UK energy policy Can it deliver? Will it deliver?

Transcription

1 UK energy policy Can it deliver? Will it deliver? David Clarke Chief Executive ETI 2012 Bridge lecture 2012 Energy Technologies Institute LLP The information in this document is the property of Energy Technologies Institute LLP and may not be copied or communicated to a third party, or used for any purpose other than that for which it is supplied without the express written consent of Energy Technologies Institute LLP. This 2012 information Energy is given Technologies in good faith based Institute upon the latest LLP information - Subject available to to notes Energy on Technologies page 1 Institute LLP, no warranty or representation is given concerning such information, which must not page 1 be taken as establishing any contractual or other commitment binding upon Energy Technologies Institute LLP or any of its subsidiary or associated companies.

2 UK energy policy has a long history... Professor Peter Pearson Low Carbon Research Institute of Wales Cardiff University Professor Jim Watson Sussex Energy Group University of Sussex Available on the IET website 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 2

3 System level strategic planning Technology development and demonstration Informs effective decision making Underpins national energy systems policy Develops capacity, technology and engineering Increases investor confidence 2012 Energy Technologies Institute LLP The information in this document is the property of Energy Technologies Institute LLP and may not be copied or communicated to a third party, or used for any purpose other than that for which it is supplied without the express written consent of Energy Technologies Institute LLP. This 2012 information Energy is given Technologies in good faith based Institute upon the latest LLP information - Subject available to to notes Energy on Technologies page 1 Institute LLP, no warranty or representation is given concerning such information, which must not page 3 be taken as establishing any contractual or other commitment binding upon Energy Technologies Institute LLP or any of its subsidiary or associated companies.

4 Making energy policy work for the UK Capacity Skills, training, infrastructure, science, R+D Energy power, heat, transport, infrastructure Wealth creation gross value added, direct employment, secondary jobs and impacts, exports, inward investment 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 4

5 The energy policy trilemma Secure Sustainable 30% imported in 2010 (net) >50% expected by 2020 Targets Power from a portfolio of sources Diversity in fuel supply and conversion Market leads on technology selection CO2 emissions down ~18% <4% energy from renewables (2010) 6 GW wind operational (+4 GW in construction) >4% biofuel in diesel (2010, ~15% sourced in UK) Targets -34% CO 2 by % CO 2 by % of energy from renewable sources by 2020 Affordable Real prices continue to increase Domestic oil up 90% since 2003 Gas up 80%, Coal up 60%, Electricity up 40% Targets Reduce the number of households in fuel poverty and eliminate fuel poverty in vulnerable households 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 5

6 Scale of the UK challenge... 62m people... growing to 77m by m cars... growing to 40m by 2050 Over 380 significant power stations... many in remote locations Over 85GW generation capacity... from 1MW to 3.8GW 24m domestic dwellings... 80% will still be in use in 2050 total dwellings 38m by 2050 Final users spent 124bn on energy in % of GDP 5.5m households in fuel poverty... 70% are vulnerable households Energy consumption rising at >3% / year 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 6

7 The challenge reaches everyone... In England alone there are >16,000 miles of transmission lines >380,000 miles of distribution lines ½ million substations / transformer points System losses = 1 nuclear plant >176,000 miles of gas pipes Some elements are over 100 years old Like for like replacement costs total around 200bn Generation Transmission Distribution 65bn 30bn 95bn GB electricity network overhead and underground lines Like for like is not good enough to meet future needs Power industry employs more than 2% of UK workforce 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 7

8 What might the UK energy system look like in Decided by global developments not just UK events, decisions and policy UK and global economy Industry and technology developments UK demand changes scale and segmentation Global socio-political events International market confidence... The future is uncertain and we need an energy system design that allows for this 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 8

9 A national energy system design tool Integrating power, heat, transport and infrastructure searching for the lowest cost solution 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 9

