Examination of Witnesses (Questions 300
- 305)
TUESDAY 24 JUNE 2008
Mr Chris Bennett and Ms Nicola Pitts
Q300 Chairman:
Just coming back to nuclear, can you turn up and down the power
of nuclear at will?
Mr Bennett: That is an interesting question.
My understanding at the moment is that there are discussions to
look at that question of whether in the future generation of nuclear
it can be more flexible than historically has been the case, so
there are two questions being asked: one is, is it feasible to
do that, let us look into the costs and economics associated with
that; the second one is if that is not the case, let us look at
a world with a high degree of nuclear, a high degree of renewables
and then what gas and oil do you need to still hold on the system
if that is the only plant available for flexibility, so we are
very much looking beyond 2020 to 2030 and a world of renewables
and nuclear and how we would operate the system.
Q301 Lord Macdonald of Tradeston:
Offshore wind has higher generation levels than onshore wind so
does that mean that it is less demanding in terms of the short-term
reserve that you require and the margin of spare capacity that
you need?
Mr Bennett: Our analysis at the moment
suggests that the key driver for the amount of reserve that we
need to hold is the uncertainty and the intermittency of wind
rather than the load factor of the wind, so at the moment we believe
a slightly higher load factor for the offshore would not impact
on the amount of reserve that we would be looking to hold. The
reserve numbers that I quoted earlier deal with the scenario of
11 gigawatts onshore and 19 gigawatts offshore.
Q302 Chairman:
Can we look at the demand side for a moment? To what extent do
you think demand side management can reduce the cost of accommodating
the intermittency of renewable energy? As an alternative ploy
do you see any prospects for energy storage?
Ms Pitts: To start off we just have to
think of the system as it is now, and demand side responses are
a relatively new thing. It has generally been managed by generation,
either turning it up or down, but as Chris said there are demand
side offerings that are out there; Anglesey Aluminium can come
off very, very quickly and can stay off for up to 20 minutes,
so there are people who are thinking around the demand side but
it is a new area so it is quite immature at the moment. In terms
of balancing wind at peak times demand side management will be
crucial. How can you actually facilitate that? Certainly things
like a smart metering rollout will help; that will enable suppliers
to offer differential tariffs so that people are incentivised
to use electricity off peak. There is also dynamic demand which
is a potential and it could be that National Grid in its residual
balancing role could be able to say turn down fridges for half
an hour or turn off a washing machine, so all of that is the potential
that is out there. In terms of how much would that shave off these
additional balancing costs, something like dynamic demand is probably
more shaving off tens of millions rather than the hundreds of
million, so there is the potential but I do not think it is the
complete solution. The other issue of course is the system is
really set up to satisfy every piece of demand that is out there,
and maybe we have to look at the system in a different way and
think about greater energy efficiency so that we are actually
reducing the amount of energy we are using overall. In terms of
storage I am sure lots of people have told you about lots of exciting
projects that are out there. Some of the simpler ones, things
like storing hot water and potentially a new generation of storage
heating could help to use the potential of wind power that is
generated overnight when demands are lower, so storing that is
extremely feasible. There are also some other projects that are
being developed in certain parts of the world—there is the
potential for creating hydrogen using seawater next to offshore
wind farms—so there is a broad array of things that could
happen. We are obviously looking at what is out there but we have
not come to any sort of firm conclusion that there is one answer
for the demand side at the moment.
Q303 Chairman:
Coming back to the reserve for a moment, what proportion of your
reserve do you currently buy from the demand side and would you
expect that proportion to change over time as you have a significant
amount of renewables on the network in 2020?
Mr Bennett: I have not got the precise
numbers to hand but we can definitely send that information through.
We are always interested in the demand side and at the moment
it is the large industrial plants; we very much look to encourage
those customers to provide demand, so at the moment the vast majority
is held on generation rather than demand, I do not know the precise
percentages but going forward we definitely see the role of the
demand side becoming increasingly important, so we are very much
looking to facilitate the demand side of the market but we can
firm up on the precise percentages.
Q304 Lord Lawson of Blaby:
Assuming this is the route we go down, with the wind power from
2020 and maybe a further expansion beyond that, and given the
fact that not only are there times when the wind does not blow
but there are times when it blows so hard with current technology
that you have to stop the wind turbines then, what do you consider
is the residual minimum capacity of conventional power that you
would need to have to cope with these, bearing in mind that the
demand side adjustment although technically possible has all sorts
of difficulties, not least it would probably be very unpopular
if you tell people they cannot use their washing machines. If
you agree, what amount of back-up is the residual minimum that
you would need and how many hours a year would you expect that
back-up to be used?
Mr Bennett: In the central scenario that
we have worked to at the moment, even with the penetration of
wind that we are talking about, given the load factor of wind
there is still sufficient energy left to meet demand that would
require other sources of power so we do not envisage in a 2020
world that we are in a world whereby there is not a requirement
for other plant to actually meet demand. As I say, 30 gigawatts
of renewables, the average demand is 40 gigawatts anyway so there
is sufficient energy for conventional plant in a 2020 world. Purely
from our system operating role, the residual balancing role, the
reserve numbers that I mentioned earlier to be happy that we could
manage the short-term reserve requirement we were talking about
a requirement of seven to ten gigawatts of reserve for the residual
balancing role, but clearly the market may well be looking to
provide more generation than that to keep itself balanced. As
I said, our central scenario of 99 gigawatts of capacity, if you
work through the factors, would achieve a plant margin similar
to the plant margin that we have got today and that 99 gigawatts,
if 30 gigawatts of that is renewables there is still a significant
amount of conventional plant under that scenario.
Q305 Lord Lawson of Blaby:
That is just to 2020; as the plan goes beyond 2020 if it does—and
it seems to be the Government's policy that you increase it—and
the Climate Change Bill for example has a 2050 target of either
60 or 80 per cent decarbonisation, then presumably renewables
under the present policy would be even bigger, would they not?
Mr Bennett: That is definitely feasible.
In our preliminary work that we have done post 2020 very much
the nuclear and carbon capture comes into the equation as well
as renewables, on the basis that there is not a renewables target
per se after 2020, it is then the carbon reduction targets, so
we are looking at the full suite. As I said, for the residual
balancing role you have got probably a requirement of up to ten
gigawatts of reserve and it is then for the market to decide to
balance its own position whether it does want to hold a combination
of conventional plant as well as renewables such that they can
balance their individual portfolios.
Chairman: Thank you very much for spending time
with us and answering our questions. We look forward too to your
further written submission and I wonder if there is one additional
question you might address in that further submission. That is
that in your first written evidence you mentioned the possibility
of using bio-methane in the gas pipeline network; could you expand
on that and perhaps tell us how much of the UK's natural gas could
be replaced by bio-methane, looking at both the sources of supply
and any technical limits that there might be in the mixture you
would deliver, that would be very helpful. Thank you very much
indeed.
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