Examination of Witnesses (Questions 1-19)
Mr Tim Abraham, Mr Chris Barton and Mr Duarte Figueira
17 MARCH 2008
Q1 Chairman: If you are happy, gentlemen,
we will start the formal proceedings. There are one or two procedural
matters. Can you see all the nameplates of the members of the
Committee? There may be others joining or leaving during our session.
In a minute I am going to ask you to describe your specific responsibilities
for the record, but may I thank you for coming. I do not know
in which order you want to go, but could you just describe your
responsibilities, please?
Mr Abraham: Yes, indeed. My name is Tim
Abraham, I am the Director of EU Energy in BERR. As such, in particular
I have responsibility for the negotiation of the draft Renewables
Directive.
Mr Figueira: My name is Duarte Figueira
and I am responsible for Renewables Deployment in BERR as Director
responsible for the RD team. Essentially that is about putting
in place regulation to make that happen but also about trying
to remove barriers.
Mr Barton: My name is Chris Barton. I
am responsible for the Renewable Energy Strategy Project within
BERR which is aiming to identify how best the UK should aim to
meet its share of the EU 2020 target.
Q2 Chairman: Thank you. I am going
to leave you three gentlemen to decide who leads off in answering
each question. I am going to kick off, if I may, by asking the
first question. How achievable are both the EU's general 20% and
the UK's national 15% renewable energy targets?
Mr Abraham: I will start off and talk
about the EU and Chris may want to talk specifically about the
UK. It was clear from the agreement at last year's European Council
that the targets as a whole were, to quote an oft-used word, ambitious
and this certainly seems to be the case as we in the UK and, indeed,
across Europe start looking in detail as to what a 20% renewables
target means in practice. The level of EU renewables energy in
2005 was about 8.5%, so for the EU as a whole there is an increase
of more than double over a period of something like 12 or 13 years.
Clearly the achievability of the targets will vary from country
to country but that has partly been taken into account in terms
of the individual targets set for each country. I would say that
whilst at one level a doubling, or a little bit more than that,
perhaps does not seem all that great, about a quarter of the current
level within the European Union of renewables is large hydro which
on the whole, with one or two exceptions, has already been secured.
We are largely talking about wind, both onshore and offshore,
solar and more advanced technologies. In the initial discussions
about the Directive in the Working Group and, indeed, in the Energy
Council, Member States have, perhaps inevitably, all emphasised
the difficulty of meeting these targets and clearly there will
be those, like the United Kingdom, who have got a comparatively
low amount of renewable energy at the moment for which this will
be a big change in the balance and challenging for that. There
will also be a number where, to take a couple of examples, maybe
Latvia and Sweden, the targets are extremely high and they have
already used a great deal of their own renewable energy. There
will be challenges of different types for different countries.
Mr Barton: If I may just add, from the
UK perspective it is clear that the proposed 15% target will be
very ambitious: the equivalent 2005 figure is about 1.5% renewable
energy in the UK, so we are looking at potentially a 10-fold increase
over the next ten years or so. The analysis by Poyry, which we
published in line with the impact assessment last week, does suggest
that this is possible but it will be dependent on having sufficient
financial support, and Poyry estimated that the cost to the UK
could be in the region of about five billion pounds per year by
2020. We will need to address some of the key barriers which are
blocking renewable deployment at the moment, for example some
of the difficulties in relation to grid and planning. We also
will be dependent on there being a sufficient supply of sustainable
biofuels. Subject to those issues being addressed, the initial
analysis, at least from Poyry, suggests that the target will be
achievable and what the Renewable Energy Strategy Project is about
is trying to work out how best to make that achievable so that
we hit our targets and get the maximum benefits from it.
Q3 Chairman: Could I just ask you
to comment on the Cambridge Econometrics report which was reported
on Friday, 14 March, saying that the target for the United Kingdom
was—I forget the exact description—pretty challenging
is a modest description of their conclusion.
Mr Barton: Thank you, my Lord Chairman.
