Memorandum by Scientists for Global Responsibility
SUMMARY
The economics of renewable energy can only be
judged in relation to energy from non-renewable sources. We give
reasons why we believe the costs of fossil fuels will remain high,
and that the security of supply of oil and gas is uncertain. On
present prices, some renewables such as on-shore wind are already
cost competitive, and the costs of many other types of renewable
energy are falling rapidly.
On the issue of integrating intermittent or
variable renewables into the electrical network, it has been shown
that the costs of integrating up to 20% of renewables into the
system are quite modest. Above this, more stand-by capacity would
be needed. However, with a wide geographic spread of wind and
tidal power systems to minimise the likelihood of a very high
proportion being unavailable at one time, the amount of time this
standby capacity would be called on would be small, so the objectives
of reducing CO2 emissions and reducing dependence on imported
fuels would not be seriously compromised. There are many possibilities
for greater demand side management, such as tariffs encouraging
customers to avoid using power at times when the electricity grid
is under stress.
There are means of storing energy when there
is a surplus of low-marginal cost, low carbon electricity available
from renewables. A possibility likely to become more practical
soon is use of electrical vehicles and plug-in hybrid (PIH) vehicles
(which will be marketed soon), which can be charged at times of
such surplus capacity. In the unlikely situation of a prolonged
shortage of wind power, PIHs would be able to operate on petrol
or diesel fuel.
With fuels being more expensive, the economics
of heating by carefully designed heat-pumps together with heat
storage become more attractive, particularly if installed on a
community or district scale. This would be another means of making
optimum use of intermittent or variable renewables.
The UK has a very large potential for off-shore
wind power and different types of marine energy. Floating wind
turbines making use of well developed technology for floating
oil rigs, which can be positioned in much deeper water than fixed
turbines, are being tested now. Because of the stronger and more
consistent wind in the open sea and easier installation, the cost
of power from these is predicted to be comparable with land-based
turbines. This development could provide virtually unlimited energy
in relation to the UK's needs.
We believe that on present policies the security
and affordability of energy supplies to the UK is in serious jeopardy,
given the very high dependence on imported gas that will occur
if the installation of new plant is driven purely by short term
market considerations, and our balance of payments situation could
become serious. This concern on energy security and affordability
reinforces the need for alternative energy sources and energy
conservation required to meet the government's targets on greenhouse
gas reductions. A huge effort to develop, manufacture and install
a large capacity of renewables is needed urgently. This will need
a major upgrading of skills at all levels. But above all, there
is a need to reduce energy demand through a combination of energy
efficiency and behavioural change.
1
1.1 How do and should renewables fit into
Britain's overall energy policy? Britain's energy policy consists
largely of aspirations on meeting a number of objectives—on
greenhouse gas reductions, on energy reliability and security,
on providing affordable energy and promoting competitive markets
in the UK and abroad. However, we consider that all these disparate
objectives are such that it is unlikely that reliance on competitive
markets alone will deliver all the desired outcomes. First of
all, it is vital, to achieve the proportion of renewable energy
required and to meet the other objectives of the government energy
policy, that we improve the energy efficiency of all sectors.
This is particularly so in the housing sector to help reduce fuel
poverty.
1.2 We believe that the government's assessment
of the availability in the future of secure supplies of fossil
fuels, in particular of oil and gas at relatively low prices,
is misplaced. Government papers have consistently hugely underestimated
future oil and gas prices. Input to the 2007 Energy White Paper
used baseline prices for 2010 of $40 per barrel for oil and 33p/therm
for gas (1). In relation to the current costs (see section 7.1),
these seem likely to be unrealistic. Factors which we cover below
lead us to believe that the aims of the UK's policy for secure
and affordable energy are highly unlikely to be met with the present
strategy of reliance on a global supply of fossil fuels being
consistently available at reasonable prices. With the run-down
of UK off-shore oil and gas production and likely high energy
import costs, the UK could suffer from major balance of payments
problems. Developing the indigenous renewables industry will be
important in maintaining a healthy UK economy.
