Examination of Witnesses (Questions 220-233)
Mr Simon Roberts
12 MAY 2008
Q220 Lord Bradshaw: Stepping outside
the Advisory Board of which you are a member, what would you do
if you were told that you have got to reduce carbon used by energy
very dramatically? What steps would you take as of now?
Mr Roberts: I think the first thing I
would do is, rather than just talk about aggressive energy efficiency
policy, I would actually implement some so that you look at the
demand for supply. This whole Directive is a percentage, it is
not an absolute amount and, therefore, you should do much more
and focus much more effort. I do not see that at all within BERR.
There are just comments around the fact that energy efficiency
is going to be done, but somewhere else in government. That is
one thing, and also integrate that into a proper policy around
the existing Climate Change Bill infrastructure. The other thing
I would do is simplify much more the support mechanism for renewable
energy so one looked more at the Spanish model of having what
in effect is a stepped feed-in tariff. They change it each year,
but there is a systematic process, which is much lower risk, much
more predictable, and therefore creates much less financing premium,
and where they have aligned planning, industrial sector development
and support mechanisms. If you have those things lined up there
is an awful lot of space in the system to do it. The other thing
I think that is needed, and it may come up in questions, is that
the Government needs to stop looking at regulation of the grid
as being something to do on behalf of consumers as though their
only interest was in how much they paid rather than what energy
system was developed. I think one needs to look much more at a
grid system that is managed to, in effect, predict and provide,
going back to a slightly older mechanism, but one taking the lessons
we have learned from the last 20 years of doing it the way we
have with much more following demand and development. Actually
we are going to need to put in the infrastructure and plan that
grid on the basis of knowing where the resource (wind, whatever
it might be) is and planning the provision of that over time,
not waiting for developments to come forward through planning
before the grid comes forward. We could still meet targets but
they will just be an awful lot later, and probably too late in
terms of the other ambitions we have to curb carbon emissions.
Q221 Lord Paul: What can we do about
moving from the Renewable Obligation Certification to a feed-in
tariff without ruining the confidence in the policy community?
Mr Roberts: We might ruin some confidence
in the policy community, but that is not the interesting community,
it is the investor community, the people who have put their money
into projects or are planning to put their money into projects.
I actually think the Renewables Obligation, while in the past
one would say, "do not keep changing it because the investor
community needs some sense of predictability and certainty",
that does not mean it is the ideal mechanism. I think what we
have seen over the last five or six years is a fairly consistent
and strong sense from the Government that they are serious about
renewables, which has now been embedded within the finance community.
I do not think they think they are about to pull the plug—excuse
the pun—pull the rug, to use a different analogy, from underneath
the investment programmes that have gone on. I think what you
have got now is an opportunity where the Government has built
up that confidence and understanding, it could now introduce completely
different support mechanisms without undermining that confidence.
The government understands very clearly the notion of grandfathering
and how to support existing investments while bringing in new
programmes, new support mechanisms. I was on the steering group
of a study that the Carbon Trust did a few years ago, which effectively
said, "if you structure it right and are very clear about
it and make it predictable and reduce the risk in it, the investment
community will lap it up". The only problem you have got
with the Renewables Obligation is the Government tends to tinker
and make it more complicated and less predictable, and that is
something the investment community does not like. As long as every
time you are applying these basic things; is it more predictable?
Is it lowering the risk, like something like a feed-in tariff
or a stepped feed-in tariff, or, what in that study was called
a renewable development premium, something which is effectively
politically controlled but manages to improve the investment return
so that it was an investment that people wanted to make. Then
I do not think you are going to have an issue with the investment
community. If you bring them in, talk to them, plan it through,
make it predictable, I think they will probably favour it rather
than reject it at this stage.
Q222 Lord Powell of Bayswater: Just
leading on from that, would you also say that really support schemes
need to be harmonised across Europe and that would give the investor
community greater confidence for the basic support scheme? Would
it be the feed-in tariff?
