Doosan Power Systems’ Energy Brief 2010 survey examines the views of 175 the UK’s leading energy experts. Dr Mike Farley, director of technology policy liaison at Doosan Power Systems, discusses the results in the aftermath of this month’s General Election.

 

Dr. Mike Farley, Doosan Power Systems, UK

With the right backing, Southern England could host the world’s first ‘CCS cluster’, which would carry carbon dioxide emitted by power stations via interconnected pipelines to North Sea oil and gas fields Source: E.ON

Energy and future energy policy remain firmly at the top of the political agenda after the UK’s General Election. In light of the uncertainties highlighted by Ofgem’s (Office for Gas and Electricity Markets) damning ‘Project Discovery’ report, which found that the UK faces significant periods of energy unserved if it fails to take bold action to build new generation capacity, Doosan Power Systems’ ‘Energy Brief Survey 2010’ is timely. The results underpin the importance of reviewing current energy policy and looking to the future as the new government takes shape.

The Thames Cluster, could collect CO2 from major emitters on the Thames and Medway Estuaries – each of which has emissions in excess of one million tonnes per year, which add up to a projected 28 million tonnes of CO2 per year after 2016, based on planned new developments and closures Source: E.ON

If the UK wants to achieve its energy and climate change objectives, policymakers will have to act now to ensure their strategies are sufficient and deliverable. However, policymakers face three objectives that often pull in different directions: security of supply, reduction of carbon dioxide emissions, and affordability and competitiveness.

Unless the UK acts now to diversify power sources and safeguard its electricity supply, it clearly faces the very real risk of the lights going out in the near future. Without early funding for key energy projects, such as carbon capture and storage (CCS) demonstration plants, the UK faces being left lagging behind at a time when other countries have put funding of such projects at the heart of their economic stimulus packages.

 

ENERGY BRIEF SURVEY

 

The Doosan Power Systems survey examines the views of 175 of the UK’s leading energy experts on both current energy policy and what future UK energy policy should look like. The findings provide a unique snapshot of the key issues facing policy makers in the UK today, and the key areas that must be addressed by the new government.

Seventy eight per cent of respondents agree that action is needed now to ensure the UK energy sector retains its competitive edge. The UK can and should take a global lead in energy, including developments in CCS projects and capture ready power plants, to avoid losing out to other countries in the race for skills and competitive advantage in the field. The government should take action now to ensure the UK achieves maximum economic benefit and creates new jobs from the development of the energy infrastructure.

In February, an Ofgem report stated that between 2012 and 2013 there was a “window of opportunity” to put a new market framework in place to deliver up to £200 billion ($304 billion) of investment needed to secure energy supplies and cut carbon emissions in the UK. The 2010 Energy Brief survey clearly supports this sentiment and highlights the urgent need for action on reforming energy policy. A clear direction is needed that will provide the confidence the sector needs to move forward on projects that will secure energy supplies and reduce emissions in the UK in the short, medium and long term.

 

Energy policy

 

One of the key issues concerning energy policy over the past ten years has been the sheer number of new policies that have been introduced to tackle the energy challenge. However, 82 per cent of respondents believe that the current planned energy roadmaps for the UK are insufficient and undeliverable. This clearly indicates that the energy industry does not have confidence in current energy policy and this must be rectified urgently.

Sixty five per cent of energy experts disagree with the government’s belief that current policy will deliver security of electricity supplies for the UK over the next ten years. Security of supply is a growing concern and one that the UK Government must address urgently. A ‘technically balanced’ portfolio with the optimum mix of renewables, gas, clean coal and nuclear will be essential to provide the UK with sustainable, secure and economical energy supplies.

Reducing emissions is one of the key challenges for policy makers today, and must be a consideration at all levels. Two-thirds of respondents doubt that energy policy will deliver on emission targets for the UK by 2020. The results of the survey demonstrate that there is little confidence that the government’s emissions objectives have been set with a sound understanding of the processes needed or the costs involved to achieve these targets.

Therefore, a gap exists between the government’s emissions ambitions for 2020 and the reality of reaching them.

