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Shot in the dark

ICE energy board chairman David Anderson explains the detail and highlights the gaps in current power policy.

Energy was barely out of the news in 2003. It started with the Energy White Paper in February setting the ambitious, but conflicting, goals of reducing CO 2 emissions by 60% by 2050, maintaining reliable supplies, promoting competitive markets and providing affordable heating.

The White Paper has spawned the Energy Bill presented to parliament in late November 2003 and expected to receive Royal Assent in July. Its three main themes are developing offshore windfarms beyond UK territorial limits, establishing the Nuclear Decommissioning Authority to clean up the UK's civil nuclear legacy, and creating a statutory framework to introduce the British Electricity Trading & Transmission Arrangements which will effectively extend existing arrangements into Scotland.

Energy is likely to attract continuing media interest in 2004. Wind energy generation faces technical challenges; the margins of excess plant capacity is declining; the need for alternative baseload generation will reach crisis point and security of supply is fragile.

It is becoming increasingly clear that the national target of getting 10% of generation from renewables by 2010 will fall short by some considerable margin. Seven per cent is more realistic with most of this coming from wind, both on and offshore.

The proposed extension of the renewables obligation from 2010 to 2015, together with the proposed easing of planning conditions, will give further impetus to early development of the best onshore wind sites.

Offshore wind sites look promising on paper, but developers will have to work hard to attract funding, recognising the additional difficulties of building in a severe corrosive environment up to 30km offshore. There are also concerns about intermittency and generation back-up for windless days.

Wind, nevertheless, remains the best option for a worthwhile renewables programme and 2004 should see the launch of the first construction of developments of over 100MW.

The second issue is plant margin - the percentage of generating capacity available above maximum demand. This will continue to give concern despite the Regulator's assurances that mothballed plant returning to service will ease the problem of generation shortfall.

Plant margin several years ago sat healthily around 27%; it is now around 20% having been as low as 15%, the oft-quoted minimum threshold to maintain secure supply.

Given that more than 50% of current generating plant is over 30 years old, it is questionable whether 15% - or indeed 20% - is sufficient. There is little likelihood of this changing over the next three years despite 6GW of proposed gas fired capacity having received government consent.

Wholesale generation prices are unlikely to be at a high enough level to justify developers building new gas fired plant for another three years. This coincides with the closure of several magnox nuclear power stations and the introduction of the European Union's Large Combustion Plant Directive which will drive the early closure of certain elderly coal stations. This problem will become more evident in 2004.

As far as the power distribution network is concerned National Grid's investment figures for grid refurbishment and renewal suggest that assets with a recognised replacement cycle of between 15 to 85 years are currently being replaced at a rate of less than 1% per annum. This equates to an actual replacement cycle of 100 to 120 years.

Network sufficiency, refurbishment and extension to capture the growth in renewables, mean that the transmission and distribution companies will remain a primary focus of attention in 2004.


The options: can the alternatives to gas deliver?


Coal has slipped down the rankings as a viable energy source since the 1980s. Then, Britain burned more than three times as much coal as it does today. Coal now provides around 30% of Britain's energy, but lack of action on reducing greenhouse gases and acid rain emissions from coal fired power stations means that coal is now battling to justify its presence in the energy market.

Like nuclear power, coal has become an expensive to use resource because of its potential to pollute. Huge sums need to be invested in clean coal burning technology. At the same time, scientists are examining ways to store carbon dioxide emissions underground. This method of sealed storage is unlikely to come cheap either.

'By 2020 coal generation's contribution to the UK's power output is likely to be significantly lower than today, ' says the government's Energy White Paper.

It cites increasingly draconian European Union restrictions on emissions from coal fired power stations as a key factor in coal's impending decline.

But Britain still has huge coal reserves, which could be more fully exploited if the government, the coal industry and energy producers could be persuaded to invest more in clean coal burning technology. Instead Britain's coal power station operators are likely to import less polluting coal so they can produce electricity without breaching emissions limits.

Incentive to build new coal fired stations are also few.


Last year's White Paper states that 10% of the UK's fuel mix for electricity generation must come from renewable sources by 2010 and this was extended in December to 15.4% by 2015. According to the White Paper, renewable sources contributed a total of 3GW, or 3% of baseload capacity in 2002.

To meet government targets renewables have to multiply their contribution by 500%.

Wind offers the best chance. In December the Crown Estate granted 15 licences to build the next generation of super size offshore wind farms. The capacity of these could dwarf that of sites currently under construction.

The first generation of wind farms covers 13 sites limited to 30 turbines per site. The next 15 will be further offshore and could hold more than 250 machines. According to the British Wind Energy Association this will yield between 5.4GW and 7.2GW of electricity.

Building offshore is not without its problems, but offshore wind attracts millions of pounds in subsidies (NCE 24 July 2003). Younger and less developed technologies are not so lucky.

Wave and tidal power projects are still in their infancy. Research and development grants are sporadic, causing problems for developers.


Engineers - or at least the ICE and the Royal Academy of Engineering's Professor Michael Laughton - are certain on the role that nuclear could play.

'The government needs to bring forward a public consultation on nuclear power, advance a study on what a new nuclear build might look like, provide mechanisms to retain fast disappearing skills in the nuclear industry and research options and technologies, ' says the ICE in its commentary on the White Paper.

Laughton agrees: 'A commitment to debate the nuclear new build issue is necessary in both public and political domains. Pragmatic and bold steps should be taken to ensure maintenance of the nuclear skills base, to explore licensing of new technologies and begin initial modelling of business frameworks that will provide a working base for the commercialisation of any future new build programme.

'If coal is not considered then rather than replacing nuclear with gas fired plant capacity, replacing retiring nuclear plant with new nuclear is the only sensible option, ' he adds.

Both are concerned that if the government pursues current policy, generating capacity provided by nuclear power plant is likely to be eradicated within 20 years as ageing plant is taken out of service.

Nuclear energy currently accounts for 25% of Britain's energy needs but its viability is hampered by the costs of decommissioning radioactive reactors and storing toxic nuclear waste.

The recent Energy white paper gave limited hope to the pro-nuclear lobby.

'At some point in the future new nuclear build might be necessary if we are to meet our carbon targets, ' it says. But the statement appears to keep the nuclear option open rather than commit to it.

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