Mr Roberts: I am not sure whether you
need to partly because the resources are different in different
parts of Europe, so it would not necessarily be appropriate to
give a wind farm in Scotland the same support as they would give
it in a rather less windy part of middle Germany.
Q223 Lord Powell of Bayswater: Not
the same level of support but the same instrument of support?
Mr Roberts: I am not entirely convinced
that is necessary, and I think what we would find is the EU and
the various Member States spending an awfully long time harmonising
their support mechanism when actually we could get on and deliver
programmes. I think what is needed is for the Government to look
to what has happened in other countries and take some lessons
from that. What we have seen is that support mechanisms which
have more of the characteristics of feed-in tariffs seem to develop
more quickly, and ultimately at a lower cost to the consumer.
There has been the Government's argument for using the RO, yet
there is no evidence any more to support that at all; in fact
it is a very expensive per megawatt installed way of supporting
renewables. As an organisation which works on fuel poverty as
much as we do on carbon emission reduction, that seems to me to
be something which the Government ought to be taking very seriously.
I do not think you need to harmonise support across Europe. I
think you need to look at making sure that the investment opportunities
in the UK look as interesting and predictable and low risk as
they do in other parts of the EU but also, much more broadly,
in other parts of the world.
Q224 Lord Powell of Bayswater: Do
the Guarantees of Origin Certificates make any sense without a
harmonised European support scheme? How will they be traded?
Mr Roberts: I am not entirely convinced
they should be traded, and certainly I would not see the UK, being
an area with a very good renewable energy resource, as a country
that ought to be looking to achieve its obligations from investing
in countries overseas. If they were, or if British companies were
doing that, it is probably a sign that the UK has not got its
support mechanisms right rather than because the resources, in
terms of renewable resources, were that much better somewhere
else.
Q225 Lord Powell of Bayswater: Maybe
a timing issue because there is a deadline which cannot be met
without doing this, you know that?
Mr Roberts: Maybe come back to you in
2018 on that one! I just actually think at the moment, let us
get on with it and stop worrying and fiddling around with whether
we are going to hit 14.7 or 15.3%, and how much we might be able
to trade. It is fairly obvious what we have got at the moment
is not going to work to get anywhere near that kind of level.
There are examples from overseas that we could readily import
if only we could get off our holier than thou, we have got pure
market mechanisms, we must be better than anyone else, and we
have got competition so we must be somehow better, high horse.
Back off and learn from what they have managed to achieve in Spain.
From a standing start five years, after we started with the NFFO,
they have got to the stage where they are now installing twice
as much per year as we have installed in the last 15. It seems
to me there is a lesson to be learned there.
Q226 Lord James of Blackheath: Is
that just land versus land or is that all methods? Are you taking
the totality of land and sea-born wind farms together in that
or are you talking land versus land?
Mr Roberts: If you just include onshore
you look far worse in the UK compared with Spain. They did 3,600
megawatts of onshore wind last year, and we did, including offshore,
something around 500 or 600.
Q227 Lord James of Blackheath: Does
that, Mr Roberts, bring us back to the point I was debating with
Lord Dixon-Smith about the supply chain being conditioned by the
infrastructure of equipment that is available to sustain the development
and production of these farms?
Mr Roberts: Yes. I think there is a chicken
and egg aspect to that, but I also recognise what you are saying
about the role government can play in stimulating supply chains
in developing capacity which would enable industrial benefits
to be captured here rather than somewhere else and to scale developments
to overcome those kind of obstacles you are going to get if simply
you wait for the pull from the market to pull industrial development
through. What they did in Spain was effectively say, "If
you want to put up a wind turbine in Galicia and get planning
for it, you will need to source 60% of the components for that
from within Galicia". All of a sudden there is a lot of manufacturing
capacity in Galicia associated with it. Now, you say that to the
DTI and they will basically talk about EU procurement laws and
how you cannot possibly. You talk to people from Spain, and they
will say, "I do not see anyone from the Commission coming
and challenging us".
Q228 Lord James of Blackheath: Is
your approach to this then that the British Government ought to
be resolving this by, first of all, a dialogue with Europe to
establish what can be done and then going out and doing the maximum?
