The Economics of Renewable Energy - Economic Affairs Committee Contents


Memorandum by Mr Michael Negus

GENERAL CONSIDERATIONS AND ELECTRICITY SUPPLY STRATEGY

  The Committee's task is extremely difficult, if not almost impossible, because of the continually changing costs of generating electricity, due to a world energy market that has never been so unstable and is, at least currently, becoming more and more expensive such that it impinges upon global politics, comodity costs and economic stability.

  At the moment in the UK "renewable energy" is synonymous with wind power, hence wind turbines and wind farms. There are task groups both within and outside of government considering how to use the sea that surrounds our island as a source of energy for electricity generation. This has many important advantages over the use of wind as a renewable source. It is important to remember that a national energy strategy is long-term and expensive. It is not as easy as putting up more and more windfarms, but the long-term returns and benefits for our nation are immensely greater. I am thinking principally of independence from political influence by countries that have massive oil and gas resources, such as Russia and the Middle East, and the urgency of reducing our carbon dioxide emissions.

  I would suggest that the Britain should aim at generating at least 25% of total electrical energy from the sea. We should now have a 20 year national project to plan and implement such a strategy. It will be expensive, the Severn barrage alone will cost £10-14 billion. The Carbon Trust suggested (BBC News Channel 24 January 2006) that 20% of our electricity could come from "wave farms" (50 TWh/year) and "tidal stream" (18 TWh/year). This together with the 5% coming from the 100 underwater turbines of the Severn barrage would give the 25% total contribution from the sea. The great advantage of sea over wind power is the size of the contribution and its relative lack of variability and unpredictability, these being the main problems with wind power.

  Wind power must be used as a contribution for our national electricity needs. But it must play a subsidiary role to power from the sea. There should also be a national survey to define precisely those areas of Britain where it is really economically worthwhile to set up windfarms, without government subsidies or guaranteed electricity prices. Such a study must take into account the effects of wind turbines on the landscape and seascape, hence the quality of life in rural Britain, because the turbine towers are very high and seem to be getting higher. Imposing them on beautiful, wild landscapes is foolish and shortsighted.

  How is it possible to put an economic value on the complex of factors, political and economic, arising from global warming? Although I realise that a major task of the Committee is to do precisely that. There seems to be an obvious axiom: reduce electricity generation that burns fossil fuels and generates carbon dioxide. Currently 71% of our electricity comes from burning gas (37%) and oil (34%). About 22% of our elecricity comes from nuclear, including 4% imported from France EDF. We could, as I suggested above, generate up to 25% of our electricity from the sea, and possibly 10% from wind. Without an expansion in nuclear generation we would still be emitting far too much carbon dioxide. I would suggest that our nuclear power should be doubled to provide about 50% of our needs. This would mean that our electricity supply from carbon sources would drop to about 15%, so reducing our carbon dioxide emission from electrcity generation to about a quarter of what it is now, without the expense of carbon capture.

  It is instructive to look at the carbon dioxide emissions from three European states in relation to their GDPs. France, UK and Germany are not very different in terms of their GDPs. However Germany already produces more than twice the carbon dioxide emission of France, and almost one and a half times that of the UK. Yet Germany generates 11 times more electricty from wind power than either France or the UK. Moreover, I think foolishly, it is closing down its nuclear power industry (19 stations) and in the future will rely on an expansion of wind power, which can provide only a small percentage of its needs, and must inevitably burn more and more gas and coal. The gas of course will have to be bought from Russia. I have seen infra-red satellite pictures of Europe that show Germany, which has eleven times more wind turbines than France, as the hottest atmosphere in Europe, because of its hot gaseous emissions. These will no doubt get worse.

THE 2015 ENERGY GAP

  The strategy outlined above, with its long-term aim of providing sufficient electricity to "keep the light on" is only attainable over a period of 20 or more years in the future ie 2030 and beyond. But it must be started now, and properly costed and provided for. But what about the problem of generators, both carbon based and nuclear, that are scheduled to close down in the near decades? I would draw the Committee's attention to the House of Commons Select Committee on Environmental Audit, in particular the written submission by Matsui Babcock. That submission, after detailed analysis, concludes that, although nuclear electricity generation is the only way of producing sufficient base generation and low carbon dioxide emmision, it is in fact inpossible to achieve this by 2015. Matsui Babcock conclude that the only option open to us is clean coal generators, because the other carbon source, gas, is increasingly unreliable, and could fail during cold winters. They conclude that the contribution of renewables in the face of the 2015 Energy Gap crisis is almost irrelevant.

CONCLUSIONS

  I would suggest that the Committee does not fall into the trap of equating renewables with wind turbine farms. It could be that in the future a quarter or even a third of our electricity supply comes principally from the sea, with a smaller amount from wind, preferably off-shore windfarms.

  At the moment the cost of generating electricity from wind, especially off-shore wind, is the most expensive of the methods available. The rising cost of oil and gas will not necessarily make wind power cheaper because of the need for carbon fueled back-up to step in when the wind fails.

  In the short term we need to quickly build carbon-capture coal-fired generating stations.

  For the longer term we need to begin now to build sufficient nuclear generating stations to supply at least half of our future electricity needs.

8 June 2008



 
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