renewables". Then there is Waste (agricultural, food, etc), Bio fuels (timber, husks etc), which attract ROC's, and probably should be entitled Surplus Products. Hydro is the only firm and reliable renewable source.

  The USA has a similar lack of proper Energy Policy.

2.  Greater use of Renewables

  Renewables do have a role to play, but (other than Hydro) will never replace Capacity (MW). Use of Wind Turbines in a local grid, such as Avonmouth Docks, contributes some Energy (MWH), with excess being exported to the National Grid. This is a form of load amelioration.

  The maximum amount of Wind input which could be accepted by the UK Grid is probably about 15% (c 1OGW) due wind's stochastic intermittency. Ireland has stopped at 5%. Germany has planned 48,000 MW of wind, but needs to build 46,000 MW of standby generation. There is a case for CHP for new build Housing estates, but dissipation of heat in summer has to be dealt with.

3.  Promote Renewables

  Micro generation schemes are useful in remote parts, but are generally expensive. Tidal streams energy limit for UK has been assessed by ENTEC as 18TWHpa, and Tidal Barrage as 19TWH. Total electricity usage is c 390TWH (2007). Of the Tidal, Severn Barrage of 8,640MW could produce 17TWH at 22½% Load Factor, but would be very expensive at c £15 billion, and would not do Base Load. This energy output of 17TWH could be produced by 2 in no. modern nuclear stations for 1/3 cost, which would do Base Load.

  The ROC system is an indirect subsidy, so not illegal state aid. The consumer pays it, thus increasing fuel poverty. It is a clumsy tool, which stifles innovation and primarily promotes Wind Turbines. It would be best to drop the ROC system, as Ofgem recommend.

  It is possible to obtain from the Met Office for certain places, such as Airports, detail of Wind availability. Below 10 knots, wind turbines effectively do not generate and Power relates to the cube of Wind speed, with 100% power at about 25 knots. From the wind data, one can calculate Load Factor—but LF is not related to Mean Wind Speed, as that is a different graph. Knowing the capital cost, maintenance costs of wind turbines, sale price of electricity, ROC subsidy, one can calculate the financial breakeven figure for LF to be c 18%. If the ROC subsidy is removed, breakeven is LF c 40%. As wind turbines do not do what it says on the tin, many are likely to be abandoned as LF is average c 27% maximum.

4.  Grid Investment

  Recent information indicates that the 16GW of Wind Turbines in the pipeline for Scotland would require Grid investment of c £4 billion. That for the UK overall would be c £9 billion. Add the £30 billion of the ROC system, produces large expenditure related to Renewables.

  One needs to consider the balance of cost vs gain. For instance, the capital cost of onshore wind would move from c £l.2M/MW to c £1.5M/MW. If current power station sites can be used, so can the current infrastructure, with consequent reduction in grid expenditure.

5.  External Costs

  In Devonshire, Tourism is the second biggest employer behind the Civil Service ie Government. Farming comes third. The spend on Tourism in Devon is about £2.2 billion per annum, of which about £520 million goes on accommodation. An important segment is the walkers/hikers. All of the tourists come to enjoy the tranquillity and good landscape. These assets are damaged by unsightly and moving wind turbines, which can be seen from afar. Once the tourists have decided to leave the area, they will not return, as people do have habits.

  Near to Wind turbines, land values fail. Damages have been successfully claimed in court, because of failure to mention the turbines prior to sale. This means inter alia loss of revenue (rates) to local authorities and loss of value of property.

6.  Cost Renewables

  The table attached sets out costs and other factors of Renewable and Conventional Sources of Energy. These average figures are derived from sources such as RAE and IPA consultants. They do not include additional costs for renewables due extra grid costs, but do include standby generation.

  Load factor is important for the return on investment. Generally for Renewables that achieved will be c 25%, and for proper Power stations 65%-95%.

7.  Biofuels

  Research is underway through Imperial College and the Porter Institute to improve yield of Biomass and enhance output. This includes considering synthetic fuels from gas or coal to produce Biobutanol, with an energy content of 29 MJ/litre, compared to alcohol at 19.6 and gasoline at 32. The aim is to reduce cost from c $4/litre to $.6/Iitre. Work is also underway on bio-plastics, which has intellectual property aspects for licensing.

  Concern has been expressed that corn should be retained for food, where security of supply is also at risk, rather than use for fuel. It is however important to keep the Farmers in being, and use of corn can be changed. Note also that about 140 years ago 30% of the USA energy burn was corn for horses, for transport. Plus ca change.

ELECTRICITY GENERATION—COSTS


Source
C02
Base Load
Capex £M/MW
O & M £/KW
Levelised
.p/KWH

Severn Barrage (Cardiff)
0
No
2.5
14
11
Severn Barrage (Chepstow)
0
No
2.5
14
10
Lagoon (SB)
0
No
[2.5]
—
[7.5]
Tidal Stream
0
No
1.3
50
6.1
On Shore Wind
0
No
1.2
48
5.4
OffShore Wind
0
No
1.7
56
10
Wave
0
No
3.1
[56]
21
Bio/Waste
.20
Possibly
2.7
25
7.5
Nuclear
0
Yes
1.5
48
3.7
Coal
.86
Yes
1.0
25
5.1
Gas
.34
Yes
.4
15
5.0
Hydro
0
Yes
1.3
[4.2]

T J W Hale
Chairman

4 June 2008





 
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