I have to confess, I have not read the whole report but I do understand
that it was casting doubt as to whether we would achieve that
target. It is fair to say that on current policies we will not
hit that target and the Energy White Paper was explicit that we
would have to come up with further measures beyond what is currently
planned. Our expectation is that on current policies we would
hit about 5% renewable energy by 2020, so if the 15% target were
to be agreed that would be a three-fold increase. In one sense,
I am not surprised if they are saying that on current policies
we would not hit 15%. The challenge, and what the Renewable Energy
Strategy Project is about, is trying to come up with the policies
to ensure that we do hit that target.
Q4 Chairman: Perhaps I might just
ask Mr Abraham, what is the formal position at the moment on the
targets of 2020 and the 15% allocation to the United Kingdom?
Mr Abraham: The formal position is that
they are a proposal from the Commission. They came out in January.
The first detailed negotiations in the Energy Working Group start
tomorrow. The French Presidency are very keen to try to agree
the whole of the energy and climate change package, so not only
the Renewables Directive but the other connected Directives, during
their Presidency, or at least get an agreement in Council amongst
the Member States for the good reason of hoping to get the whole
package agreed and through the European Parliament before the
European Parliament elections next summer. We support that aspiration
if it can be done, but that is quite an ambitious target.
Q5 Chairman: Can I just ask one question
for clarification. You talked about one-quarter of renewable energy
being generated from large hydro facilities at present, but I
think you implied there was not very much more to come from hydro
in the timeframe we are talking about. Is that the correct interpretation?
Mr Abraham: That is my understanding,
my Lord Chairman, that most of the easy fruit in terms of hydro
across Europe has been secured already.
Mr Figueira: From a UK perspective we
are doing a little bit of work to try to identify the possibilities
for more hydro in the UK, but we believe them to be small.
Q6 Chairman: Have you widened the
scope to include the Severn Barrage, for example?
Mr Figueira: No, the Severn Barrage is
not included in that particular project.
Q7 Chairman: Could you just tell
us, for the record, what the position is in terms of your Department
looking at the Barrage.
Mr Abraham: Yes, indeed. We feel that
the Barrage, or the potential for the Barrage, if it can be executed,
is enormous and very much in the spirit of what we are trying
to do in terms of encouraging renewable energy across Europe.
As you may know, my Lord, if the initial calculations are to be
believed it could provide up to 5% of the whole of the UK's energy
supply. We are looking very carefully and have launched a feasibility
study into that project.
Q8 Chairman: By 5%, that is almost
a third of the target for the UK.
Mr Abraham: It is actually 5% of the
electricity, I am sorry, so it is less than that, I am afraid,
but it is still pretty significant.
Chairman: Splendid. Thank you very much.
Q9 Lord Walpole: Before I ask the
question, can I just say, as you touched on the tidal Barrage,
it does seem there is an enormous amount of power outside the
window over there, is there not. When you look at the Thames and
the tide coming in and out, millions of tonnes of water are moving
backwards and forwards each time. Is there any suggestion there
are other rivers that one could do that sort of thing to other
than the Bristol one?
Mr Barton: As far as I am aware there
has been consideration of whether there might be potential in
the Mersey. I have not heard of consideration specifically on
the Thames, but I am not in a position to say why that is. The
Mersey is the other river that I have heard people speaking about
that has tidal potential.
Q10 Lord Walpole: What I was really
going to ask you was how important do you think microgeneration
is in achieving the target, or are we just playing games? Expensive
games at that.
Mr Barton: Certainly our view, my Lord,
is that microgeneration will be an important part of the overall
answer. Exactly how important is one of the key issues that we
are looking at in the Strategy. It is important in at least two
ways. One is in terms of absolute generation. Certainly on the
heat side, the majority of renewable heat, if not micro, will
be distributed generation, so the great majority of renewable
heat is likely to be micro or at least not macro, if I may put
it in those terms, distributed energy. On the electricity side,
it is fair to say that under the definition of microgeneration
at 50kw it is unlikely to be a large percentage of the overall
renewable electricity but there is an increasing interest in the
distributed electricity above 50kw, so not the large scale generation
but on-site electricity generation. How significant, the honest
answer at this stage is we are not sure. We are conducting some
analysis of that and, indeed, I expect that will be one of the
questions we will be seeking views on in the consultation. The
other area in which I think it is important to pick up microgeneration
is in the potential it has for changing attitudes and engaging
people in the climate change debate and potentially for renewables
more generally. Again, there are suggestions that it may help
in encouraging people towards energy efficiency and more general
support for renewables although, again, as far as I am aware,
that is largely an expectation rather than detailed studies suggesting
that is the case.