Mr Roberts: I do not need to teach this
Committee that Britain tends to take a much stricter interpretation
of every single law that ever comes out of Europe than any other
part of Europe does and, as a result, we tend to never really
stretch the boundaries and never really find out. I think there
would be great benefit in understanding how those industrial planning
and support mechanism alignments can be achieved within the confines
of European law.
Q229 Lord James of Blackheath: In
contrast to Lord Dixon-Smith's response, I think you are saying
that it is much more a government policy initiative which needs
to be taken rather than an investment community initiative?
Mr Roberts: The investment community
is going to invest in things they see they can make money out
of. Putting money into building a ship to put piles in the ground
for wind turbines off-shore is quite a big decision to make when
what you are actually waiting for is to see how much of that development
is going to take place. At the moment the only mechanism the Government
uses is effectively to use the Renewables Obligation to pull development
through by providing some benefit at the end. There is a lot of
evidence from other countries that you need to intervene at more
places along the supply chain, rather than just the end, for example
the output support in order to get industrial scale development,
sector developments—we are talking about an offshore wind
industry sector and an awful lot of money being invested in that
over time—if you want to get that going simply paying a
little bit extra for the electricity it will produce will not
drag it through quickly enough at scale where the UK will gain
the industrial benefits of that unless you also intervene. I am
also a board member of Regen South West, which is a sustainable
energy agency for the South West funded by the RDA, the regional
development agency down there. They did a bit of work a few years
back, to look at what role the RDA, which is in effect an arm
of government, could play in stimulating marine energy, "what
was the missing bit?" In effect what they identified was
the missing bit was the connection from the sea to the land and
the planning permission associated with connecting up with that.
They now have a programme which is going forward with the RDA
support and some input from government funding to do what is called
the wave hub. This is effectively best described as a long extension
lead with a four gang socket at the end of it under the sea, about
30 miles long, coming into ground at North Hoyle in Cornwall.
That will provide four private developers with their own money,
and probably some government grants as well, a pre-consented testing
ground for their marine energy devices, wave energy devices. This
is public money being used to clear through what would otherwise
take each individual developer an awful long time to sort out
because the alternative is each developer has to go and find a
way of getting a 30 mile cable laid to North Hoyle so it can test
its device out. That seems to me an excellent use of public money.
There will be almost no public bodies involved in the delivery
of it, it will be done by the private sector, because they can
do those kinds of projects better, generally speaking, but it
will have public money to support it and the public engagement
of stakeholder process identified it and led to its development.
Q230 Lord Whitty: On the planning
side, I think I heard you say quite early on that the local planning
framework needed to be positive, and in some other European countries,
I think specifically, Spain, the community supported these projects
because the community benefited from these projects. Bearing in
mind you are talking about consumers and prices at the end of
the day, are you saying that in relation to some of these projects
the specific community benefited in the sense that they had cheaper
electricity or growth of jobs or whatever and that the local planning
framework facilitated that or are you saying something rather
more general?