2
2.1 The main barriers to greater deployment
of renewable energy in the UK are the planning system for on-shore
wind developments and uncertainty in the return on capital on
more costly renewables such as off-shore wind because of the nature
of the Renewables Obligation (See section 4). The shortage of
skills at all levels—engineers, technologists and scientists
as well as skilled craftsmen—is a major problem in expanding
the UK infrastructure generally. The Ministry of Defence has objected
to many wind energy schemes due to concerns about radar: these
concerns are not an issue in other countries, in Germany for example.
2.2 As indicated below, in relation to technical
limits, the amount of renewables the UK can absorb is high. However,
this does require an integrated consideration of energy production
with energy use. The total energy resource available from renewables,
especially off-shore wind (including developments outlined in
section 7.4) is very high.
3. The cost of energy from most renewable
energy technologies globally is reducing (2). There are likely
to be technical advances in most types of renewables in the UK
that will lead to lower costs. In relation to technology particularly
relevant to large scale deployment in the UK, advances in off-shore
wind power should lead to significant reductions in costs (see
section 7). R&D in off-shore wind and marine technologies
and other renewables should be given more support. The total UK
budget for R&D on renewable energy is too small (£37
million in 2005) even with proposed increases in view of the challenges.
4
4.1 Government support for renewable energy
has not been especially effective in bringing on-line a significant
proportion of renewable energy. The Renewables Obligation is not
well targeted, giving more support for some technologies like
on-shore wind than is now required, while being inadequate and
insufficiently certain for some other technologies. We believe
a well targeted feed-in tariff, in particular to support those
technologies where the UK has potentially a large resource such
as off-shore wind and marine energy technologies, would give developers
greater certainty in their economic assessments.
5
5.1 The national grid network would have
to be strengthened to more remote parts of the UK where much of
the renewables potential lies—for example to the west and
north of Scotland for wind and tidal energy to be transmitted
to areas of major demand. A proportion of embedded generation
(ie local generation that does not feed outside the local distribution
area) could reduce the demands on the transmission network. The
current rules on connecting generating capacity to the network
are generally very unfavourable to renewables, particularly for
small systems.
5.2 There should be no problems in managing
the proportion of intermittent renewables likely to be installed
before, say 2020. The UK Energy Research Centre (3) following
an analysis of a large number of international studies showed
that the costs of coping with intermittency with 20% of such renewables
would be 0.5 to 0.8p/kWh, ie less than 1% on customers' electricity
costs. It should be noted that the seasonal variations in average
wind energy match the seasonal variations in demand. Wide geographical
dispersion of wind generation (and of tidal stream systems were
these to be deployed—see para.7.5) would reduce the variations
in total power output. The small individual units and this spread
of output variations would not need additional spinning reserve
(with its parasitic energy losses) required to take up sudden
loss of generating capacity (currently sized to cope with the
loss of 1200MW of Sizewell B reactor, the largest single unit
on the grid). Tidal power systems output is variable but fully
predictable, thus the need for any standing reserve can be planned
for in advance. Tidal barrier systems (barrage or lagoons) can
be built as multi-pool systems which allow the power to be dispatched
when required, rather than purely in response to tidal movements.
If required, pumped storage capability can be incorporated into
tidal barrier schemes. In addition to the Dinorwig pumped storage
scheme in N Wales, hydro-electric systems such as those in Scotland,
with some modifications, could provide pumped storage capability.
The price of electricity supplied to the grid varies hugely at
different times, so having more control over when power can be
dispatched is very valuable.
5.3 There are a number of demand side management
(DSM) methods to enhance stability of the grid. The use of interruptible
tariffs (already widely used in industry) could be increased to
include domestic customers, and tariffs with pricing structures
to discourage electricity use at times of stress on the grid would
ease the integration of intermittent renewables. Although significant
standby reserve capacity would need to be maintained if we had
a very high proportion of variable or intermittent renewables,
much standby capacity already exists in many organisations, eg
diesel generators which can be started remotely. However, the
number of hours per year this standby capacity would be needed
to operate has been shown to be low. Thus the objectives of reducing
reliance on scarce fossil fuels and reducing CO2 emissions are
not seriously compromised.
