ENA Bulletin 24 May

Issue 273: Tuesday 24th May 2011  

  • The energy weathervane keeps on turning

  • Energy centrepiece of new devolved Governments

  • Networks welcome clarity of roles and relationships for Ofgem  

  • ‘Pylon’ design competition launched by Chris Huhne  

  • Clegg makes green investment bank announcement  

  • Health & Safety review call for evidence  

  • Farewell to ENA Australia’s Andrew Blyth

  • Brussels update  

  • Forthcoming events organised and/or supported by ENA    

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The energy weathervane keeps on turning

Energy has long been at the centre stage of political events. It is a very long time ago that the Bulletin reported on a laissez-faire approach to energy at the heart of Westminster and Whitehall. Those were the days when apart from a handful of committed energy stalwarts headed by ex-Cabinet Minister Lord (Patrick) Jenkin no one really focused on energy in Parliament. Now we expect it to be in the place it is. However it is now becoming that rare beast a political weathervane. Like the cockerel upon the church spire it is telling us what the political weather is and where the storms are expected. One such battle was over the Government’s response to the Committee on Climate Change Renewable Energy Review. We were told there was a battle in cabinet over it. Even more surprising was the idea that it was between those two mighty beasts of the Lib Dems Chris Huhne and Vince Cable. In the Cable corner were concerns about how much it would all cost. There were worries that it would hamper recovery. In the Huhne corner the argument was turned on its head. The targets were driving the green economy which was vital to the recovery. All was set for a right royal joust at the heart of Government. Ironically between two politicians who are in may ways political soul mates in Government.  

So what was on the table? The review had concluded that a renewable energy share of around 30% by 2030 would be appropriate, with scope for a higher share (e.g. up to 45%) depending on the extent to which renewable technology costs fall and possible constraints on deployment of low-carbon alternatives.

It highlighted a range of promising renewable energy technologies which could in future become competitive, including electricity generation from wind and marine, air and ground source heat pumps and the use of bioenergy for heat generation.  

It set out options for addressing intermittency of renewable power generation, including demand-side flexibility, interconnection, and back-up generation, which could support a very high share of renewables in power.  

The review concluded that nuclear generation in particular appears likely to be the most cost-effective form of low-carbon power generation in the 2020s (i.e. before costs of other technologies have fallen), justifying significant investment if safety concerns can be addressed. It says gas CCS may be particularly useful in providing flexible generation.  

It says that “given significant uncertainties over future developments”, the review recommends that the Government should adopt a portfolio approach to technology development. This should cover both renewable generation and other low-carbon technologies.  

The review set out an illustrative scenario where 40% of our electricity comes from renewables, 40% from nuclear, 15% from coal and gas with CCS and less than 10% from unabated gas.  

To underpin the portfolio approach, the review argues that the Government should make clear commitments to support less mature renewable technologies such as offshore wind and marine generation through the 2020s. These commitments should then be implemented under new electricity market arrangements.  

So who won? The moment of glory was Mr Huhne’s thanks to a clear intervention on his side from the PM. Alas this came as he was embroiled in questions over a speeding offence from nearly ten years ago.  

Meanwhile last week the Energy & Climate Change Select Committee said the Electricity Market Review launched by the Government last December was bereft of the necessary detail to show it could deliver. The White Paper is due on 18th July just before Parliament rises for the summer. There are concerns echoing around the energy corridors that the White Paper may not assuage the Select Committee’s concerns. We shall see.  

The Government has said it will review progress in 2014 to ensure the UK’s targets are in line with those across Europe. Although it will continue to push for  a 30 % rather than 20% EU emissions reduction target for 2020, they seem to have accepted it may be necessary to scale-back and align the UK’s target to the EU’s actual trajectory.  

As the Bulletin goes to print we do not know what the future holds for Mr Huhne. He is confidently fighting his corner and his powers of survival cannot be underestimated. If, however, he were to stand aside the word around Westminster is that Jeremy Browne, the Foreign Office Minister could be the front runner to take the reins at Whitehall Place.  

