TODAY’S STUDY: WHAT THE UK CAN DO WITH NEW ENERGY

The abundance of this good earth is being challenged daily by the force of a sprawling and ravaging human population but the human gift of self-correction is also hard at work and not to be underestimated.

Nowhere is the struggle between these forces more evident than in the United Kingdom. This elder in the family of Western Civilization has decided to be reborn in the New Energy economy.

Not since Henry VIII broke away from Rome have the British people faced such a transition. England intends to get 30% of its power from New Energy by the end of this decade. That’s a big step up from its present less-than-5% New Energy. Nearly half of the projected 2020 capacity will come from its abundant offshore wind resource. That offers Great Britain a new chance to relive its glory as master of the high seas. But it also leaves a lot of New Energy to be obtained from other sources.

Doubt is easy, especially when fed by the seductive promises of the nuclear industry. Bur anybody who has read Tolkein or seen the movies made from his wonderful book knows the UK has a great tradition of struggling against its own doubt and the seductions of the dark side. Never count out the people who pulled off the miracle of Dunkirk.

And there is good reason, as shown in the report highlighted below, for the British people to have faith in the resources of their shire.

Onshore and offshore wind have “very significant deployment potential.” Wave, tidal and current energies have technology challenges but big promise. Though Brits take their holidays in Spain, UK solar PV has “very significant deployment potential.” There are also deployable geothermal, biomass and bioliquids resources and ample energy from various kinds of waste to be harvested. Finally, there is “high potential” in Energy Efficiency and combined heat and power (CHP).

The caveat: The miracle of Dunkirk happened when Winston Churchill turned loose the inexplicable force of his indomitable people. Likewise, today’s leaders must find the courage to get planning constraints out of the way of British New Energy innovators and support them by leading an unreserved effort to modernize the power delivery system.

There is a gathering storm, increasingly impossible to avoid, because of the world’s failure to face climate change as a community. It is left to individual nations to lead by example. As always, Great Britain is willing to do its bit.

Review of the generation costs and deployment potential of renewable electricity technologies in the UK; Study Report
June 2011 (Arup/Department of Energy and Climate Change)

Executive Summary

Arup was appointed by the Department of Energy and Climate Change (DECC) in October 2010 to look at the deployment potential and generation costs of renewable electricity technologies in the UK up to 2030, taking into account sensitivities as to the range of cost inputs, investor behaviour and barriers to deployment. Arup was supported on cost data gathering exercises for some technologies by Ernst and Young (E&Y). The data and analysis from this study will be used to inform the levels of renewables subsidy under the Renewables Obligation (RO) and/or Feed-In Tariffs (FITs). The project was split into two parts:

• Part A – Maximum feasible resource potential of renewable electricity technologies, constraints to renewable electricity technologies expansion and potential annual build rate scenarios from now to 2030; and

• Part B – Generation costs of renewable electricity technologies.

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DECC required a full assessment on a comparable basis of the renewable technology families and subcategories as listed in Table 1. This list includes technologies currently eligible under the RO and some new sub-categories.

Marine technologies (tidal range, tidal stream and wave) have been included, but as marine studies previously commissioned by DECC have been published, DECC did not require any significant primary research/data gathering. Consultation was undertaken on the published studies to ascertain whether the data, assumptions and conclusions in the reports were accepted by industry stakeholders and to determine which data set was considered to be the most representative and realistic.

Data was prepared for all of the technologies covered by the sub-divisions in Table 1. The exact sub-divisions used within the analysis below this level, depended on the extent to which it was possible to differentiate between different deployment rates (part A) or capital and operating expenditure (part B).

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The early part of the study involved a comprehensive desk study, which took into account and built upon the considerable and extensive literature and research already produced for DECC. Arup gathered new data from a number of sources including DECC, independent generators, suppliers/electricity companies and their own research.

During its development, DECC, and Arup/E&Y have worked together to achieve agreement on the substance of this key state of the industry report.

Consultation was undertaken with various renewable energy organisations to brief them on the scope and content of the study and to confirm the findings of the available evidence base: where appropriate Arup clarified key assumptions. An extensive range of other stakeholders across all aspects of the renewable energy sector was consulted on the study, primarily to ascertain cost data but also where appropriate to discuss deployment.

