INDUSTRY NEWS
INDUSTRY NEWS
Renewable energy reform could save UK consumers £2 billion
A
n independent report published on 16 February has revealed that consumers could
save more than £2 billion if the UK Government’s planned renewable energy auctions are opened up to include a wider mix of technologies. Yorkshire-based power generator Drax commissioned NERA Economic Consulting and Imperial College to look at hidden costs that are not reflected in the contracts awarded for renewable generation. NERA stands for National Economic Research Associates.
These hidden costs or whole system costs are increasing as intermittent renewables – those reliant on the sun and wind – increase. These intermittent renewables mean other forms of power generation need to kick in and flex up and down to meet electricity demand. These costs are passed on to consumers via their energy bills.
The Government is currently planning three auctions for new renewable energy contracts – Contracts for Difference (CfDs) - over the next four years and all
are focused on offshore wind. The new research shows significant differences in the true costs of renewables once these additional costs are recognised. Offshore wind could require a CfD of £127 per MWh, onshore wind £92-97 per MWh, solar £96 per MWh and biomass £84 per MWh.
Once these new support levels are modelled over the planned energy auctions, the new energy mix that could win contracts is shown to save consumers £1.9- £2.2 billion. This support is already paid for through energy bills and the new cost-efficient mix would lessen the impact.
Dorothy Thompson, CEO, Drax
First investment in Scottish timber market
The acquisition 3,100 hectares of forest in three locations in Scotland for institutional investors was announced by Aquila Capital on 12 January. This is the company’s first investment in the Scottish timber market. The forests consist of a mix of sitka spruce, lodgepole pine and other fast-growing coniferous tree species and will be managed by Tilhill Forestry Ltd, a leading UK forestry and harvesting company.
Established more than 60 years ago, Tilhill Forestry is a subsidiary of BSW Timber Ltd, which operates throughout the UK and has a
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turnover in excess of £100 million. Scotland is an attractive market due to a long-term shortage of timber, importing 75% of its requirements. The forests acquired by Aquila Capital have excellent internal and external transport links, providing easy access to market while being mature and largely ready for harvesting, offering an immediate and continuous cash return.
According to a paper by Aquila Capital entitled Real Assets – Investments in Timberland, forest investments are particularly attractive to investors who seek to reduce risk in their portfolios.
Group, said: “This independent research shows it’s crucial we get the right mix of energy generation. The UK’s system faces growing challenges, from costs to reliability, as traditional forms of generation are replaced with renewables. “Intermittent renewables like wind and solar are vital as we continue to clean up energy generation, but they need to be backed up by a constant supply of electricity that can be flexed up and down to make sure the UK’s businesses and households always have power on demand. “Opening up energy auctions to include other renewables could save consumers £2 billion and with
more biomass in the mix, energy security is also boosted. Using the latest technology, we’ve upgraded half our power station to run on compressed wood pellets, which give an 80% plus carbon saving against coal. With the right support, we stand ready to finish the job.” Daniel Radov, Associate Director, NERA Economic Consulting, added: “NERA Economic Consulting is pleased to be able to continue its partnership with Imperial College in modelling the total costs of different power generation technologies and in helping to inform the policy discussion around renewable energy and decarbonisation.
“To ensure that we achieve environmental targets as efficiently as possible, it is essential to have policies in place that provide the right incentives to minimise costs. We hope the combination of Imperial’s whole-system energy modelling with NERA’s ability to model the details of the CfD auctions will contribute to a better understanding of the advantages and disadvantages of different policy approaches.”
Report alleges ‘carbon scam’
A new report launched by the Global Forest Coalition at the United Nations Conference on Climate Change (COP21) in Paris provides an overview of current global industrial-scale bioenergy trends. Use and production are primarily in the US, the EU and Russia at present, but other regions such as Asia are gearing up to become heavily engaged in it, predominantly through the production, consumption and trade in industrial-scale wood- based biomass.
Entitled ‘Biomyths – the Costly Carbon Scam of Bioenergy’, the report claims to expose how large-scale bioenergy is being promoted as a replacement
for some fossil fuels, based on what it calls the myth of ‘carbon neutrality’. Mary Lou Malig, Global Forest Coalition Campaigns Co-ordinator, who attended the climate negotiations, said: “Accepting that large-scale bioenergy can be carbon neutral will permit power plants to go on pumping carbon emissions into the atmosphere whilst countries falsely claim that they are reducing emissions”. She concluded, “In
combination with proposals like Bioenergy with Carbon Capture and Storage (BECCS), such claims turn any possible agreement that might come out of Paris into a fraudulent scam”.
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