Watch this space.  

The Climate Change Committee Review can be found here    

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Energy centrepiece of new devolved Governments

ENA were in the energy capital of Europe – Aberdeen on the day the new First Minister of Scotland was appointed. We were attending the All-Energy Conference spreading the word for the networks. The new First Minister sent his good wishes via video. There were no prizes for guessing who he was. Alex Salmond is currently on a justified political high having secured the first majority government north of the border. Ironically with an election process designed to prevent majority rule. It marked out the political success he had and the political earth quake that had taken place. The Bulletin analysed in the last edition what this might mean for energy policy but Mr Salmond is on the warpath and yesterday was in Whitehall for meetings with among others Chris Huhne and the Chancellor. He said last week he would “kick the door down” if necessary to get what he wants. Mr Salmond will clearly take the lead on energy issues seeing it as vital to Scotland’s political and economic future. Although he was primarily focusing this week on the tax changes to oil and gas production, he also wants more control of offshore development and is aiming for 100% renewable energy consumption in Scotland within the next few years.  

This is echoed in Wales where Carwyn Jones, the Welsh First Minister has already said will take “overall Ministerial lead for energy policy”. This will involve convening regular meetings of the key energy companies and co-ordinating the Assembly Government’s departments. They have said they will pursue “a mixed energy economy”. The new Assembly Government intends to make “a high level statement regarding its engagement with the energy sector”.  

So as with Westminster politics the energy agenda is also guiding and shaping the political agendas of both Scotland and Wales. These are interesting times.  

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Networks welcome clarity of roles and relationships for Ofgem  

The Government have published their Summary of conclusions as part of the Review of Ofgem launched last year. This has arisen because of continuing uncertainty over the role the energy regulator should have. Is it a policy body or a delivery body? How does it relate to and connect with the Government. Who should regulate the regulator? These are some of the issues the Government made clear they wanted to address when the coalition administration was formed. To some extent this review was begun by the previous government and followed some high profile policy interventions such as Project Discovery.  

The Review has concluded that the current system should be strengthened to bring greater clarity and coherence to the distinct roles of Government and the regulator:  

  • Ofgem will continue to regulate independently of Government;  

  • Government will set out a strategic policy framework for the energy sector and will define those strategic goals to which Ofgem should contribute. The Government will seek legislative provision to require Ofgem to take its independent regulatory decisions within the context of these goals, which will be set out in a new statutory 'Strategy and Policy Statement'. Approval from Parliament will be sought before the Statement takes effect(this will come in next year's new energy bill);  

  • Ofgem will set out annually how it plans to deliver its contribution to the goals and how it will monitor progress, in order to increase transparency and accountability.  

ENA welcomes the broadly positive conclusions of the review into the role of Ofgem. We were especially pleased to see many of ENA’s recommendations included. The remit rightly focussed on the need to clarify the respective roles of Ofgem and DECC in the development and implementation of government energy policy. Such clarity will be essential if we are to create a stable regulatory framework and ensure a suitable environment for the much needed investment in our energy networks.  

However there remains a number of uncertainties, for example the extent to which the guidance from DECC to Ofgem will resolve situations where policy priorities may conflict, such as between affordability/fuel poverty and achieving our climate change targets. ENA is therefore keen to participate in the planned consultation process on the proposed new Policy and Strategy Statement and will continue to work closely with both DECC and Ofgem.  

A full report will be published with the electricity market reform White Paper, before the summer recess (due on 16th July).  

The full document can be read here.   

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‘Pylon’ design competition launched by Huhne  

How would Sir Stephen Spender the poet have put it?  

“Now over these small hills, they have built the concrete  

That trails black wire  

Pylons, those pillars  

Bare like nude giant girls that have no secret.”  

This week National Grid and DECC launched a major design competition to redesign this vital part of our network architecture, known to the industry as towers but to the rest of the world as pylons. The competition was launched at the Royal Institute of British Architects by the Energy & Climate Change Secretary Chris Huhne. He asked architects, designers and engineers to rethink the pylon, one of the most crucial but controversial features of modern Britain.  