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The work comprised:

• An assessment of the maximum feasible resource potential of the renewable electricity technology families and subcategories from 2010 to 2030;

• An assessment of the constraints to renewable electricity generation technologies expansion for each electricity technology family and sub-category from now to 2030;

• Three scenarios of potential annual build rates from now to 2030 for each technology family listed in Table 1, differentiating by sub-category where appropriate; and

• An assessment of generation costs of renewable electricity technologies.

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The team considered the following constraints:

• Supply chain: fuel supply (where applicable), equipment and materials, skilled labour availability and installation capacity;

• Planning: Government consent, local authority planning approval for power plant;

• Grid constraints: construction of and connection to the transmission network; and reinforcement of the transmission network; and

• Other constraints: physical constraints (including availability of suitable sites) and any other potential barriers (technical, legal, etc), which could limit the deployment or maximum feasible potential.

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The potential for major refurbishment and repowering of existing infrastructure was taken into account.

Based on the supply chain, planning, grid and other constraints identified, three deployment scenarios were developed on the maximum amount of capacity that could be built per year in the UK (MW/year) as follows:

• Low scenario: the maximum amount of capacity that could be built per year per renewable technology between now and 2030 in the UK given current constraints;

• Medium scenario: the maximum amount of capacity that could be built per year per renewable technology between now and 2030 in the UK if some of the constraints are relaxed; and

• High scenario: the maximum amount of capacity that could be built per year per renewable technology between now and 2030 in the UK if additional constraints are relaxed.

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Output from all three scenarios is presented in terms of annual installed capacity (MW/yr), cumulative installed capacity (MW) and energy generation (GWh/yr). For each technology a view was also developed as to what deployment trends were likely to look like beyond 2030.

A commentary on the regional distribution of deployment for each of the deployment scenarios across England, Scotland, Wales and Northern Ireland is provided where applicable.

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The review of generation costs draws on publicly available information, Arup and E&Y proprietary cost data and project cost data collected through extensive consultation with industry stakeholders. The work involved:

• Reviewing industry literature to gather benchmarks on project costs for the technologies covered in the report. This includes information on capital expenditure (capex), operating expenditure (opex) and capacity factors.

• Consulting with stakeholders to collect project cost data, a view on cost drivers and other technical/operational project information relevant for levelised cost modelling. Levelised costs are a full economic assessment of the cost of the energy-generating system including all the costs over its lifetime (e.g. initial investment, operations and maintenance, cost of fuel, cost of capital).

• Establishing project cost ranges (high, median, low) for different groups of installed capacity for each renewable technology. This includes current project cost for pre-development, capital expenditure and operational expenditures. Other key financial and technical project data have also been collected from stakeholders including efficiency, capacity factors and hurdle rates.

• A forecast of project costs based on main cost drivers and learning rates (cost savings achieved via technological improvements over time).

• Inputting current and projected costs, and technical/financial project parameters into DECC’s levelised cost model. The actual modelling of levelised cost is excluded from this study. Also the project has not gathered data on biomass fuel availability and prices, which is the subject of separate research.

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The main aim of the study is to provide baseline data to inform a further modelling exercise within DECC for the RO banding review.

The baseline information on deployment potential and capex and opex data has been split down to finer levels than any previous work (some 30 plus sub-categories when either size category, geographic or technology sub-division is taken into account). This allows the more detailed economic modelling to take place. It is thus more comprehensive than any of the previous evidence bases.

There has been significant primary research in some technologies (particularly waste based energy generation, biomass and bioliquids), and for these topics the report presents new, more detailed material. This report provides a detailed summary of renewable generation costs and deployment and has identified significant deployment potential which should allow the achievement of UK Government targets.

The report does not give the whole picture, as fuel costs, waste gate fees and a comparison of aggregate deployment outputs results against UK Government targets are excluded. Furthermore, levelised generation costs are not included. A brief overall summary by technology follows below:

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Onshore Wind - This still has significant deployment potential of around 17.3GW by 2030 (medium forecast), but the deployment rates are slower than previously modelled. So generally, forecast 2020 figures will only be reached on the high ambition scenario. This is mainly due to planning and grid constraints. Deployment of onshore wind in Scotland is anticipated to remain an important and increasing part of the onshore wind generation. The capex and opex data is very similar to previous studies.

Offshore Wind – This has a very significant deployment potential; generally similar to existing data (a potential 41GW by 2030 under the medium deployment forecast) but a slightly slower rate of deployment is anticipated in the next 5 to 10 years, reflecting the phasing of the larger projects after 2015. Capex/opex data gathered is limited and reflects uncertainties in the sector, hence future projections must be viewed with caution.