Mr Roberts: Both general and specific
probably at the same time. What I will do is send to the Committee
a summary of the report we wrote because it was trying to piece
those things together. Effectively what it showed was in Spain,
Denmark and Germany—the three countries we looked at and
compared with the UK—there are, through various different
ways: in Spain principally industrial benefits and therefore jobs
within the region, and there is a very strong regional identity
in Spain; in Denmark much more through local ownership and the
co-operative structure they have got there; and in Germany simply
through a very, very dispersed ownership structure for most of
the wind turbines which have been put—and in some cases,
in one of the states, they have a fund which provides a certain
amount of euro/cents for each metre of vertical structure in the
landscape, a rather Teutonic solution, but one where there is
a very clear framework in which in the community—and you
can define that in all kinds of different ways, how big or small
it is—there is a real sense that this is not something being
done to them by an outside commercial often not even UK-owned
interest but something which is being done partly by people within
the community or people who are benefiting the community with
jobs or where there is a very clear framework of growth and support
for that. I think we need in the UK to look at how we make the
benefits that flow into the communities a much more systematic
and routine part of the development. And whether that is by simplifying
support mechanisms, so a wider range of people can get involved
easily in development rather than being a rather high risk process,
I think it is probably more, at this stage in the game, about
starting to set standards for the kind of contributions that wind
energy development will make into funds which can then be used
for good works within the community and to make that systematic
and routine, and set benchmarks for it rather than leave it at
the largesse of the developer. I think developers will talk about
them being good neighbours and opponents will talk about being
bribed, but I think there is a very clear justification; the wind
does not belong to anyone, if you are putting up wind turbines
you are farming the commons in effect, and I think there is a
good case for arguing that some of that should be put back into
some common fund for the common good of the community. We have
done a community benefits toolkit for the DTI and Renewables Advisory
Board which drew out a lot of these issues. One of them obviously
is where you draw the line around that community, who controls
it, how you make decisions around that, but at the moment that
is completely ad hoc, completely at the largesse of the developer,
local authorities get involved in it but get it muddled up with
planning and economic development and are not clear about it.
It needs some more systematic and clear process so that it is
very clear that local communities will, and quite transparently,
benefit from renewable energy development in their vicinity.
Q231 Lord Whitty: How do you see
that being driven through the planning structure that we have?
Is it an initiative which the Regional Development Agencies or
the regions could drive by their role as a catalyst for this or
is it something which needs to change systematically within the
planning system itself?
Mr Roberts: The planning system cannot
take account of any of those kind of things which I think is a
fault. When we did the original study one of the recommendations
was you needed to start looking at the economic benefits which
can accrue locally as something which is material within the planning
system, and at the moment they are outside it. I think that becomes
a difficulty in relation to wind so you end up with this rather
purist planning decision and then the economic development side
rather separate. It seems to me that does not create clarity.
You have some local authorities now, particularly in Scotland,
where they insist on some renewable energy community fund being
made but declare that it is completely independent of any planning
decision they might subsequently make. It is basically a mess
at the moment and it needs to be resolved and would best be resolved
by setting some very clear nationally agreed benchmarks for the
level of contribution that will be made from any renewable project
into a fund which will be organised for the community good and
that may be organised on a regional basis or a local authority
basis. I think those kinds of things may vary from region to region
and where that is clear and decisive. I am not sure at this stage
whether you would even need to legislate for that. I think you
could probably set up something which worked initially on a voluntary
basis and you could then build it into basically common practice.
You are not sure, maybe I am just not being clear enough.
Q232 Lord Whitty: You did say initially
that we needed to look at this aspect of the planning process
as well as the big infrastructure projects.
Mr Roberts: Yes.
Lord Whitty: If we were to do this for
the smaller ones then I think you would need to look at the planning
system and as we know the Planning Bill is coming this way very
shortly. Do you have any ideas!
Q233 Lord Rowe-Beddoe: A very quick
question. As you are Bristol based I must ask you, do you have
a comment on the inquiry or the proposal for a Severn Barrage?
Mr Roberts: I have been around in Bristol
for too long to have really much of a thought on that because
it has flowed in and out like the tide, basically. My sense is
that it is a big technological lever that the Government is desperately
trying to pull on to hope that it can fill in a big gap in its
calculations as to how it is going to hit targets. It strikes
me that it is incredibly capital intensive. There are a lot of
unanswered questions. It suffers the usual engineering problem
of trying to extract all of the energy out of the Severn rather
than just take some of it out which would reduce a lot of the
impacts. And I cannot at the moment see any way in which it would
be funded. I think there are also some important issues around
its impact on the grid because, while it is predictably intermittent,
it actually will be producing power at various different times.
It becomes much more problematic to deal with a very large project
like that, and Graham Sinden at the Carbon Trust has done some
interesting work on this. If you have a very big project like
that producing power with the tide (so predictably), the balancing
issues ensure that the real power you can count on the system
is much less than you might imagine and it causes all kinds of
problems in relation to that.
Chairman: Thank you very much indeed
for coming and for your very clear and interesting evidence.
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