Mr Huhne said they were the “steel arteries of the UK”. He said it was the industry’s role to improve the environment, especially as we were at the crux of a “new energy construction age”. However “this energy revolution needs to be more beautiful” he added.  

Nick Winser from National Grid evoked the magic of electricity with the reference to the old term for a light switch as “the wizard in the wall”.  

Nick said National Grid would be utitlising existing circuits wherever possible but new lines were needed. There would be undergrounding where appropriate but as both he and Mr Huhne said this was expensive.  

Nick said the current pylon is one of the reasons we have such reliability. It is easy to maintain and is flexible in application. However new technologies and materials mean we can make a change.  

The familiar steel lattice tower has barely changed since it was designed by the architect of the Menin Gate Sir Reginald Blomfield in 1920s.  

There are more than 88,000 pylons in the UK, including 22,000 on National Grid’s main transmission network in England and Wales.  These stand some 50 metres high, weigh around 30 tonnes and carry up to 400,000 volts of electricity over thousands of kilometres of some of the most exposed, weather-beaten parts of Britain.  

As well as exploring the design of the pylon itself, the competition aims to explore the relationship between energy infrastructure and the environment within which it needs to be located.  The challenge is to design a pylon that has the potential to deliver for future generations, whilst balancing the needs of local communities and preserving the beauty of the countryside.  

ENA welcomed the competition and its role was recognised during the press launch by Nick Winser. ENA is sensitive to the impact this infrastructure has on our visual environment. Our members therefore are looking forward keenly to seeing some innovative and exciting designs emerging from this initiative.  

The competition closes on 12 July, with shortlisted candidates notified at the end of July. The designs will be open for the public to view and comment on via the competition website and also at an exhibition to be held at the V&A as part of London Design Festival (17-25 September).  

Chris Huhne will chair the judging panel, which will include Nick Winser, Director of the V&A Sir Mark Jones, architects Sir Nicholas Grimshaw and Bill Taylor, engineer Chris Wise, the journalist Jonathan Glancey and a senior representative from RIBA.  

The competition website is here. 

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Clegg makes green investment bank announcement  

As part of a speech on the green economy yesterday the Deputy Prime Minister took the opportunity to make some announcements about the Green Investment Bank.      

Mr Clegg said the Government will bring forward legislation to ensure “both the operational independence and enduring nature of the Bank”. He said the Government were determined that the organisation “will be part of the institutional architecture of this country” and that legislation would ensure “a long shelf-life”.      

The Government has guaranteed £3 billion for the initial capitalisation of the Bank. They hope to generate these funds through asset sales, but he made clear that the money would not depend on those sales. He said it has been underwritten by the Treasury, and it will be made available.      

Investments will be able to be made from April 2012. He said possible early priorities for the Bank were offshore wind, waste, and non-domestic energy efficiency. They were also looking at the potential for using the Bank to help deliver the first stages of the Green Deal. In the initial period, investment decisions will be made under interim governance arrangements, which Vince Cable will set out in more detail shortly.      

The Bank will have full operational independence under the leadership of a new board as soon as state aid clearance has been approved, which he said “will take place as soon as possible”. The bank will then be able to undertake a wide range of transactions, including equity, debt and risk mitigation products. He said the initial £3 billion capital by 2014/15 should enable the bank to catalyse an additional £15 billion of investment in green infrastructure.  

Finally he said the Bank will have borrowing powers from April 2015, on the basis - as set out in the Budget - that the Government target for debt to be falling as a percentage of GDP has been met.  

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Health & Safety review call for evidence

As we look forward tomorrow to an event on the House of Lords Terrace focusing on the energy industry’s health and Safety Powering Improvement initiative the Government have just launched a call for evidence as part of the Löfstedt Review into health and safety legislation. It is “inviting views from all interested parties on the scope for reducing the burden of health and safety regulation on UK businesses whilst maintaining health and safety outcomes”.  