Industry needs certainty if it is to plan and commit to investments, and it therefore looks to see what policy the next government would assume if there was a change of administration. Almost 80 per cent of energy experts said that current investment levels in electricity generation and infrastructure are not sufficient to meet the UK’s long term energy needs. The findings are particularly pertinent in light of the real need for an overhaul of the energy infrastructure in the UK.

This will require significant investment beyond what is currently forecast and must be sufficient to cover a combination of nuclear, renewal of gas and clean coal facilities, wind, offshore wind and marine.

The energy industry must to be given reassurance that sufficient investment will be available over the coming years to fund the necessary technology developments and new build needed in the UK.

 

Need for clean coal

 

Recent policy on new coal power stations has been driven by considering what the impact would be on the negotiating stance at Copenhagen. The lead-up to Copenhagen saw the non-governmental organizations (NGOs) secure a hollow victory for the environment.

They succeeded in delaying the building of what would have been the cleanest coal fired power plant in the world, genuinely capture and storage ready, at Kingsnorth. This has probably delayed the construction of 1.6 GW of new plant, some of it CCS, by more than three years.

The proposed Kingsnorth coal fired plant in Kent, which would incorporate CCS Source: E.ON

Unfortunately, despite their efforts to publicize climate change and stress the importance of carbon mitigation technologies like CCS, environmental NGOs have failed to back the concept of ‘capture and storage-ready’.

This concept was developed by the International Energy Agency and subsequently adopted by the European Union, and is now being progressed by the G20 as a safeguard against locking-in carbon emissions from coal and gas power plants, which are inevitably going to be built around the world while CCS is developed.

Meanwhile, coal and gas power plants continue to be built on sites and in locations that may not be suitable for CCS. Coal and gas remain the largest sources of the UK’s electricity, 31 per cent and 46 per cent respectively in 2008, with the share increasing at times of high demand, as for example in the cold spells this winter when it was notable that wind generation was minimal.

Although significant steps have been made with the commitment to support four CCS demonstrations on coal, each of 400 MW, the tight rules on new coal power plants recently announced and the uncertainties around funding CCS on full power plants could have severe consequences for security-of-supply in the UK.

The Energy Brief 2010 survey recorded that 68 per cent of respondents believe that CCS policies in the UK and Europe are currently insufficient and are not conducive to meeting targets.

 

Looking ahead – shaping future energy policy

 

Looking to 2020, the government, led by the Climate Change Committee (CCC), has recognized that we will need “some” new coal with CCS. We at Doosan Power Systems criticise this vision for CCS as being well short on what is needed if we are to maintain a balanced portfolio, maintain security of supplies, and achieve climate targets.

A strong commitment to CCS is vital to delivering security of supply while reducing emissions in the UK. Both coal and gas power plants will need to be built and fitted with CCS in order to achieve climate change goals and keep the lights on. CCS is cleaner and more secure than unabated gas fired power and is more reliable and much less expensive than highly variable, intermittent offshore wind.

If the demonstration and the deployment of CCS continues to be delayed then, as with nuclear, the UK will find that replacement power plants, carbon capture plants and pipelines cannot be built quickly enough.

If the UK wants to retain its competitive edge, then policymakers will have to ensure that it has enough competent and skilled workers to service the energy industry in the future, and to build the new capacity needed to maintain energy supplies. There is consensus in the industry that without the necessary skilled workforce the power industry will be unable to deliver on future energy demand. However, 63 per cent of energy experts stated that the UK is not investing enough in developing the skills needed to support the energy sector, which highlights the need for additional government funding now at all levels.

We will continue to press for credible policies and guidance to the Infrastructure Planning Commission that will lead to an optimum technically balanced portfolio of low carbon electricity generation with an ambition of substantially decarbonizing the electricity sector by 2030.

This will require rapid progress on nuclear and CCS as well as renewables, particularly the implementation of the CCS levy for the four demonstrations and future retrofits.

Doosan Power systems will remind the government of its objective to deliver economic benefits from CCS in the UK given the huge potential market. We will also seek policies – against which we can plan our investments in research and development, people and capacity – for the roll-out of CCS technology in the 2016 to 2020 timeframe.

 

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