Renewables targets ‘hugely ambitious’

C&I Issue 1, 2012

UK government targets on renewable energy are jeopardising energy security and lack the necessary back-up infrastructure to sustain energy generation when supplies of wind, wave, solar and other renewables run low, according to a report by right-leaning think tank The Adam Smith Institute and The Scientific Alliance in December 2011. The report, which lambasts the UK’s Renewable Energy Roadmap for 2020 as ‘hugely ambitious’ and ‘most unlikely to succeed’, endorses many of the views of the UK Chemical Industries Association (CIA), which has been a critic of subsidies to raise the proportion of renewables to 15% of UK total primary energy use by 2020.

‘We question the cost-effectiveness of the UK’s current renewable targets,’ says the CIA’s energy spokesperson Nick Sturgeon. ‘As the Adam Smith Institute report highlights, supplies from wind power are variable so the need for back-up supplies add to the already high cost of this technology. While wind has a role to play in the energy mix, we believe we’d be better off building more baseload generating capacity, particularly nuclear and clean coal, and less wind.’

Subsidies to support renewable targets could increase electricity prices by a third by 2020, according to the CIA. High and uncompetitive UK energy prices have already led to stoppages in production in previous winters, while decommissioning of the country’s ageing coal and nuclear plants by 2015 means that the UK will become more reliant on imports of gas to fill the ‘gap’ in supply. By 2020, the CIA expects that gas imports will rise to 80%, as North Sea oil reserves continue to run down.

Renewable energy, however, can only form a ‘minor part’ of the UK energy mix, according to the new report. In 2010, the UK consumed 210m tonnes of oil equivalents (toe) of primary energy, of which 31% was lost due to inefficiencies in generating electricity from coal and gas, its authors note. The government’s roadmap aims to increase the share of renewables from the current 5.7m toe or 2.5% of the energy mix in 2010 to 20m toe by 2020 – an objective they say is ‘seriously compromised’ by the need for reliable energy generation ‘not just when the wind blows or the sun shines’.

A high contribution from intermittent renewable power generation would require large-scale storage capacity for conventional energy forms as back-up, which is currently lacking, the report authors contend.

As for the energy forecast for chemical firms this winter, CIA’s Sturgeon says: ‘The outlook looks good though, as usual this is dependent on the reliability of gas and electricity supply infrastructure. The UK holds only 14 days of gas stocks in storage, compared with around 100 days each in France and Germany, so investment in additional storage would help to avoid the risk of high and volatile prices when supply margins are thin.’

Uncertainties over gas supplies are already contributing to high and volatile market prices, which are uncompetitive with those in other parts of Europe, the CIA notes.

‘As UK renewable and other energy policy is set, government figures suggest that the impact on electricity prices could be as high as 50% by 2020,’ Sturgeon says. ‘The good news is that, following representations by CIA and other energy intensive sectors, this has been recognised in the Autumn Statement and the first steps are being taken towards relieving the impact of the EU Emissions Trading Scheme and Carbon Price Floor (CPF) on electro-intensive businesses (C&I, 2011, 24, 5).’

On the plus side, the adoption of renewable technologies is already helping some manufacturers to lower their carbon footprint. ‘Renewables is an important area of focus for us,’ comments a spokesperson from INEOS ChlorVinyls. The company’s Runcorn site consumes roughly the same amount of electricity as the city of Liverpool. However, ‘in an effort to reduce our dependency on gas to generate this electricity, we are investing in a major energy-from-waste facility at Runcorn site that will enable us to divert 20% of our power needs away from gas,’ the spokesperson says. ‘We are also investigating the feasibility of other renewable sources, such as wind and wave power.’

Meanwhile, lobby group RenewableUK refers to a recent UK Committee on Climate Change study, which found that only 6.5% of the 75% price rise in electricity prices from 2004 to 2010 was due to support for low-carbon energy. ‘Over the last decade, rising fossil fuel prices have pushed up energy bills by more than double the amount that low-carbon investment has,’ says policy director Gordon Edge, pointing to the study’s projection that investing in renewable and nuclear power will raise household bills by £100 between now and 2020 – much less than claimed by critics. ‘And that extra £100 brings us more stable prices, a UK [renewables] industry, and reduced dependence on imports, making investment in renewable energy excellent value for money,’ Edge added.

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