The review will consider “the opportunity for combining, simplifying or reducing the approximately 200 statutory instruments that are owned by the Health and Safety Executive, by learning lessons from health and safety regimes in other countries, and considering the extent to which regulations:  

  • have impacted on positive health and safety outcomes and businesses;

  • have led to unreasonable outcomes, or inappropriate litigation and compensation; and

  • have unnecessarily enhanced the requirements of an EU directive”.

The call for evidence is available here.

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Farewell to ENA Australia’s Andrew Blyth

Andrew Blyth, CEO of ENA Australia has resigned. He has been CEO for much of its history having joined in April 2006. He had previously worked for Australian government ministers. His replacement is yet to be confirmed.  

Farewell Andrew and good luck.  

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Brussels update      

Pan European electricity highways  

In co-operation with DG ENER, ENTSO-E has published a consultation on the roadmap towards a modular development plan for a pan European electricity highways system. ENA will be responding to this consultation through Eurelectric, the European energy association.  

The Commission’s Infrastructure Blueprint identified electricity highways as a long term priority, and ENTSO-E’s proposed 3 year study project is intended to deliver a comprehensive view of European electricity grid developments to 2050. ENTSO-E has made it clear that they intend the broad involvement and direct participation of   external stakeholders, which is very positive development.  

The Commission spokeswoman has outlined the definition of an electricity highway as “an electricity transmission line with significantly more capacity to transport power than existing high-voltage transmission grids, both in terms of the amount of electricity transmitted and the distance covered by this transmission.”  

A feasible electricity highways concept will clearly require considering the whole energy supply chain and analysing all relevant technological, economic, and socio-political issues.  

ENA welcomes this initiative from the European TSOs, with the first version of the highways development plan due to be published at the end of 2014, but would caution that ENTSO-E priorities in terms of resourcing must remain firstly the development of the EU network codes, both technical and market focused, and secondly the important mid-term work updating the Ten Year Network Development Plans.      

EU energy spend

A new report from the European Commission reviews the progress made to date with those energy projects which were successful in obtaining EU monies under the European Economic Programme for Recovery (EEPR). The €3.98bn EEEPR was agreed by Member States as part of the financial package of measures to fight the economic recession across Europe. The Commission has optimistically calculated that the leverage effect in terms of enabling the successful candidates to secure private financing could be as much as a multiplier of 10.  

Although the EEPR was a “one off”, we are encouraged that in terms of EU budget discussions, the Commission has been asked by Energy Ministers to report to them in June on future investment needs and proposals for how to meet these costs. Investment in energy projects is a recognised driver for economic growth, and need to be encouraged.  

Similarly, the New Entrant Reserve 300 (NER 300) scheme run by the European Investment Bank is providing funding to help demonstrate CCS and renewables technologies. DECC has announced that it has submitted 12 UK projects for the NER 300 scheme, including 7 CCS projects, and five innovative renewables projects. The UK networks have a strong role to play in the development of CCS, in terms of their expertise in the efficient and safe transportation of energy, with National Grid an active participant in a number of the candidate EEPR projects, also SSE with its project for the post combustion capture retrofit to Peterhead CCGT.  

DECC has also helpfully stated that the UK Government is committed to developing CCS, and will also launch its own selection process for projects to receive national funding later this year.      

Polish presidency priorities  

Poland is due to take over the EU Presidency from Hungary from 1st July, for the remainder of 2011.  

In terms of the Polish Presidency priorities for energy, the focus will be on external relations and energy security. A legislative proposal on energy security and international co-operation will be published this summer.  

Baroness Ashton, as EU High Representative for Foreign Affairs, has also been asked by the European Council to take the energy security dimension fully into account in all her work on external affairs, which is recognition of the political priority now assigned to energy security concerns.   ______________________________________________________________  

'The Bulletin' is ENA's free fortnightly round-up of key issues affecting the sector. Visit http://www.energynetworks.org/bulletin for the latest edition or sign up at http://www.sign-up.to/signup.php?fid=602&pid=4068 to become a subscriber.  

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