10 ESME is used to inform decisions and answer questions... What might be no regret technology choices and pathways to 2050? What is the total system cost of meeting the energy targets? What are the opportunity costs of individual technologies? What are the key constraints e.g resources, supply constraints? How might uncertainty in resource prices and availability influence technology choices? Where should new generating capacity optimally be located? How might accelerating the development of a technology impact the solution? How might policies and consumer choices influence technology development? 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 10

11 Typical ESME Outputs 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 11

12 Getting to UK primary energy diversifies Nuclear and gas are pillars - 50% of energy imported Increasing role for nuclear and renewables Primary Energy Mix (Mean) Fossil fuel persists with CCS in power and as gas in heavy vehicles Biomass, onshore wind, hydro and imported biofuels become fully exploited Wet wastes must be used effectively includes conversion to biogas Increased range and number of key assets Electricity 2010 = 365TWh, 2050 = 440TWh 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 12

13 UK 2050 power generating capacity 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 13

14 Gas likely to persist in UK space heating but... the majority of dwellings are likely to be heated by electricity (heat pumps) Space Heat Production (Mean) 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 14

15 Why is gas so valuable for heat? UK system has to cope with 6x heat demand swing Heat Electricity Design point for a GB heat delivery system Heat / Electricity (GW) Heat demand Electricity demand Jan 10 Apr 10 July 10 Oct 10 Design point for a GB electricity delivery system GB 2010 heat and electricity hourly demand variability - commercial & domestic Data source: UKERC (2011) 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 15

16 2050 road transport Potential significant use of gaseous fuels... hydrogen (cars) and hydrocarbon gas (HDVs) 39 million passenger cars Hydrogen FCV ICE Liquid Road Fuel Consumption 450 TWh (276Mboe) Hydrogen ICE Hybrid Electricity Liquids (including biofuels) BEV Electric and liquid / electric hybrids PHEV Gas (LNG in HGVs and CNG in buses) 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 16

17 Geographic factors are critical in optimising system cost Statfjord Brent Population Forties Weather / climate Resources Power generation Bunter Domes CO2 storage Transport needs 35 Energy storage Morecambe 21 9 Indefatigable Leman Energy Technologies Institute LLP - Subject to notes on page 1 page 17

18 2050 CO 2 target is unaffordable with today s technologies 2050 marginal UK system cost 2010 /Te CO Current technology capability 0% 20% 40% 60% 80% 100% UK Committee UK Energy GHG Reduction (including aviation and shipping) on Climate Change target 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 18

19 2050 abatement costs can be acceptable if... we develop and apply the optimum technologies 2050 marginal UK system cost 2010 /Te CO % 20% 40% 60% 80% 100% UK Committee UK Energy GHG Reduction (including aviation and shipping) Current technology capability on Climate Change target Expected improvement in technology capability Successful technology selection, innovation and development ETI projects focus on reducing these levels further 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 19

20 2050 abatement cost is <1% GDP Biomass and CCS are key levers, nuclear is part of the base platform 2010(Mean)/year Total system cost 294bn Abatement cost 26bn (0.7% GDP) Average cost Marginal cost 51/tCO2 360/tCO2 No biomass No CCS No nuclear + 44bn + 42bn + 4bn No tech devt* + 106bn *Assumes current technology cost/performance 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 20

21 Effective national policy needs to focus on things which will move the dial Focus on the big levers is crucial to maximise impact of scare resources - money, skills, supplybase and time Investment in innovation is critical to reduce costs Engagement of industry and consumers is essential ETI view immediate development priorities for 2050 as... Efficiency (technology, consumer demand, storage) Nuclear CCS Bioenergy Offshore wind Gas for transport 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 21

22 Efficiency All future emission reduction scenarios utilise efficiency improvements Waste heat recovery Building insulation Efficient vehicles Energy systems management ETI targeting through system demonstration and technology development projects Smart systems 95m+ Marine and Land Heavy Duty Vehicle efficiency 30m+ Plus, ongoing ETI projects in building refurbishment, energy management systems and energy storage 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 22