5.4 Increased interconnector capacity with
mainland Europe would further diversify the sources of supply
and spread the times of peak load. There are a number of technologies
which in the long term could allow the installation of a very
large proportion of renewables, in addition to the demand side
management measures outlined above. The introduction of a significant
proportion of electric vehicles and use of heat pumps (in conjunction
with adequate heat storage) could take power at times when there
is surplus low marginal cost capacity on the grid system (see
section 8).
5.5 While with some forms of renewables,
there can be issues of variability or intermittency of output
as discussed above, with nuclear power stations, if their capacity
exceeds the "base load" on the system, being capital
intensive, their economics would suffer as they would not be operated
at full load all the time.
6
6.1 All major infrastructure installations
will have some impact on the environment. The effects of climate
change on the natural environment are likely to be marked and
permanent, so the visual impact of wind turbines must be seen
in the context of the necessity of reducing the risks of major
climate change. We believe, in common with many environmental
groups (including the RSPB) that carefully sited wind farms taking
account of bird migration routes should be accepted on this basis.
6.2 The external costs of fossil fuel generation
on the environment have generally been borne by people other than
the plant owners. Even where companies, under the European Emissions
Trading Scheme, may have to pay for exceeding their emissions
quota, this money does not go directly to people, often in poorer
countries, now and in the future, who are likely to suffer from
effects of climate change.
6.3 For nuclear power, governments bear
the risks of costs of accidents larger than that covered by the
operators insurance: this is an externality associated with nuclear
power.
There is no way of guaranteeing that costs of
final disposal of radioactive waste which will have to be borne
many decades in the future will be adequately funded by the companies
that benefit from the plants operation. Any assumption that a
sinking fund will continue to produce a positive real return rests
on the assumption of continued economic growth. The increase in
the costs of energy, raw materials and particularly skilled workers
required for final disposal of radioactive waste or spent fuel
may well be greater than the real growth in the fund. Future generations
may be affected by radiation doses from radiological waste. The
building of nuclear power stations in "developed" countries
makes it not possible to restrict their use in any country, and
this will lead to significant costs (financial and in security)
in safeguarding against the misuse of fissile material.
7
7.1 The comparison of costs of renewables
with conventional forms of energy depends on the cost of the latter.
Recently the costs of energy derived from fossil fuels have escalated
sharply. Crude oil has been trading at between $130 and $140 per
barrel recently, compared with about $70 a year ago and about
five times more than in 2001. Wholesale gas prices in the UK in
late May 2008 were 57p per therm compared with 28p a year previously.
Coal prices have also risen steeply due to strong demand on the
international market. In late May 2008 the UK wholesale electricity
price was ~£70/MWh compared with £24/MWh a year previously.
There are reasons to believe that high prices are likely to persist
(although probably subject to fluctuations). The increase in oil
prices reflect a rapid rise in demand from countries like China
and India whose economies are developing rapidly, while output
of oil has remained broadly constant. The production in a number
of non-OPEC countries is declining (the reserves in many of these
countries are becoming depleted or more difficult to exploit),
while major OPEC suppliers are not responding to the price increase
by increasing production. This may reflect the fact that these
countries will be paid more from a slightly lower volume of sales
at a much higher price in a tight market than would result from
increasing their output. Also, King Abdullah of Saudi Arabia has
said of oil "Leave it in the ground |. Our children need
it". It is believed by many oil experts that there are technical
difficulties in increasing production in some OPEC countries—for
example, in Saudi Arabia, the world's largest producer, their
largest oil field, Ghawar, is suffering as a result of excessive
water injection that has been used to drive out the oil after
natural driving pressure declined. The International Energy Agency,
previously bullish about the adequacy of future oil supplies to
meet demand has recently indicated supply relative to demand will
be tight (4).
