Examination of Witnesses (Questions 266
- 279)
TUESDAY 24 JUNE 2008
Mr Chris Bennett and Ms Nicola Pitts
Q266 Chairman:
Welcome to Mr Bennett and Ms Pitts; thank you for giving up some
of your time this afternoon to be here and thank you too for the
written evidence which you let us have in advance. Just to make
it easier for the recording of the proceedings, if you can speak
reasonably slowly and reasonably firmly, that would be great,
and if you can speak reasonably briefly that will also be excellent.
I do not know if there is anything you want to say by way of introduction
or whether your written report stands as it is.
Ms Pitts: We just wanted to say that
the figures contained in that are obviously our preliminary view;
we are expecting the Government's renewable energy strategy to
come out later this week so obviously we will need to look at
that and refine our thinking accordingly, but this is our estimate
at the moment.
Q267 Chairman:
As of today. Perhaps I could start the questioning; you have estimated
that to meet the UK's target for renewable extra energy an investment
in the onshore transmission system of about £3.5 billion
will be required. How much renewable capacity would that accommodate
and are you aware of estimates of the additional investment needed
in the distribution networks as well as in the national grid?
Mr Bennett: Preliminary studies suggest
that that £3.5 billion, which as Nicola said is our initial
estimate, would enable the connection of 30 gigawatts of renewable
wind which in our scenario would suggest 11 gigawatts of onshore
wind and 19 gigawatts of offshore wind. So the £3.5 billion
would facilitate the connection of 30 gigawatts of wind; broadly
that reinforcement would be in three areas: in Scotland we would
be anticipating 10 gigawatts of renewables, associated reinforcement
costs around about £2 billion; in England with the facilitation
of the offshore regime we would be anticipating up to 19 gigawatts
of offshore wind connecting on the east coast of England. That
would probably cost in the region of £1.3 billion of onshore
reinforcement. The other area where we are expecting wind to connect
is Mid Wales and we have anticipated for a gigawatt of generation
perhaps up to £200 million for the Mid Wales connection.
That is our initial estimate: 30 gigawatts. As Nicola said we
have recently commissioned a joint study with the Scottish transmission
owners and have committed in the next six months to really delving
into looking at the investment and the deliverability issues so
we will be producing a report that firms up on those numbers.
As far as the distribution network side of things is concerned,
our studies have concentrated on 30 gigawatts connected to the
transmission system. That onshore reinforcement is to facilitate
the bulk transfer of generation to the centres of demand. At the
moment our studies have not looked into the impacts on the distribution
networks.
Ms Pitts: It also does not look at the
connections from an offshore windmill to shore as well, it is
only the onshore connections.
Q268 Chairman:
But it would include in Scotland the Beauly to Denny line.
Mr Bennett: Absolutely.
Q269 Lord MacGregor of Pulham Market:
Could I just follow up on that? You mention in paragraph 13 and
in your appendices the three you have just mentioned for the £3.5
billion; do you also have issues about onshore wind apart from
Wales and how much will that cost?
Mr Bennett: The onshore element assumes
one gigawatt in Wales and the associated reinforcement there;
ten gigawatts of renewables in Scotland is all onshore, so the
onshore elements are primarily Scotland and Wales. There is a
major offshore reinforcement required off the east coast of England
for the offshore elements and the onshore element to connect the
offshore would be estimated at £1.3 billion.
Q270 Lord Lawson of Blaby:
Just to clarify what you said a moment ago before going on to
another question, there was one element in the cost which you
said was not included in this. Can you explain that because I
did not quite understand what that element is and what you think
that would add to the cost?
Ms Pitts: The element that is not included
in that is, if you like, the single connection from an offshore
station, an offshore wind farm onshore if you like, so that connection
is not covered. What we are talking about is the onshore costs
and associated reinforcement—I think I am right in saying
that the potential for those additional costs could be—
Q271 Lord Lawson of Blaby:
I understand now, thank you for clarifying it. Of course, the
connection from offshore to onshore has to be done. Have you made
a provisional estimate of what that would cost?
Mr Bennett: We have looked into it and
the offshore regime, the rules as currently applied, would have
a competitive tendering arrangement for it. If you look at the
numbers at the moment for the Round 2 wind farms, the number that
is being quoted for seven gigawatts of offshore renewables is
in the region of £2 billion. If you extrapolated the Round
2 offshore costs, £2 billion for seven gigawatts, in our
scenario to hit the 2020 targets you might need up to 20 gigawatts
offshore so you could be talking in the region of £6-£10
billion for the offshore investment.
Q272 Lord Lawson of Blaby:
Plus the onshore.
Mr Bennett: Plus the onshore element.
Q273 Lord Lawson of Blaby:
The offshore, although it probably does not have so many difficulties
with planning permission, is actually quite considerably more
expensive for a gigawatt coming from offshore than a gigawatt
from onshore.
Mr Bennett: That would be the case.