Lord Walpole: That is a helpful suggestion.
I cannot get people to recycle paper here, let alone anything
else. It is quite extraordinary how some people are not able to
take on board the fact that there is a problem, it is as simple
as that, or they think there is one.
Q11 Lord Paul: To what extent are
these targets capable of improving the EU's security of energy
supplies? What difference, in real terms, would achieving the
target make?
Mr Abraham: I think we and the Commission
see this target as containing both an element of the climate change
campaign and as helping the security of supply. If we look at
where we are in Europe, in 2000 our import dependency on imports
of energy was about 40% and that is expected to increase to about
65% come 2020. Some of the figures of import dependency, in Central
and Eastern Europe, particularly on Russia, are very high indeed.
The idea of being able to have perhaps up to 20% of energy that
is clearly domestically produced must increase that security of
supply. To answer your question, it will certainly do that. There
is another issue which is security of supply in a slightly different
sense, which is in terms of the intermittency of electricity in
particular when a country is dependent on renewable sources, particularly
those renewable sources that are dependent on the weather and
climatic conditions. Although there are then issues about how
you balance the network, we are looking at that issue at the moment,
and Chris may be able to say a little bit more about that, essentially
our initial findings are that up to certainly 20-30% of renewable
energy in electricity, those sorts of issues are containable.
Q12 Lord Walpole: You did start to
touch on the intermittency problem. How will the EU deal with
issues of intermittency? What measures will be taken at an EU
and national level to ensure reliability of supply? The other
thing I am not clear about—I am not the right sort of scientist,
that is the trouble—is if you are transferring energy around
the countryside, is by gas pipes not the most efficient way? In
other words, I am very, very suspicious that conducting electricity
around the place by wires is an extremely inefficient way of moving
energy. Would you like to comment on that?
Mr Barton: Thank you, my Lord. Can I
take your first question first on the intermittency issue, just
to build a little bit on what has already been said. Clearly one
of the potential issues with increased renewable generation, particularly
if it is from wind, is this intermittency problem. As has been
suggested, certainly our initial analysis is that is a resolvable
issue essentially through requiring back-up generation, more flexible
use of that back-up generation and operation of it, and potentially
through increased demand-side flexibility. Using that range of
options our analysis is that the intermittency issue is not an
insurmountable problem, albeit that surmounting the problem comes
with a cost so, for example, there will need to be greater overall
generation capacity in the UK as you introduce more intermittent
generation, but it is resolvable.
Q13 Lord Walpole: As you probably
know, Great Yarmouth has got the remains of an oil-fired electricity
production capacity which is not used. In other words, there is
a power station there that is in mothballs and, instead of that,
the amount of electricity that will hopefully come down that bit
of the grid will come from offshore. Should that power station
not be mothballed but kept, not absolutely ready but ready to
go within 24 hours if there is a serious problem, or should it
be mothballed and forgotten?
Mr Figueira: That is a very interesting
question which we are pondering ourselves. What we believe is
that as the proportion of renewable generation grows it will not
replace conventional generation on a one-for-one basis, there
will be a need for back-up flexible generation to cope with the
generation of these renewables, so the chances are that we will
require flexible generation in order to cope with changes principally
in wind power which will be the dominant technology in terms of
renewables. Whether that is existing generation operated more
flexibly or whether it is new flexible generation is a matter
which will be discussed as part of our Renewable Energy Strategy
work, so it is possible that as a result of more renewable generation
on the system we will bring on board conventional generation which
perhaps has been mothballed in the past. What happens in an individual
instance will depend on the economics.
Q14 Lord Walpole: You have not answered
the question whether it is inefficient to pass power down power
lines.
Mr Figueira: I do not know the answer
to that.
Mr Barton: I do not have the figures
for the relative efficiencies but my suspicion would be that you
would need a variety of different approaches. Unless you are going
to power all generation through gas you could not rely solely
on the gas grid, but I have to confess I do not know about the
relative efficiency point.
Q15 Lord Walpole: I fear that we
lose too much electricity down these grid wires.
