The Economics of Renewable Energy - Economic Affairs Committee - Contents

Examination of Witnesses (Questions 260 - 265)


Professor Gordon MacKerron

  Q260  Lord Lawson of Blaby: It would be wind and nuclear but you think it would most unlikely to be wave, tidal or solar.

  Professor MacKerron: It would not be wave or tidal and it absolutely would not be solar photovoltaics because, although they are technically very exciting and getting cheaper, they are still very expensive.

  Q261  Chairman: Can I just move to heating for a little and perhaps ask you the same question about the best buy in terms of renewables. What is the best buy against fossil fuels or gas central heating?

  Professor MacKerron: Heat has been a sector which, whether you are dealing with renewables or anything else, has been much neglected. Energy policy has been all about electricity for a very long time in a way that I think has over-emphasised the importance of electricity. For heat there are a number of established small scale technologies that are, by some definitions, renewable but work very well. There are various forms of waste combustion which raise political difficulties but are actually normally cheap and in my view a rather effective way of managing a good deal of waste. Although not much widely used in the UK, biogas from agricultural waste is actually a very effective form of generating potentially heat and other by-products, but probably not a major source for a country like the UK. Then one comes onto the difficult question of biofuels and the obligations for renewable transport fuel obligation and wider European Union obligations which I think realistically are too taxing for us to meet whether it is 2010 or 2020. Nevertheless I think there are real prospects and again in the area of second and even so-called third generation biofuels there is a very great need for substantially greater efforts in research and development because in these newer generations of biofuels the plant matter will almost certainly not compete in the same way with food uses of land because using cellulosic and other materials may allow us to use marginal land in quite productive ways. I think for heat biofuels as a longer term bet have some real prospects. Beyond that it is very difficult to know.

  Q262  Chairman: As you suggested governments have not spent as much time or attention as they have done on power generation. How would they tackle promoting heat in a way that was comparable to the Renewables Obligation in power generation? How would one approach this if you really wanted to get at heat? What would they do?

  Professor MacKerron: There have been suggestions about imposing various kinds of heat obligations not unlike renewable energy obligations. That is not impossible but I do not think it has been thought through in any way as to make it potentially at the moment a coherent issue. There is clearly significant scope for combining heat with power or combined heat and power at various scales ranging from the household to the industrial to the municipal and so on. To be commercially viable you need a reasonably good spread between the various different prices, in particular the probable gas input price and the electricity output price. When gas prices rise too high it becomes commercially unattractive, but in the long term I suspect that we could get a lot further than we currently have by judicious expansion and incentivising on combined heat and power at various scales. However, that has not been a matter of enough policy interest nor has there been enough governmental work or, for that matter, academic research to enable us to say with confidence that we can get very far with technologies like combined heat and power, but I would say that is probably, because well established technically, a very fruitful way forward.

  Q263  Lord Lawson of Blaby: In another context you pointed out various kinds of collateral advantages you saw in various different renewables. There are also sometimes disadvantages. In the case of biofuels is it not the case that biofuel production requires the use of inordinate quantities of water and is that not something of a problem and indeed a cost in the real sense?

  Professor MacKerron: You are absolutely right and it is very important to say that biofuels are far from the same thing in different agricultural and other regimes. Brazil, the pioneer, happens to have a form of biofuels based on sugar cane which does offer very large carbon emission reductions compared to the equivalent volume of fossil fuels. The use of maize in the American Mid-West does not at all and on some calculations is a net carbon emitter compared to fossil fuels, so one has to be extremely careful to specify what kind of biofuels in what environments. Your point about water use is a very serious one in water short areas. Biofuels is a very diverse set of technologies and we should be very careful not to talk about it as if it were a single thing, but in many circumstances it has real problems, I agree.

  Q264  Lord Macdonald of Tradeston: I would like to ask a quick question on nuclear cost. We are told in some of the more recent developments the costs have been escalating in an unexpectedly aggressive fashion. Why is this happening when it is an old and apparently stable technology in places like France? Are people striving for some particular gain that is producing all this uncertainty and undermining the economic model?

  Professor MacKerron: Some of the recent escalations are, as it were, the backwash effect of world commodity prices which affect nuclear construction as they do others, but the other thing to say is that virtually all the nuclear technologies that are now under commercial construction in the world—that includes both Finland and France, the two prominent EU recent examples—although they are based on historic technology and the nuclear core is really very similar to technologies that are now 40 or 50 years old, nevertheless they have been substantially improved with more passive safety systems and improvements of one kind or another. However, unfortunately, none of them has ever been built at full scale until the first commercial order. As most engineers will tell you, even if it looks like it is familiar, if it is new and you have never built it before you are very likely to run into first of a kind—sometimes second and third of a kind—problems. That has certainly occurred in Finland where there has been difficult interaction between the local safety regulator and the French leading constructor. Even in France some difficulties are emerging. Although officially the design of reactor in France, the so called EPR (European Pressurised Water Reactor) is in the same family as the one in Finland. The French design is not the same as the Finnish design, maybe because the safety regulatory systems in the two countries differ. It is very difficult when you play around with technologies like that to control the cost, especially when you have not built them in very large scales anywhere before.

  Q265  Lord Layard: Do you think it is going to be possible for us to meet the target by 2020 of 15 per cent from renewables?

  Professor MacKerron: It is possible but I would say low probability. I think if we do meet it it will be potentially at quite high costs, taking costs in their stand alone sense. We have every possibility that as we build more renewables and we learn and we get economies of scale we will come down some cost curves but we are also likely to move to less and less favourable locations given that renewables, especially in the form of wind, are very location dependent for their economics. It is imaginable but I think it is fair to say that within Government and perhaps behind closed doors most of the officials are exceptionally worried about the feasibility of the target. I do not think we are currently in a position of planning for it. When Government, for example announced the possibility of the 33 gigawatts of offshore wind it does not seem to have done any serious work on the huge industrial and logistical implications of such a vast programme, whereas it does seem to be a bit more interested in the logistical implications, for example, of a nuclear programme. I think we would only realistically be getting towards that 15 per cent if we pay a lot more attention to some of what we used to call indicative planning back in the 1960s because markets are jolly good things but they do not actually solve all the problems. When one has a huge industrial project of this kind we do need a bit more of what we used to call planning if we are to get somewhere near meeting the target.

  Chairman: Thank you very much indeed, Professor MacKerron. You have been very helpful.

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