23 Nuclear Supply chain development and early deployment is critical in realising the optimal 2050 UK energy system design Broadly a mature technology Appears economic under most emission reduction scenarios Primarily an issue of deployment Planning Licensing Supply-chain development Finance support Cost impacts post-fukushima need clarification international approach needed ETI supported recent development of R+D roadmap for the industry 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 23

24 CCS A key lever - particularly combined with bioenergy Long development time requires early start Potentially very wide use Power Hydrogen and Synthetic Natural Gas (SNG) production Heavy industry ETI investing over 60m in enabling CCS for coal, gas and biomass Improved separation technologies Storage appraisal Transport system design tools 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 24

25 Early demonstration start is essential Longest lead time item is the most uncertain - storage Power and Capture system (IGCC) ~ 1,100m Gas plant can be built capture ready Transport system ~ 130m Approvals FEED Construct Route and planning Order Lay Storage system ~ 140m+ Years Selection Appraise Drill Test License Construct ~ 90m (saline aquifer) ~ 50m Energy Technologies Institute LLP - Subject to notes on page 1 page 25

26 Bioenergy A key lever particularly with CCS Requires sustainable supplies imports and indigenous Major potential for creating negative emissions via CCS Could support a range of conversion and utilisation routes Hydrogen SNG Heat ETI investing in soil science, logistics and value chain models Informing decisions what do we grow? where do we grow it? how do we handle it? 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 26

27 Offshore Wind The marginal power technology and an important hedging option cost reduction is critical DECC cost reduction task force identifying routes to achieving 10p/ KWh by 2020 Contract and project structures Financing and risk management Technology innovation ETI has already invested 40m in technology development projects Another 30m of projects in contracting - next generation, low cost, deepwater platform and turbine technology demonstrations ETI Targeting 8.5p/KWh post Energy Technologies Institute LLP - Subject to notes on page 1 page 27

28 Gas Likely to replace heavier fossils in hard to electrify and backup applications Fossil gas likely to remain cost effective and widely available Low CO 2 emissions vs heavier liquid fossil fuels likely to lead to gas replacing diesel in HDVs Technology already available Energy density supports long-distance vehicle applications Hydrogen from fossil fuels could become an increasingly important energy vector Creates system flexibility (with CCS and storage) Light vehicle transport applications ETI already investing in enhanced control and safety systems for powerplants using hydrogen rich fuels 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 28

29 The energy policy trilemma Sustainable Key Targets -34% CO 2 by % CO 2 by % of energy from renewable sources by 2020 Secure Targets? Power from a portfolio of sources Diversity in fuel supply and conversion Market leads on technology selection Affordable Targets Reduce the number of households in fuel poverty and eliminate fuel poverty in vulnerable households 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 29

30 UK energy policy Can it deliver? 2020 / 2050 CO 2 targets are viewed as increasingly challenging in today s economy Demand reduction (efficiency) is key to ensuring progress UK policy focus is on measures to engage industry and consumers Planning reforms Green Deal for efficiency Electricity Market Reform contracts for difference, capacity payments, FITS/ROCS, Emissions Performance Standard,... Carbon Price Floor Being driven by increasingly urgent regulation and standards Building regulations changes Smart meter roll-out Energy Technologies Institute LLP - Subject to notes on page 1 page 30

31 UK energy policy Will it deliver? The assured availability of affordable, sustainable energy is a critical element in delivering long-term economic development and growth UK policy will deliver a system that combines these 3 elements but... Will it meet the targets? Will it be the optimum solution? Success will need industry and finance to be persuaded to invest in... widespread innovation major, long-term infrastructure developments (in an uncertain market) 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 31

32 UK energy policy Will it deliver? Virtually all the technology elements in the UK energy system will need to be replaced over the next 40 years Power, Heat, Transport, Infrastructure 2050 CO 2 target is unaffordable with today s technologies 2050 CO 2 abatement costs can be acceptable if we prioritise, develop and apply the optimum technologies Informed, robust decisions are critical Early demonstration of cost effective options for national priorities is critical 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 32