7.2 The demand from China and India and
other rapidly developing countries with a huge total population
is likely to remain strong. As people's income rises, the level
of car ownership rises (currently three per 100 people in China
compared with 77 in the USA) and in hot, humid countries, energy
hungry air conditioning becomes more widely used. Although there
may well be significant price fluctuations, the future generally
is likely to be one of high energy costs, as even if "Western"
economies contract, trade between energy exporting countries and
the new major economic powers in Asia is likely to continue strongly.
Whether or not one believes that peak oil is near, the balance
between supply and demand is likely to maintain high prices.
7.3 Further, many of the major suppliers
of oil and gas are countries which are not especially well disposed
to the West—such as some Middle Eastern countries which
may be subject to instabilities due to fundamentalist pressures
and Russia. China is buying oil rights in a number of African
countries and elsewhere. On present trends, the UK would become
even more dependent on gas, including imported Liquified Natural
Gas (LNG), as coal fired power stations not fitted with pollution
controls have to be shut down by 2015 under the Large Combustion
Plant Directive (more than 20GW loss), nuclear plants reach the
end of their life and North Sea production declines. Global gas
supplies are becoming very tight. Saudi Arabia has no plans to
export any of its large reserve, and Indonesia (the world's second
largest gas exporter) is defaulting on its export contracts with
Japan and S Korea to satisfy its growing internal demands. The
USA will soon become a major importer of LNG as its own and Canada's
gas resources decline. Russian gas supplies are limited by lack
of investment, and Nigeria's exports will be limited by increasing
domestic. Some LNG tankers have to pass through potentially hazardous
bottlenecks like the Straights of Hormuz. A major explosion at
a LNG terminal could disrupt supplies elsewhere as the causes
are ascertained. Overall the security of supply to the UK is uncertain.
7.4 There are large variations in cost estimates
of renewables. Using 2007 actual wind turbine costs with 10% interest
and 20 year life, 25% load factor, on-shore wind cost is just
under £50/MWh which is competitive with conventional generation
at its current prices. Off-shore wind, for which the UK has a
huge potential, has higher costs currently, but these should reduce
as increasing the size of clusters of turbines reduces the connection
costs, and due to advances in technology. Floating wind turbines
can be sited in much deeper water where the wind is stronger and
more consistent, and would have reduced installation costs. This
concept is being tested by StatoilHydro in Norway, who believe
that the costs could be competitive with on-shore turbines (5).
Given the greater depth at which these devices could be installed,
the total energy potential is virtually unlimited in relation
to UK energy demand.
7.5 Tidal barrier systems and tidal lagoons
require no new technology but involve massive civil engineering
works. There are environmental issues with barrage schemes, and
due to the long construction time, the costs are very sensitive
to the interest rate. Tidal stream systems are being developed—these
are underwater turbines or other submerged devices to extract
energy from tidal flows (6). These systems appear to have good
prospects as part of a future diverse energy system, but the costs
need to be confirmed in the light of experience with prototype
installations.
7.6 The costs of carbon capture and storage
(CCS) are still uncertain, and depend on the distance from and
type of storage sites and the technology used. CCS requires additional
energy input per unit of output. In a situation of likely high
fossil fuel prices, this efficiency loss will be more significant
than with low fuel prices. The size of efficiency loss varies
with the type of CCS plant: Integrated Gasification Combined Cycle
(IGCC) with pre-combustion removal of CO2 will suffer from a smaller
penalty than post combustion CO2 removal.
7.7 The costs of nuclear power stations
will not be known definitively until firm prices are quoted for
new plant. The Olkiluoto plant in Finland is widely believed to
have been sold at below cost as a "loss leader" and
been given certain subsidies, so this does not give a clear guide
as to nuclear plant costs. Both the Finnish plant and the Flammanville
plant in France (the only nuclear plants in Europe currently under
construction) have been delayed by some construction problems
and there are cost over-runs.