Hydro – This study shows no significant changes from the data in previous studies. A large increase in small hydro (of less than 5MW size) is possible but, this results in a small net contribution 600MW by 2030 (medium forecast) in output.

Marine Technologies (wave, tidal stream and tidal range) – This study has reiterated the data from previous work - that there is limited deployment by 2020, but up to 4,000MW of capacity by 2030 (all medium forecast). Tidal stream is seen as the most promising technology in the short term, however the costs and funding gaps have been re-confirmed as still challenging.

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Geothermal – This study has reached similar conclusions as previous studies; the technology has a low potential by 2020, but greater by 2030 (especially for renewable heat) - but the capex and opex appear still challenging. The medium deployment forecast indicates 990MW by 2030.

Solar PV – This is a technology with very significant deployment potential of 16.6GW by 2030 (medium forecast), but with very high capex.

Dedicated Biomass (Solid) - In the light of new data on global fuel availability this study has quantified a moderate to high deployment potential of 2.8GW (medium forecast) in the >50MW category using largely international sustainable biomass. It would appear to offer a relatively low capex, high capacity generating option, achievable over the next 10 years.

Biomass Co-firing - Solid biomass co-firing has the potential to increase in quantity and to continue to make a reasonable 1.2GW (medium forecast by 2020) generation contribution. The contribution from co-firing declines to 2020.

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Dedicated Biomass (Solid) Power Station Conversion - The partial or full conversion of existing coal or oil power station units to biomass is a new area and one for which the project data has to be viewed with caution. Most existing research has not anticipated a contribution from this sector. It could, however, offer up to 1.8GW (high forecast) of high capacity factor, low planning risk deployment between 2010 and 2030 at low levels of capex and opex.

Dedicated Bioliquids - As per dedicated solid biomass in the light of new data on global fuel availability this study has quantified a medium to high deployment potential using largely international sustainable bioliquids. It offers a relatively low capex, high capacity generating option achievable over the next 10 to 20 years. Cost data for dedicated bioliquids in the larger project scale should be viewed with caution as there is a limited dataset, and deployment and cost assumptions differ slightly.

Energy from Waste – Energy from Waste is a complex topic with many key assumptions necessary on input data. It remains an important part of the UK’s waste management strategy. The renewable electricity deployment predicted is quite modest - c.260MW by 2020 (low forecast) and slightly lower than previous data. This is due to the limitations on fuel supply. Waste is a finite resource and there are competing demands for its use. It also has a fairly high capex and opex but this is likely to be offset in part by gate fees for the waste fuel.

Anaerobic Digestion (AD) – A high deployment potential is anticipated by 2020 relative to current levels, though its electrical contribution is still fairly modest at c.380MW (medium forecast). Like Energy from Waste the input assumptions are complex and it becomes resource limited by 2025. Potential has been identified from a range of AD generation types.

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Landfill Gas (Dedicated Biogas) - The study has identified that negligible new build is anticipated. With a declining resource over time, landfill gas therefore makes little contribution by 2025. It remains a strong contributor at 0.4GW of installed capacity to 2020 (medium scenario).

Sewage Gas (Dedicated Biogas) – This is anticipated to provide little or no significant additional contribution - 175MW maximum by 2030 (all forecast), when viewed in comparison with most other technologies.

Advanced Conversion Technologies (ACT) - Deployment potential forecast is very modest (almost negligible relative to other technologies at 50MW by 2030 under the high deployment forecast). This is lower than previous studies and reflects concerns over technology maturity, the resource that will be available for this technology and high capex and opex.

Renewable Combined Heat and Power (CHP) - Most studies consider the potential for CHP from all fuel sources (mostly non-renewable), and thus identify a high potential. Renewable CHP is more constrained by matching sites of generation with heat load customers. In the low to high deployment forecast the range of Renewable CHP is estimated to be between 1.5GW and 6.2GW of the electrical renewable thermal deployment highlighted by 2030. These figures come mainly from larger scale dedicated biomass (c.50% of the contribution), with more limited contribution from the Waste to Energy, Geothermal, Bioliquids, Sewage Gas and Anaerobic Digestion sectors. Further analysis of Renewable CHP deployment beyond this study is needed as the evidence base for deployment potential is limited.

...This study highlights the significant opportunity to deliver renewable energy generation across the UK. If constraints on grid connection, planning and supply are relaxed sufficiently, an additional 35 to 56GW of installed capacity could be reached by 2020 and a further 73 to 126GW by 2030.