The Economics of Renewable Energy - Economic Affairs Committee Contents


Memorandum by the Energy Technology for Sustainable Development Group, Imperial College London

(a)  Are there technical limits to the amount of renewable energy that the UK can absorb?

  Taking this question as "how much intermittent electricity from wind, tidal, wave (solar) etc. can the UK absorb", the answer depends critically on:

    (a) what other sources of electricity generation are on the grid,

    (b) transmission constraints and

    (c) the uses to which the electrical energy can be put.

  Given time to reconfigure the UK as a low-carbon electricity economy, perhaps 20-30 years, it is quite likely that a combination of strategies (drawing on a range of insights including technology design and policy for successful deployment) could be developed to absorb electricity from such sources equivalent in energy terms to at least the current electricity output (then perhaps 25-50% of the much-increased total electricity generation). Promising options include:

    —  electric vehicles and electric heating using heat pumps in addition to "conventional" electricity use;

    —  demand side management (eg through economic incentives such as a dedicated electricity pricing strategy at individual and business level); and

    —  prioritised isolation protocols.

(b)  How do the costs of generating electricity from renewables compare to fossil fuel and nuclear generation? What are the current estimates for the costs of "greener" fossil fuel generation with carbon capture and storage and how do these costs compare to renewable generation? What impact do these various forms of electricity generation have on carbon emissions?

  The authors believe that studies showing offshore wind costs to be roughly comparable to those of fossil fuel with CCS (e.g in the 2007 Energy White Paper) are broadly correct, but the question as posed is almost meaningless due to the extensive qualifications that must be placed on any answers. Some of these will be listed below. It is also important to consider how the system costs for different penetrations of renewable deployment are calculated and translated into cost of electricity impacts. This is a complex issue that requires consideration of a number of factors including what other generating sources are assumed to be included in the network and, hence, how much change is required to support intermittent generation from many renewable sources (both in terms of energy back-up and maintaining security/quality of supply when, potentially rapid, changes in electricity delivered to the grid occur).

  As a guide to practical policy development, if the question implies that the cheaper source(s) of generation should preferentially be developed then it is inappropriate. As things stand we need to explore whether or not CCS can be implemented as a viable large-scale energy technology option as quickly as possible, because it does many things that many or all renewables cannot do (eg tackling CO2 emissions from fossil fuels without prohibiting fossil fuel use and providing electricity generation capacity that can be controlled to ensure that real-time supply matches demand, hence maintaining quality and security of supply). Similarly, so long as renewable electricity can be produced and used effectively, a certain amount as a fraction of the energy mix is desirable. For both renewables and CCS the costs of current deployment effectively also include the cost of developing options for further implementation and technological advancement in the future, until such time as the technologies and the infrastructure and markets are mature—probably many decades ahead.

  Carbon emissions from CCS plants can be any value, from unabated fossil emission levels down to typically 15% or lower with any viable capture technology operated at full effectiveness (order 100 kg/MWh for new coal), to very near zero with some oxyfuel technologies, or negative (potentially to quite large values) with partial or total heat input to the CCS plant from biomass. Interim emissions levels (between unabated fossil emission levels and typical CO2 emissions with "full" CO2 capture) would be obtained by partial bypass of the capture system if this was allowed by policy-makers and economically attractive for plant operators.

  Some factors determining the estimated cost of electricity generation from fossil fuels with CCS are:

    —  fuel costs;

    —  carbon costs (avoided by CCS);

    —  credit for negative CO2 emissions associated with biomass use in CCS plants, expected to be co-utilisation with fossil in many cases;

    —  payments for ancillary grid services provided by controllable and flexible fossil CCS plants (which intermittent renewables require as a complement);

    —  whether or not the CCS plant is first of a kind (ie the UK CCS Competition), first generation, second generation or later; and

    —  how costs for CCS pipelines are apportioned between first and subsequent plants.

(c)  How do the costs and benefits of renewable electricity generation compare to renewables in the other key forms of energy consumption—transport and heating?

  This question appears to assume that renewable electricity cannot be used for transport and heating. Previous work by some of the authors[69] suggests that even when starting with biomass, its use in transport via conversion to renewable electricity, instead of via conversion to "2nd generation" biofuels, will result in improved overall biomass utilisation and, if combined with CCS during electricity generation, negative emissions per km travelled.

  For heating, conversion of biomass to electricity combined with the use of the same electricity in a heat pump also compares very favourably in terms of conversion efficiency to direct utilisation. The conversion efficiency in electricity generation (30-45%, the latter with co-utilisation) is offset by the multiplying effect of the heat pump (typically three or higher). If the electricity generation is combined with CCS, negative CO2 emissions per unit heat used can also be obtained.

  Of course, electric vehicles and transport also allow the use of primary renewable electricity (wind etc.) in these applications, as well as biomass and products derived from biomass; it was not clear that the question allowed for this flexibility.

(d)  Should British support for renewables in other countries be allowed to contribute towards meeting the target for the UK?

  Renewables in other countries will not achieve much in the way of a contribution to UK energy security and may have little or no effect on global CO2 emission rates, especially if the other country is covered by an emission cap (since emission caps tend to get used to their full extent whatever the energy mix).

(e)  What are the costs and benefits of the present generation of biofuels? Will there be a second generation of biofuels and, if so, what are the estimated costs? What are, or are likely to be, the carbon emission impacts of first and second generation biofuels, and what are the other relevant environmental effects?

  It appears to be inconsistent that electricity produced from biomass and used as a transport energy source is not treated in the same way as biofuels, and that this treatment is not extended to all renewable electricity so used. It is also arguable that any low-carbon electricity used in transport, which will achieve comparable climate and energy security benefits to biofuels (assuming acceptable lifecycle impacts for the latter) should also be treated in the same way when it comes to incentives and targets. Indeed, increased use of low-carbon electricity in transport is arguably a more transformational step than the use of biofuels, since the latter do nothing to encourage the national car fleet and transport energy supply infrastructure to change in ways that will reduce long-term dependence on liquid fossil fuels.

  The authors gratefully acknowledge thought-provoking conversations with colleagues at Imperial College and elsewhere. The opinions and interpretations expressed here are, however, our own.

June 2008




69   Gibbins, J, Beaudet, A, Chalmers, H and Lamperth, M. Electric vehicles for low-carbon transport Proceedings on the Institution of Civil Engineers: Energy (2008), in press Back


 
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