Memorandum by the Institution of Mechanical
Engineers
The Institution of Mechanical Engineers (IMechE)
is a professional body of over 78,000 professional engineers in
the UK and overseas. The Institution's membership is involved
in all aspects of energy exploration, conversion, supply, use
and recovery. As a Learned Society, IMechE's role is to be a source
of considered, balanced, impartial information and advice.
1. THE ROLE
OF RENEWABLES
IN UK ENERGY
POLICY
The Institution welcomes the EU-set target of
15% of energy consumed in the UK to come from renewable sources
by 2020. However, despite its abundant natural renewable energy
resources, both on land and around its coastline, the UK lags
far behind other EU nations in expanding its renewable energy
production. If the UK is to achieve its target, renewable energy
must be rapidly deployed across the transport, power and buildings
sector. Put simply, an ambitious and coordinated package of measures
across the energy field is urgently required.
2. BARRIERS TO
ENTRY
Existing markets, economic models and mindsets
all tend to artificially favour conventional (fossil-fuel and
nuclear) energy technologies and inhibit the growth of new, radically
different, alternatives. Current barriers to the greater deployment
of renewable technologies include (but are not limited to):
2.1 Research and development in the UK energy
industry is low, hampering the development of new technologies
and allowing other countries to gain market advantage.
2.2 Most renewables incur a much higher
proportion of their life-cycle costs in the early planning, manufacture
and build phase. Their operating costs and decommissioning costs
tend to be very low (particularly when compared to existing technologies
like nuclear). However, the lack of availability of financing
for renewables projects has impacted on their deployment.
2.3 The UK suffers from a lack of skilled
engineers and scientists needed to develop renewable energy capacity.
Renewable energy must be seen as an exciting opportunity for young
people. Without this the UK will cannot hope to be competitive
in the global market place for renewable energy.
2.4 Much of our manufacturing base has now
moved overseas. Achieving the necessary scale of manufacturing
capacity in a desirable time frame is unlikely without coordinated
and concerted government support. In the absence of this support,
it is likely that most of the components will need to be imported.
3. FUTURE COSTS
There are already a very wide range of renewable
energy technologies that are likely to become cheaper both in
real and comparative terms. Once built, most renewables utilise
freely and permanently available resources. The early-stage additional
costs of renewable energy must be thought of as an investment,
not just in the achievement of long-term energy and climate policy
objectives, but also as an instrument of industrial policy, stimulating
future jobs and export earnings.
4. FEED-IN
TARIFFS
International experience has clearly demonstrated
that feed-in tariffs have delivered far more renewables, far quicker,
than quota-type systems like the Renewables Obligation. IMechE
believes there is a very strong case for introducing a FIT system
for small-scale energy producers (electricity and heat) at the
earliest possible opportunity. At larger scale, careful consideration
needs to be given to ensure that any FIT proposals do not cause
a collapse in what little investor confidence the RO has so far
built up.
5. THE ELECTRICITY
GRID
The existing electricity grid (transmission
and distribution networks) was designed in the first half of the
20th Century to take energy from the coal fields to the major
industrial centres. That model is now totally inappropriate; over
70% of the electricity grid is beyond its designed capacity. Major
investment and upgrading of the grid is already required. The
advantages of renewable and distributed sources of energy (particularly
those providing electricity and useful heat at the same time)
are numerous and well documented. There is a strong case that
future investment and upgrading of the grid should be geared towards
a more distributed, less centralised model.
6. INTERMITTENCY
Most renewables are variable—they only
produce energy at certain times when the prevailing conditions
are appropriate. They are not, however, unpredictable, at least
not within the timescales required for effective operation of
the electricity grid. With the exception of biomass and Energy
from Waste plants, other forms of renewable generation will require
marginally more back-up than conventional plants. The Institution
can provide much deeper technical evidence on these matters if
required, but in summary we believe that the intermittency issue
is entirely manageable, at an acceptable cost, provided that a
balanced portfolio approach is pursued. No one technology (and
here we emphasise that renewables are not one single technology)
should be allowed to become too dominant in the mix. While a wide
range of scenarios are possible, a reasonable working model on
which to plan is that no one energy source (eg wind, nuclear,
coal, gas, biomass, wave, tidal, solar, etc) should generate more
than 25-30% of overall electricity demand.
7. COST COMPARISON
The applicability of renewables is often highly
site-specific, so generalisations about their cost relative to
the market incumbents are subject to significant imprecision.
Conventional technologies see a higher proportion of their life
cycle costs discounted into the future, making them appear cheaper.
The estimated £75bn (and rising) bill to decommission safely
our existing fleet of nuclear power stations shows how misleading
such up-front calculations can become. Global stocks of oil, gas,
coal and uranium are all finite, all depleting, and all likely
to see considerable price volatility over the coming decades.
Most renewables utilise indigenous natural resources and so enhance
security of supply because they are not subject to geo-political
supply chain risks.
8. OTHER FORMS
OF ENERGY
CONSUMPTION
There is a wide variety of renewable technologies
able to deliver electricity, heat and/or fuels for transport.
While the opportunities for renewable energy in the transport
sector are relatively limited, substantial opportunities do exist
in the heat sector. The immediate focus in the heat sector should
be on energy efficiency improvements, particularly to the existing
building stock. However, incentives and support mechanisms are
needed to encourage their uptake of both energy efficiency mechanisms
and heat supply technology in the UK market, and achieve cost
reductions through economies of scale.
9. EU ETS
The EU ETS is an important tool, but is unlikely
to bring forward the required large scale investment in renewable
energy when employed in isolation. The carbon price is neither
sufficiently high nor sufficiently predictable to provide long-term
investor confidence.
10. BIOFUELS
Despite recent controversy, IMechE sees no fundamental
reason why biofuels can not provide a significant source of low
carbon energy for the transport sector, sustainably and without
unacceptable impacts on food or natural eco-systems. The current
target to supply 10% of our road transport fuels from biofuels
is a reasonable aspiration for the current (1st generation) energy
crops, provided it is managed appropriately. With the right investment,
2nd and 3rd generation biofuels have the potential to supply much
more.
11. OVERALL ENERGY
POLICY
In general, the development and delivery of
all forms of renewable energy needs to be planned and managed
in ways that takes due account of the whole energy scene, and
its inter-relationships with other policy areas eg climate change,
foreign policy and security, taxation and the economy, manufacturing,
agriculture, etc. It is vital, therefore, that renewable energy
technologies are developed as part of a co-ordinated and balanced
overall energy policy, alongside major investment in energy conservation
and efficiency, the development of carbon capture and storage,
and a much greater focus on the heat sector.
12 June 2008
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