7.8 Recent increases in the cost of wind
turbines due to supply chain shortages in face of a rapid increase
in demand and increases in material costs are likely to be mirrored
by similar cost increases in other generation systems. There is
already a waiting list for certain pressure vessel components
for nuclear reactors. While the supply chain problems are likely
to be resolved over time, all major infrastructure projects are
likely to face increased material costs.
7.9 In terms of carbon emissions, current
coal power stations have about twice the emissions of combined
cycle gas turbine plants. The carbon footprint of wind turbines
is very low. The footprint for nuclear power, taking account of
energy used in construction, uranium mining and milling and enrichment
is significantly lower than fossil fuel plants, but will increase
when lower grades of uranium ore have to be used.
8
8.1 For heating, there is a limited role
for biomass using UK sources: wood must be from sustainable forestry.
Biomass can be used directly for heating (eg wood pellet boilers
or domestic wood burning stoves) at low cost. Bio-gas can be produced
by anaerobic digestion from biomass or municipal waste, and this
can be used for heating—either locally or distributed via
the gas mains. A particularly beneficial application is in combined
heat and power. Solar heat has a valuable part to play in the
energy mix. New buildings should be designed to make maximum use
of passive solar energy by favourable orientation of windows,
combined with variable shading to limit solar gain in hot weather:
this represents an optimal use of renewable energy at virtually
zero cost. All new homes should be fitted with solar hot water
panels—large scale of production and installation at the
time of building would radically reduce costs.
8.2 Given the present high cost of gas,
the economics of electrical heating using heat pumps are improved,
the greater capital costs being offset by the greater efficiency
in the use of primary energy. In a building with a high area of
heating surface relative to the heat load, ground source heat
pumps can have a coefficient of performance of up to four. Given
that modern combined cycle gas turbine power plants have an efficiency
of ~60% and with a typical domestic boiler efficiency, the overall
effectiveness of using power from this source would be ~2½
times that of direct use of gas. In the medium to long term there
could be a high proportion of a low-carbon power generation capacity
with near zero marginal costs, such as wind and tidal systems:
given sufficient controllable thermal storage in the heating systems,
this could be used for heating. The thermal storage gives flexibility
in when energy is needed, increasing the proportion of intermittent
renewables that can be accommodated. Heat pumps and heat stores
are cheaper for community and district heating schemes than for
individual dwellings. Pipework for district heating should be
incorporated into all new housing schemes, to allow a variety
of efficient energy sources (eg from combined heat and power,
biomass or heat-pumps) to be used.
8.3 In the transport sector, the use of
biofuels at the moment should be limited (see 11). Electric vehicles
are now becoming practical for many uses with recent advances
in battery technologies. For uses requiring a limited daily mileage,
pure electric vehicles are likely to be suitable. For more general
use, the plug-in hybrid (PIH), which has sufficient battery capacity
charged from the mains supply for most daily use cycles, with
a small internal combustion engine able to provide power on extended
journeys is promising. PIHs are to be marketed by US and Japanese
manufactures in the near future (7). Because of the high efficiency
of electric drive, primary energy use and the cost of operation
is less than with petrol or diesel, at present prices. The introduction
of a significant proportion of electric or plug-in hybrid vehicles
would provide a demand for electrical power all year round which
can be supplied off peak. Power supply to charging points where
vehicles are parked for topping-up could be interrupted for a
period if there is a risk of grid supply falling short of demand.
In the USA, a trial is underway where in such conditions, if vehicles
have adequate energy stored in their batteries, they can feed
power into the grid. PIHs would be able to run on petrol or diesel
fuel if there were a shortage of power for a number of days. The
ability to take power at times most suitable to the electricity
supply system would make this technology appropriate to system
with a high proportion of intermittent wind or tidal power.