Mr Barton: That is a potential attraction,
I think, of some of the distributed electricity and distributed
energy approaches, that there is less scope for transmission losses.
Chairman: I think it would help the Committee
if you could reflect and perhaps let us have a note on intermittency,
in particular if we are to meet the 15% target in the United Kingdom,
and what that implies for both reserve and generation capacity,
particularly in terms of generating electricity from the different
sources, wind and water. It is clearly an issue of some importance
for us because the cost implications of providing that reserve
generation capacity we will probably wish to look at further.
Whilst I am asking for further notes, can I just jog back to the
Barrage, if you could send us a note, whether this is public or
not it would help if you could indicate to the Clerk, on the commissioning
of a feasibility study and also what the potential is particularly
from the Severn Barrage. We have taken some evidence on that but
it would be helpful to have that on the record.
Q16 Lord Paul: Concerns have been
expressed recently in some quarters about "supply chain"
bottlenecks. For example, the availability of appropriate offshore
engineering facilities. The EU target will increase demand further
and could lead to competition for resources and capabilities.
What steps are the Government and the Commission taking to assess
these issues?
Mr Figueira: We are very aware of this
as an issue. We believe that the Renewables Obligation, which
has provided the driver for renewable generation, is an extremely
important instrument and, as a result, we believe that creating
the right sort of financial instrument will create stability for
the right sort of investment to take place. Also we will be consulting
later this year on proposals in the Renewable Energy Strategy
and will take that opportunity to see what we can do to promote
investment in the supply chain. In addition to that, as part of
our Renewable Energy Strategy work, we have also commissioned
a specific piece of work trying to identify what the impact on
the supply chain would be by looking at the capacity in the UK,
in Europe and more widely internationally and then to see what
the gaps are in terms of supply chain to help us deliver the sort
of renewables investment that is required. We expect that piece
of work to make a contribution towards the Renewable Energy Strategy
work and to be possibly published alongside it. Finally, the Secretary
of State, John Hutton, has asked for the Renewables Advisory Board,
which is an independent NDPB which provides advice to him on meeting
renewables targets, to do a specific piece of work this year on
developing government and industry strategy for the supply chain
and how it might advise him on how we might reach the target in
terms of industrial capacity required. There is quite a lot therefore
that is already in train which will feed into the Renewable Energy
Strategy backing on to the fact that we believe creating the right
sort of investment climate will bring forward a supply chain.
I do not know whether Chris wants to add anything to that.
Mr Barton: If I may just add a comment,
my Lord Chairman. We see the positive way of looking at a supply
chain bottleneck as identifying there are significant business
opportunities surrounding this target and the increase in renewable
generation that we want to see. Key parts of the Renewable Energy
Strategy will need to be considering how we make the best use
of those business opportunities. In terms of policy, key issues
are likely to be giving that clear, long-term and predictable
signal as to what the policy is for support of renewables so there
is the certainty to invest there, and also identifying any specific
gaps and potential businesses filling those. An important part
of the strategy will be to see the benefits of the business opportunities
here as well as the costs.
Q17 Chairman: Will these incentives
be UK or European Union, or both?
Mr Barton: It would certainly be at the
Renewables Obligation and the financial incentives generally at
a Member State level rather than at an EU level. There has not
been a proposal at this stage for EU level support schemes.
Q18 Chairman: Can you tell us now,
or perhaps by way of a note, the membership of the Renewables
Advisory Board?
Mr Figueira: Yes, of course.
Q19 Chairman: How long has that been
in existence?
Mr Figueira: The Renewables Advisory
Board was created in 2002 and until recently it was chaired by
the Minister for Energy, but towards the end of last year the
Secretary of State decided that he wanted to chair it, and in
fact is chairing the first meeting of that renewed Board on 27
March. The Board consists of around 25 different individuals who
were appointed in a personal capacity who provide the Secretary
of State with advice on how to meet the renewable targets and
they work in a number of different areas including input to the
Renewable Energy Strategy to help us meet the EU target. The focus
this year is going to be very much on streams of work where they
can assist in providing an industrial perspective on how we can
meet those targets. One of the 20-odd work streams they have taken
on this year is, for example, supply chain work which I referred
to earlier. There are all sorts of other streams that will be
supporting Chris in the delivery of the strategy and putting it
together.
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