33 Potential implications for the UK... Abatement costs UK 2050 target appears affordable with intelligent energy system design and investment in technology development Efficiency measures waste heat recovery, building insulation, and efficient vehicles make a contribution under all emission reduction scenarios ETI targeting through Smart (including vehicle electrification infrastructure and HDV projects) Nuclear mature technology and appears economic under most emission reduction scenarios - primarily an issue of deployment (planning / licensing, supply-chain, finance etc) Cost impacts post-fukushima need clarification international approach needed Bioenergy major potential for negative emissions via CCS and might include a range of conversion routes H2, SNG, process heat ETI investing in science, logistics and value models Offshore Wind the marginal power technology and an important hedging option ETI developing over 30m of investments in next generation, low cost, deepwater platform and turbine technology demonstrations CCS A key technology lever given potential wide application in power, hydrogen and SNG (gas) production, and in industry sector ETI investing in separation, storage and system design for coal, gas and biomass Natural gas potentially a material role as a 2050 destination fuel including power, space heating, transport and process heat applications Hydrogen increasingly important energy vector providing system flexibility (CCS and storage) and light vehicle transport applications 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 33

34 UK Energy policy Must support and be supported by the bigger picture Must operate in a global market Capacity Skills, training, infrastructure, science, R+D Energy power, heat, transport, infrastructure Wealth creation gross value added, direct employment, secondary jobs and impacts, exports, inward investment 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 34

35 UK Energy policy Must support and be supported by the bigger picture Must operate in a global market Capacity Skills, training, infrastructure, science, R+D Energy Stable regulation Known liabilities Wealth creation gross value added, direct employment, secondary jobs and impacts, exports, inward investment power, heat, transport, infrastructure Proven value chains 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 35

36 Delivering low carbon energy technologies Supporting economic growth by... Informing policy Building partnerships Delivering innovation Sharing risk Creating affordability Energy Technologies Institute LLP The information in this document is the property of Energy Technologies Institute LLP and may not be copied or communicated to a third party, or used for any purpose other than that for which it is supplied without the express written consent of Energy Technologies Institute LLP. This 2012 information Energy is given Technologies in good faith based Institute upon the latest LLP information - Subject available to to notes Energy on Technologies page 1 Institute LLP, no warranty or representation is given concerning such information, which must not page 36 be taken as establishing any contractual or other commitment binding upon Energy Technologies Institute LLP or any of its subsidiary or associated companies.

37 Energy Technologies Institute (ETI) Addressing the challenges of climate change and low carbon energy Improving energy usage, efficiency, supply and generation Demonstrating systems and technologies Developing knowledge, skills and supply-chains Informing development of policy, regulation and standards Enabling deployment of affordable, secure, low carbon energy systems 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 37

38 Reducing risk and enabling Large-scale deployment through development with major industries Innovation and pull-through with smaller enterprises and academia Informed decisions on sustained, targeted development of regulatory frameworks, skills, supply-base and infrastructure 2012 Energy Technologies Institute LLP The information in this document is the property of Energy Technologies Institute LLP and may not be copied or communicated to a third party, or used for any purpose other than that for which it is supplied without the express written consent of Energy Technologies Institute LLP. This 2012 information Energy is given Technologies in good faith based Institute upon the latest LLP information - Subject available to to notes Energy on Technologies page 1 Institute LLP, no warranty or representation is given concerning such information, which must not page 38 be taken as establishing any contractual or other commitment binding upon Energy Technologies Institute LLP or any of its subsidiary or associated companies.

39 Energy Technologies Institute Holywell Building Holywell Park Loughborough UK LE11 3UZ For all general enquiries telephone the ETI on +44 (0) For more information about the ETI visit For the latest ETI news and announcements The ETI can also be followed on Twitter at twitter.com/the_eti 2012 Energy Technologies Institute LLP - Subject to notes on page 1 page 39