8.4 At current petrol or diesel prices (before
tax), the much greater energy efficiency of electrically driven
vehicles compared with internal combustion engines would make
their operating costs significantly less than petrol or diesel
vehicles even on the basis of relatively expensive renewable input
to the system. Thus, in the longer term, a synergy between electric
vehicles and renewable energy could have a major role in the UK
energy scenario.
8.5 Other means of storing energy include
production of hydrogen by electrolysis—as a fuel or as an
input for synthesising other fuels or products. It has been proposed
(8) that methanol or other liquid transport fuels (much easier
to store and transport than hydrogen) could be synthesised from
hydrogen and CO2 from power plant carbon capture by the CARNOL
process. This process can produce efficiency synergies with carbon
capture, and methanol fuel allows a significant increase in internal
combustion engine efficiency relative to petrol. These proposals
could, in the longer term, effectively give inter-seasonal storage
of energy, giving further flexibility in optimum use of intermittent
renewables. Development of this process could be an incentive
to China and other countries to use carbon capture, reducing their
CO2 emissions.
9
9.1 As indicated in 8 above, although the
majority of renewables generation for which the UK has a large
potential is likely to be for electricity, there are possibilities
for this to make a contribution to transport and heating. This
would make it easier for the UK to meet a target of 15% of overall
energy to come from renewables. Also, as mentioned in section
1, meeting a given proportion of renewables is easier if the overall
energy consumption is reduced. A massive programme of home energy
efficiency is needed, like the one in Germany where every home
built before more stringent efficiency rules were imposed will
be upgraded by a given date. In transport, modal shifts to more
efficient public transport, encouragement of walking and cycling
as well as technical advances are needed.
9.2 Given the large potential the UK has
for wind and marine power and other renewables, we do not think
it would be reasonable to take energy generated with our support
in other countries as more than a minimal contribution to our
renewables target at this stage.
10. Under an effective carbon emissions
trading scheme the cost of fossil energy with its carbon penalty
would converge with the marginal cost of renewables sufficient
to meet overall emissions target. Given that the UK is well endowed
with renewables, other means of support should not be needed for
the more economical forms of renewable energy, but some support
may be needed to encourage deployment of diverse, less fully developed
systems.
11. Some of the present generation of biofuels
(eg ethanol made from food crops and sourced from places where
forests are being destroyed) are clearly unacceptable, and some
are not even effective in reducing carbon emissions. Second generation
cellulosic biofuels which can be made from a wide variety of biomass
(including forestry waste, agricultural waste etc) are likely
to be more effective (using about 1/3 the land and needing lower
amounts of other inputs that first generation biofuels). They
are reckoned to reduce the CO2 emissions over the whole "well
to wheel" comparison by ~90% compared with fossil fuels.
Development is taking place in Germany and elsewhere (9) The success
in terms of environmental and economic benefits will only be certain
when the technological developments are more complete.
June 2008
REFERENCES
1 The UK MARKAL-Macro model and the 2007 Energy
White Paper— Dr Neil Strachan www.ukerc.ac.uk/Downloads/PDF/07/0706ESMMARKALpresNS.pdf
2 The potential for renewable energy to deliver
in large energy economies. Renewable Energy Network October 2007
www.egovmonitor.com/node/15294
3 The costs and impacts of intermittency: an
assessment of the evidence on the costs and impacts of intermittency
on the British electricity network. UK Energy Research Centre,
March 2006 www.ukerc.ac.uk
4 Energy watchdog warns of oil production crunch.
IEA official says supplies may plateau below expected demands.
N King & P Fritsh www.peakoil.org/discussion/node/1634
5 Floating turbine should capture more wind.
Professional Engineering 11 06 08
6 Current tidal power. Ian Bryden Robert Gordon
University, Aberdeen http://cohesion.rice.edu/CentersAndInst/CNST/emplibrary/Houston.pdf
7 The Volt to jolt. P Eisenstein Professional
Engineering 23 04 08
8 Fill up on alcohol J Pullin Professional Engineering
21 05 08
9 Shell and VW to look into cellulose biofuels
Glover Automotive Engineer Vol 31 No 1
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