Energy Handbook 2011 - GBR

P o w e r S u m m i t - T h e E n e r g y H a n d b o o k 2 0 1 1
C o u n t r y P r o f i l e : U n i t e d K i n g d o m
Wind turbines
located at Kentish
Flats; Photo
courtesy of Vestas
Wind Systems A/S
different, and so the investors have got to
find the money.” The UK government has
accepted Ofgem’s findings and concedes
that a large proportion of the investment
will have to come from overseas. “To
achieve [our targets] requires a substantial
amount of investment in renewables
across the whole of the EU – billions and
billions,” says Tim Yeo. “Everything we
do,” says David Porter, “is connected
with the scope for investment. This is our
message to the government: whatever
you do, don’t take any risks; if this money
doesn’t come forward, you’re not going
to achieve what you want to achieve.”
The UK energy sector has already seen
significant foreign investment. To cite
two recent examples, the Thanet wind
farm off the coast of Kent has been
owned by Sweden’s Vattenfall since
2008, and London Array – expected
to surpass Thanet in size when it is
completed in 2012 – is owned 50 percent
by Denmark’s DONG Energy, 30 percent
by E.ON UK Renewables and 20 percent
by Abu Dhabi’s Masdar.
There may be an upside to this uncertainty,
however, and the potential benefits for
investors could be well worth the risk. “If
everything comes right, you might have
a situation where instead of having just
enough electricity production, you have
ample,” says David Porter. “Electricity will
be in higher demand. One day we have
to address transport, and the electric car
remains a serious frontrunner; there’s a
big possibility that heating will be more
electric and less gas; air conditioning has
become an expectation; and then there’s
the electrification of the UK’s railways.
You could move from a very conventional
position, through this uncomfortable
period at the moment, into a world where
far more things are electric and we have
far more production.”
“An industry that used to be very dull and
almost risk free, the sort of place people
might put their pensions – although it’s
different today and we’re coming up with
lots of new technologies that haven’t yet
been tested – could potentially be very
exciting and profitable.”
David Porter’s hopes for the industry are
supported by sound theory. In his 1865
book The Coal Question, economist
William Stanley Jevons argued that
improvements in fuel efficiency tend to
increase, rather than decrease, fuel use:
“It is a confusion of ideas to suppose that
the economical use of fuel is equivalent
to diminished consumption. The very
contrary is the truth.”
Jevons observed that after the introduction
of James Watt’s coal-fired steam engine –
which greatly improved on the efficiency
of Thomas Newcomen’s earlier design
– consumption of coal soared in England.
Watt’s innovations made coal a more
cost-effective power source, leading to
the increased use of the steam engine in
a wide range of industries. This in turn
increased total coal consumption, even
as the amount of coal required for any
particular application fell.
efficacy of an approach to decarbonising
the economy that is primarily based on
energy efficiency. Organisations such as
the Carbon Trust, the National Energy
Foundation and academic bodies such
as UCL’s Energy Institute look to take a
more holistic approach to environmental
protection.
Government and Private Sector: a
Symbiotic Relationship?
For many enterprises, the level of support
available from the UK Government is
a motivating factor in their decision
to invest in the country. “The UK is at
least 20–30 years ahead of every other
country in their energy policy,” says Akio
Fukui, CEO of Mitsubishi Power Systems
Europe.
Last February the UK Government granted
Mitsubishi a £30m offshore wind turbine
research and development budget. “Our
reason for being here is simple: the product
is here,” says Fukui. “The UK started
talking about offshore about three or four
years ago. These days, influenced by the
UK, China, Japan and the United States
now talk about offshore. Technically the
UK is a leader.”
“I admire the strategy. The politicians
include a number of private-sector
companies in their discussions so that
policy is harmonised amongst the people
concerned: manufacturer, technology
holder, government, universities and
others. That’s why we decided to follow
through with our investments here,
because we trust the UK Government and
its policy.”
Despite his approval of Government
strategy, Fukui acknowledges that there
remain areas of uncertainty in energy
policy. The Government is focused on
targets 10 or 20 years in the future, Fukui
explains, but there are few guidelines as
to which energy sources to proceed with
in the immediate future. “Energy policy
should be balanced amongst offshore and
onshore wind, nuclear, coal-fired plants,
gas-fired plants and other technologies,”
he says, “with a precise breakdown for
each for five years, 10 years, 15 years
from now. People are always talking
should be much more detail on how we
get there along the way.” And as much
as it is necessary for the Government to
support private industry, according to
David Hodkinson of Vattenfall it is equally
necessary that the private sector continues
to justify the support it receives. When
Vattenfall took over the Thanet wind farm
in 2008, the project was behind schedule
and many contracts were expiring. The
opening of Thanet by Chris Huhne in
2010 went some way towards restoring
confidence in offshore wind. “It has been
absolutely essential for continuing UK
support for renewables that we provide
tangible evidence of supporting the UK
economy,” says Hodkinson.
The All-pervasive Grid
In the BBC Four programme “The Secret
History of the National Grid”, writer and
critic Will Self discusses the nature of
Britain’s dependence on electricity as
a sort of amniotic fluid surrounding us:
“the grid becomes effectively a mesh: it
becomes finer and finer and it contours
itself around our lives more and more.
…We become more and more effectively
divorced from how we heat and power
our domestic working lives; we’re more
and more disconnected by the fact of our
massive levels of connectivity.”
Can consumers remain estranged from
the energy they use, feeding off an
amorphous grid? As the prominent modes
of energy generation change in the UK,
both its transmission and ultimately also
the nature of energy use must change
accordingly. The UK’s national grid is
undergoing total reform: existing cables
are being replaced, and new networks
installed to connect burgeoning energy
centres.
“There are three drivers for the change,”
says David Smith of the Electricity
Networks Association. “One is that the
kit itself is getting old. It was put in
with an expected life span of about 30
years. It’s now lasted up to 60 years,
it’s served its time and needs replacing.
The second reason is that generation is
changing: we’re seeing coal-fired and
nuclear power stations coming to the end
of their lives. We’re seeing the prospect
Despite the confidence demonstrated by
these investors, some scepticism remains
in the private sector as to whether the UK
will achieve its targets, and how it will
manage an electricity market that relies “Jevons’s paradox” may bode well
heavily on wind energy. Some enterprises for the balance sheets of companies
in both traditional and renewable investing in cleaner, more efficient
generation are still reticent to invest in an technology, but it throws into question
74
industry riddled with uncertainty.
– from an environmental standpoint – the
about percentages and 2020, but there of offshore wind, onshore wind, and new
75