Q274 Lord Lawson of Blaby:
One further question if I may, obviously this is only to 2020
when you would have something like 40 per cent of electricity
generation coming from this, but the plan is that that is an intermediate
staging post and it goes on increasing right up to 2050 anyway
and possibly beyond that for all we know. When you extend it further
will the cost per extra gigawatt come down—can we assume
that if you were to double the amount of the electricity generated
from this source it would double the connection cost or would
it less than double it or more than double it?
Mr Bennett: That is an interesting question
and one of the challenges that we face at the moment is do you
build a network that assumes the final position and try and build
capacity with the full endgame in mind, or do you take a more
incremental approach to the investment? That is one of the challenges
that we face in terms of the sizing of the network and how you
size that network in the first place.
Ms Pitts: The other issue of course is
if you are talking about reducing carbon emissions, heat for example
represents almost half of those carbon emissions so the further
that you go past 2020 and on towards 2050 then you do have to
tackle some of these other areas such as heat and transport and
their contribution.
Q275 Lord Lawson of Blaby:
Finally, I am not an engineer at all but this is quite a substantial
engineering challenge is it not?
Mr Bennett: It is. As far as the offshore
networks in particular are concerned we are looking at trying
to push the boundaries as far as technologies are concerned, so
there are engineering issues associated with delivering the infrastructure
but we think those are challenges that the industry can rise to
and be able to deliver to.
Q276 Lord MacGregor of Pulham Market:
I would like to ask you a question about planning permission.
You refer in paragraph 18 to the problems of planning consents
and the preliminary question is I was not quite clear when you
talked about contracted wind projects in Scotland the 17 per cent
of consents across Great Britain and the 23 per cent, is that
in relation to your planning requirements or is that in relation
to the projects as a whole? The main question I want to ask you
is how much of this investment in transmission would be likely
to require planning permission and how long would you expect to
be needed to complete the investment?
Ms Pitts: Just on the first point, the
figures are that those generating stations have not got planning
permission.
Q277 Lord MacGregor of Pulham Market:
It is the generating stations, not your bit.
Ms Pitts: That is right. Just to explain
why planning permission is critical, what happens at the moment
is that we need a fairly strong signal from a generator in order
to trigger the transmission investment. Generally people will
only want to do that once they have got their own planning permission
and their financing in place. They then trigger the transmission
investments and what tends to happen is that the generator is
semi-ready to start building but they then may have to wait for
the transmission investment to go through planning itself, so
it happens in series rather than in parallel at the moment. The
other factor that we have in the current planning arrangements
are that BERR will consent the overhead line but substations are
consented by local planning authorities so it is potentially like
getting authority from BERR to build a motorway but then having
to go to each of the local authorities to get the planning permission
for the on and off ramps if you like, so we think that under the
planning reform arrangements having that within one body is a
very sensible way forward. There is also a big issue around the
uncertainty and I will give you an example. The last time that
we attempted some large scale electricity transmission investment
it was a project called the Second Yorkshire Line and from start
to finish that took 13 years to complete; much of that was in
planning inquiries so we are very supportive of the planning reforms
that will put some time scales around this for us having a certain
yes or no within four years is a lot better than having an uncertain
yes or no within seven or eight years. Going back to the issue
that I spoke about, that transmission investment happens after
the generators are ready, what we have proposed to the regulator
is the potential for us to undertake strategic investment so we
will look at the generality of what needs to be built and we are
talking about how regulation might incentivise us rather than
dissuade us from doing that. As far as we are concerned 2020 is
not that far away in terms of planning horizon so the quicker
we can get on with that investment the better. I have spoken about
how long it can sometimes take to get planning permission and
building after that will really depend on the type of project,
how long that project is and whether there are lines there in
the future, but we do expect that pretty much all of the investment
that we need to do will require planning permission.
Q278 Lord MacGregor of Pulham Market:
If you went along the existing lines of the 13 years you spoke
about, you would not really have very much in place by 2020, would
you?
Ms Pitts: We really need traffic lights
to be on green.
Q279 Lord Best:
My Lord Chairman, I wonder if I could ask a supplementary relating
to planning and indeed therefore to cost? In the Planning Bill
which is shortly to arrive in this House an amendment from this
House is about ensuring that power lines do not travel too close
to people's residential accommodation for fear of leukaemia for
children and other health risks. Have you costed in the additional
cost that you would have to incur if you had to underground your
power lines in built-up areas where it is possible that there
will be a prohibition on taking the power lines too close to the
inhabitants of those places?
Ms Pitts: To underground lines is more
costly. I am afraid I do not have the figures in my head but it
is a factor of five to ten on current costings so it would add
to the cost quite significantly. We do have rules that are in
place already around the distance that you have power lines from
dwellings so there are some rules that are there and I am very
happy to write to you and set out those rules if that would be
helpful.
Chairman: If you could let the clerk
have a note on that and anything that you do have in terms of
the costs of putting things underground would be useful to clarify.
| 
