Examination of Witnesses (Questions 80-88)
Mr Matt Thomas
31 MARCH 2008
Q80 Lord Bradshaw: That is at county
level. Would not a better method of dealing with these actually
be to turn the planning process on its head from being an adversarial
system to being an inquisitorial system, where an inspector was
appointed to conduct an inquiry, and he asked the questions, not
lawyers, and he presumably would be well briefed to actually bring
out the answers.
Mr Thomas: I think that is a very good
point, and it is one that we have debated as a company. To be
honest, we have pushed forward with the County Council level argument
because we felt that that was the one that was more likely to
be accepted if there was a planning system change, but I certainly
would not dispute that that arguably, if you wanted to really
shake up the planning system, that would be one way of doing it.
I mean, we are mindful of these targets certainly and whether
or not that kind of shake-up could happen in the required space
of time, I do not know. But it is certainly something that we
would look at if that was mooted, and I think we could welcome
as an organisation.
Lord Bradshaw: I suggest you would have
to advocate it, not look at it, because if these large projects,
and I am not saying yours particularly or anybody's, but if large
projects are to progress, then something has to happen to the
planning process, because if things are going to take 15 years
to materialise, then we are all dead really, because we will not
have any energy.
Q81 Lord Rowe-Beddoe: Does your company
have any offshore wind farms?
Mr Thomas: It does not. We are a relatively
small company, we have just built our largest onshore project,
which is 16 MW, 20 turbines.
Q82 Lord Rowe-Beddoe: Thank you.
That leads me to my next question: to your knowledge, what is
the largest installation in the United Kingdom in terms of number
of turbines?
Mr Thomas: There is one going up in Scotland
at the moment, I think by Scottish Power, which I think is about
320 MW, so presuming a 2 MW turbine, it will be about 150 or 160
turbines. That is a huge onshore wind project, and I would imagine
that would be one of the last very big onshore wind projects in
the UK. I would be surprised to see an onshore project of that
scale being developed again. Going back to your first question,
making a jump for us from small to medium-scale onshore to offshore
is probably at the moment a jump too far, and if we as a company
got into offshore wind, it would arguably be as part of a consortium,
rather than strictly off our own backs.
Q83 Chairman: Now grid.
Mr Thomas: Grid, there has been a lot
of talk of intermittency and certainly the wind power naysayers
often bring intermittency into the problem. We do not believe,
certainly within the context of these targets, that intermittency
is going to be an issue. The work done a couple of years ago by
the UK Energy Research Centre looked at about 200 different renewable
energy studies, and concluded that intermittency was not going
to be a problem certainly within a 20% renewables threshold. So
that kind of fits very nicely with the targets we are working
with here. From a small grid perspective, modern turbines are
fitted with a number of voltage regulation systems and suchlike
which can actually support and strengthen weak grids, so I would
argue with anyone who said that wind turbines were a problem on
a small grid. So I do not think we have that issue. As far as
costs go, again, the ERC calculated that I think about 0.1 penny
per kilowatt hour would be the increase in cost due to the intermittency,
which when you look at a current tariff of something like 10-15p
per unit, is very small, it is less than 1% that the customer
would actually pay in addition. So I do not think intermittency
is either a technical problem, certainly within 20%, or indeed
a cost pass-through to customer issue either. Where we have grid
issues is actually securing the connection in the first place,
and currently even for small projects, the lead time for grid
connection is easily nine months, possibly in excess of twelve;
that is from Ecotricity's perspective of small to medium-sized
projects. I do not know how much waiting Scottish Power with their
320 MW project had there, but certainly remote sites, particularly
in Scotland, grid issues I think are becoming very, very serious.
The lead time for just standard kit for grid connections is also
increasing, so just the very basic switchgear—and this obviously
leads on to supply chain issues, but it is very much grid-related;
even basic switchgear, you are looking again at 12 months' lead
time, plus an increase in costs. A lot of that is down to raw
materials, especially the increase in the price of copper, which
is feeding through to the energy industry. So that is certainly
an issue that we have.
Q84 Chairman: But it is not a technical
problem. If there were more resources or there was a change in
priorities within the grid authorities, presumably that 12-month
delay could be shortened?
Mr Thomas: Potentially, I mean, as a
wind developer, I would say that the grid should be socialised,
and clearly, I do not think that is going to happen in the short-term,
but looking beyond the size of our company, if larger scale, more
remote wind sites were to be developed, then having a socialised
grid would certainly ease that problem. If it was deemed to be
a policy worth following, whether it could be implemented within
the timeframes that we are talking here, I think is questionable.
Q85 Chairman: Could you just define
socialised, you mean nationalised?
Mr Thomas: Yes, essentially. At the moment,
each developer will pay its own grid costs, and a grid connection
will cost in the region of about half a million pounds per kilometre,
so that obviously has a huge effect on the commercial viability
of a project. Small projects, certainly the type that Ecotricity
specialises in, have to pay their way as far as the grid connection
goes. So if you only have two 2 MW turbines, for example, that
are a couple of miles from the nearest grid point, the cost of
the connection could well outweigh the feasibility of putting
those turbines up.
Q86 Chairman: We only have a few
more minutes before we turn to our final witness, but would you
just dwell on any incentives that the Government could provide?
Mr Thomas: At the moment, we are reasonably
happy with the Renewables Obligation as it currently stands. Clearly,
there are some modifications that will be made next April, and
it is obvious that that is to make offshore wind power commercially
attractive.
Q87 Chairman: For the record, could
you just define or describe the Renewables Obligation for us?
Mr Thomas: Of course. The Renewables
Obligation is a financial obligation on suppliers to source a
certain proportion of their electricity from renewable sources
or pay a buy-out penalty. As developers, we certainly welcome
the support that the Renewables Obligation provides. Without going
into too many technical details, the Renewables Obligation Certificate
that we are awarded for each megawatt hour of renewable power
that we generate is currently, I would say, an adequate incentive
for us to continue to build renewable energy projects. There was
some uncertainty last year when there were some changes mooted
to the Renewables Obligation and I think we were pretty alarmed
as a company that potentially onshore wind could receive less
support. I think there is a school of thought that says onshore
wind is now becoming a mature technology, and as such, on its
own is commercially viable. For some of the reasons I mentioned
earlier, certainly increases in raw materials costs, we would
dispute that, and we are very glad that the current support of
one Renewable Obligation Certificate or ROC per megawatt hour
remains with onshore wind. Offshore wind will get, next April,
1.5 ROCs per megawatt hour, and marine technology will get 2 ROCs
per megawatt hour. That brings me on to—there is certainly
a note here on feed-in tariffs, and we as a company are not currently
convinced, we have looked at some marine technologies for deployment,
and we are not convinced at the moment that two ROCs per megawatt
hour will be a sufficient level of support for marine renewable
technologies, and in such an instance, rather than, say, having
a capital grant awarded, if a specific limited scope feed-in tariff
were pushed towards those technologies, then I do not think as
a company we would have an issue, so long as it did not overly
advantage that technology. The Renewables Obligation has had a
number of criticisms levelled at it, and one of those is it treats
all renewable technologies exactly the same, regardless of their
state of commerciality, and I think the new RO regime will go
some way to alleviating that.
Q88 Chairman: I am going to stop
you there because we have run out of time, but by marine, I assume
you mean wind turbines at sea?
Mr Thomas: No, I mean, sorry, wave and
tidal technologies, as opposed to offshore wind, which would be
wind turbines.
Chairman: Mr Thomas, thank you very much
indeed. Perhaps you would remain there, and if we could invite
Ms Davenport to be our last witness, and we will aim to finish
at 6.00.
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