New energy that can help us flourish again... and a question of reliability

Charles Hendry

Charles Hendry MP is Minister of State for Energy at the Department of Energy and Climate Change.

THE knock-on effect this year of global events on the price of fossil fuels has made the case for a lower carbon energy mix stronger than ever.

Instability in the Middle East, the highest oil prices since 2008, and events at the Fukushima nuclear site in Japan have meant that the wholesale gas price for this winter is around 40 per cent higher than last year.

We know that the rising energy costs that have resulted from this are putting pressure on household budgets in towns and cities in Yorkshire, just as they are across the country.

That is why we do not want to continue to be held to ransom by global prices that we cannot influence, and why we want to move towards a more secure, low carbon energy mix.

Renewable energy, new nuclear and clean coal and gas will be at the heart of this move.

The UK is well placed to become a leading destination for growth and investment across these technologies, and Yorkshire and Humberside has the potential to benefit greatly from this investment. Following the Durban climate talks, there is also a renewed global imperative to switch to low carbon.

The recent agreement of a roadmap to a global deal on climate change, shows that governments in the US, China and India are serious about green technologies.

We simply cannot afford to be left behind. So we must exploit our own competitive advantage.

We have decades of experience of operating nuclear power safely, and our experience in the North Sea and our world-leading academics give us transferrable skills and expertise which can be applied to carbon capture and storage and offshore wind.

Those skills are already being utilised in Yorkshire at Ferrybridge coal-fired power station, where Chris Huhne opened the UK’s first carbon capture project just weeks ago.

We expect wind power – both onshore and offshore – to make a big contribution to our energy mix in the decades ahead.

Our Renewable Energy Roadmap set out an ambition for up to 18GW of offshore wind by 2020, provided that this can be delivered cost-effectively. This is more than a tenfold increase on where we are today.

Over the last three months, oil imports exceeded UK production for the first time ever, resulting in a sharp increase in import dependency.

With that in mind, we would be foolish not to harness our own offshore wind resource which is plentiful, secure and ours alone, particularly as the UK has around 40 per cent of Europe’s wind resource, and one of the biggest markets in the world. Offshore wind increases our energy security and reduces our carbon emissions. But the benefits of the technology go wider than this, with offshore wind having the potential to support tens of thousands of jobs across the country. The potential of the region is only just starting to be realised. Just this month, Siemens made significant progress on their plans to develop a manufacturing facility at the Green Port in Hull, a move which drew backing from the very highest levels of Government.

In November, we gave consent to DONG Energy to build a new wind farm off the Yorkshire coast at Westermost Rough, which will create hundreds of jobs jobs during its construction.

In the Chancellor’s Autumn Statement, the Humber was designated as a Centre for Offshore Renewable Engineering.

This means a commitment from Government to a partnership with local leaders to ensure businesses looking to invest in manufacturing for the renewables industry in the area receive the most comprehensive support possible.

All around the country, supply chains are developing, and Yorkshire and Humberside is reaping the benefits. Research by my department shows that so far this financial year companies have announced investment of £469.3m, with the potential to support up to 2,500 jobs in the Yorkshire region if all of these plans are delivered.

In addition, developers have announced plans for a further potential £300m investment and 559 jobs in the pipeline.

A prime example of a company seeing serious and real benefit from the green economy is Rotherham-based engineering firm MTL, which this year signed its largest export contract ever, to supply a German company with major components for a North Sea wind project.

MTL have taken great steps to bring forward the skilled staff that we will need in the future through their apprenticeship programme and their welder training school. I am determined to see more companies follow their lead, in Yorkshire and across the country.

At a time when economic difficulties dominate the news, next-generation industries like offshore wind are providing jobs and bringing capital into Britain, giving areas with rich industrial histories a real opportunity to thrive once again.

Martin Livermore

Martin Livermore is director of the Scientific Alliance and a co-author of the report Renewable Energy: Vision or Mirage? published with the Adam Smith Institute this month.

WIND turbines are becoming part of our landscape, and the recent very generous consumer-funded subsidies have seen a rash of solar panels appearing on roofs around the country. But there is plenty of evidence which suggests these renewable energy technologies may not provide the benefits their supporters suggest.

For Yorkshire, the Siemens proposal for a £210m factory to manufacture wind turbines, which would create 700 jobs, makes the issue even more pertinent.

The planned development, in conjunction with Associated British Ports, is intended to be the first step in creating a cluster of businesses supplying the Government’s enormous planned expansion in off-shore wind farms. What Aberdeen did for North Sea oil, Hull hopes to do for North Sea wind.

But this projected business is built on the basis of artificially high consumer power bills. Off-shore wind farms are more efficient than on-shore winds, because the wind is generally stronger, and planning is not bedevilled by opposition from local residents.

But they are much more expensive to install and connect to the electricity grid, and can go ahead only because the additional cost is paid by the consumer.

In difficult economic times such as these, this is particularly unwelcome. More people are put into fuel poverty and even higher-income families are feeling the pinch.

Perhaps – as the Government argues – this will all be worthwhile, as increasing amounts of wind power protect us from rising gas prices and make our energy supply more secure. Unfortunately, this is wishful thinking of the highest order. The problem is that the wind doesn’t blow when we want it to, so the output from wind farms cannot be relied upon.

The result is predictable: adding more wind turbines means having to have conventional backup power stations available. Keeping them on standby is inefficient, and having to ramp their output up and down quickly compounds the problem.

This means that reductions in carbon dioxide emissions – the primary reason for erecting wind turbines – are quite modest. This is also a very expensive way to reduce emissions: Professor Gordon Hughes, of Edinburgh University, speaking at a conference entitled ‘The economics of renewables: will green energy leave Scotland in the red?’, put the price at £250 or more per tonne of carbon, far in excess of any carbon price currently envisaged by policymakers.

There is an urgent need to invest in more electricity generation to replace the old coal-fired and nuclear stations due for decommissioning over the next decade. If emissions are to be reduced at the same time as energy supply is kept secure and affordable, the best option at present is to build nuclear power stations, which can supply a steady, reliable base load, balanced by efficient Combined Cycle Gas Turbines.

If policy was changed – if the Government realised that wishful thinking about renewables will not achieve their objectives – then where does that place the proposed renewable energy cluster around Hull?

The problem is that wind turbines will only be built in this country if there is a guaranteed local demand. The UK and other European countries cannot compete with low-cost Chinese manufacturing sector in a global market.

The Danish company Vestas, the world’s largest wind turbine manufacturer, has three manufacturing sites in China, but their output has already been overtaken by three other local companies. If turbines from Hull cannot be sold in the UK, there will be no export market for them.

If the ambitious off-shore wind farm policy does not go ahead as planned, the 700 jobs are clearly at risk. Even if the plan does go ahead, it seems highly unlikely that the target of 15 per cent of energy use coming from renewables by 2020 will be met.

To achieve it, about five new turbines must be erected on each of the limited number of working days likely to be available in the hostile off-shore environment. This seems highly optimistic.

For the manufacturing and supply chain, that may not seem like much of a problem; it simply means that their timescale is extended beyond 2020. But what happens beyond that? Would the government be able to continue forcing up the price of electricity to pay for further wind farms, or will it have become clear to the general public by then that the vision of renewable energy is actually a mirage?

To finish with another quote from the Edinburgh conference. Dr John Constable, director of the Renewable Energy Foundation, said: “Rather than spending large levels of consumer subsidy in an effort to reach arbitrary targets, government should be enabling markets to invest in technologies which can deliver energy security at an affordable price. We need a more honest approach.”