APPENDIX F Agenda Item No. 9

RENEWABLE ENERGY OVERVIEW

1 Purpose 1.1 This report is to inform the Committee on the national situation with regard to renewable energy, as it applies to the district. It sets the scene for reports to future meetings of this Committee looking at renewable energy, including wind energy and sustainable construction.

2 Recommendations

2.1 That the Committee notes the information provided within the report and takes this into account when considering future related reports. 2.2 That the Committee identifies any specific issues emerging that they would want to see covered in the forthcoming related reports.

3 Executive Summary 3.1 This report is the first of three that will come together to cover a broad range of issues relating to how we respond to renewable energy and sustainable construction in new and existing developments. 3.2 This report is to inform the Committee on the current direction of National policy with regard to renewable heat and power. It sets out the forthcoming legislation and government targets that we are expected to achieve. 3.3 Taking forward this more general “scene setting”, a report will come to the next meeting of this Committee, to explain how we would approach any wind- farm applications that are submitted in the context of our current planning policies. A third report will come to a future meeting, covering sustainable construction issues. 3.4 National Context 3.5 The Nation’s electricity demand stands currently at 330TWh (a Terawatt/hour is a billion Kilowatt/hours so for context, if a typical house uses 4,000kWh/year (the UK average), this equates to electricity to power 82.5 million homes). Clearly with around 26m homes in the UK, households only form a proportion of the electricity demand. This total demand is likely to rise to 500TWh by 2050 as more electricity is required to power cars and heat and cool houses and premises. 3.6 The Government has set itself a challenge to reduce (from 1990 figures) its CO2 levels by 34% by 2020 and 80% by 2050. Around 1/4 (21 Gigawatts) of the UK’s current electricity generating capacity (around 80GW) is to be retired between now and 2025. As such, a massive shift must take place in this electricity generation mix. It should be remembered that a GW (or W, kW, MW, TW) is a measure of power – how fast a piece of equipment will consume electricity; A GWh is a measure of electricity used. GW is akin to the CC of a car engine whereas GWh could be likened to the litres of diesel that the car uses as it drives 3.7 Table below sets out the current electricity generation mix.

F1 Source: Digest of UK Energy Statistics 2011.

Fuel Percentage

Gas 47%

Coal 28%

Nuclear 16%

Renewables 7%

Imports 1%

Other 1%

Government Overall (Non Planning) Policy 3.8 Coal fired electricity generation must reduce from 28% of electrical generation capacity today to just 3% by 2030. This due in part to the politics of coal in the UK, the formative nature of research in to carbon capture and storage (CCS). Whilst CCS technology (capturing CO2 and storing it in rock formations under the North Sea) is seeing large scale government investment in the UK, this technology is likely to be sold to nations that carry significant levels of coal and can be expected to utilise this (Russia, India, China, USA). 3.9 Nuclear power is likely to provide the same 16% of generation in 2030 as it does today; However, of the 17 nuclear power stations open today, only Sizewell will remain in 2030. So new capacity is currently likely to fill the generation gap. The Government’s National Policy Statement (see 4.21) on nuclear power generation lists eight sites across the country as potentially suitable for new nuclear power stations by 2025. 3.10 Supply fuels have changed; gas turbine power stations represent 47% of the country’s electricity generation – Because North Sea oil (and subsequently gas) peaked in 1999 and is now in terminal decline, we have moved from importing 1% of gas in 2001 to 50% today and the figure is likely to rise to 75% by 2020. This presents future global security of supply issues. 3.11 The largest projected increase in the mix will be wind turbine power. Current national plans expect 28 Gigawatts (GW) of wind by 2020 of which 8-13 GW is to be on shore. The UK is the windiest country in Europe. Wind speeds whilst reducing the further south one travels, are exceptionally good both on and off-shore. Reliance on off-shore only is not a realistic option in the short to medium term since to achieve 20GW (see 3.6), these must all be grid connected. This would require sub-sea cables connecting to around 60 on shore landing points, each with its own sub-station the size of two football pitches. Generation proximate to area of use is therefore preferable. Large global investment is taking place to provide energy storage (capacitor and battery technology) to not only address wind intermittence but also balance supply and demand and avoid the waste losses of energy caused by inaccurate predictions of demand caused by electricity needing to be used as it is generated.

F2 3.12 Combined heat and power (CHP) This technology is proven and accounted (in 2009) for some 5.7GW (electricity production) of UK supply. To make it efficient, it must be designed to make use of heat proximate to its production and at times to ensure it runs constantly. 3.13 The UK is the largest predicted market for marine energy (wave energy which comes from wind powered waves travelling across the surface of the sea and tidal energy from predictable tidal streams caused by the gravity of the moon and other celestial bodies). However, whilst this is likely for the UK to amount to some 110MW of the global 150MW by 2015, this represents a fraction of the current 80GW UK requirement. 3.14 Solar Photovoltaics (PVs) are photo cells that are excited by sunlight and produce electricity which is converted from DC to AC via an inverter for commercial/domestic use or export to the grid. The business case for Solar Photovoltaic fields similar to that installed at Westcott Venture Park in summer of this year was significantly diminished with the recent Government’s review of Solar PV which came into effect on 1 August 2011. This effectively reduced the financial incentives for large scale installation from 30.7p/kWh generated to 8.5p, a 72% reduction. 3.15 The case for Geothermal energy to produce electricity is possible in areas of the UK where viable underground heat at achievable depths is possible (SW England). Geothermal energy comes from the thermal earth inner activity, mainly where there is volcanic activity. The deposits of heat may be exploited with almost constant power supply. Once steam reaches the earth’s surface through wells, it is used to produce electricity, (or in some cases used for non- electric purposes e.g. building heating) 3.16 Hydro electricity is largely optimised in the UK because of an end to dam building. In principle, any brook or stream could be ‘tapped’ provided there is a sufficient “Head” of water to turn a water wheel or Archimedean screw to serve as a turbine for electricity generation. 3.17 Energy from Waste is not part of the Feed in Tariff (FiT) (See 5.1) scheme although it can benefit from other subsidies. It will play a very small part on the energy mix as energy is a by-product (rather than a sought resource) from this technology. 3.18 Anaerobic Digestion (AD) is supported by government and demonstrated by the fact (if appropriately sized) it can receive financial incentives from both the FiT and the Renewable Heat incentive (RHI) (See 5.3). AD takes organic (food and garden waste) to produce a biogas (bio-methane) which can then be used in electricity generation. 3.19 In all of these energy mix scenarios, new infrastructure must be implemented. Underground cabling at 10 times the cost of pylons will be hard to justify so more pylons will likely be required across the country. 3.20 To demonstrate some of the difficulties the Government’s carbon targets represent, DECC have created a website which allows the user to mix the generation technologies to achieve the targets whilst exposing the unintended consequences of same. This publicly available tool can be found at www.2050-calculator-tool.decc.gov.uk

F3 3.21 The relative combustion/generation efficiencies of the technologies discussed above are set out in order below: Source: Eurelectric 2003 (Generation efficiency relates to the percentage of actual electrical energy derived from the fuel source used. Combustion efficiency relates to same but refers to fuels that are combusted to produce heat for steam).

Technology Generation Efficiency

3.17 Large Hydro 95% Electric

3.17 Small Hydro 90% Electric

3.14 Tidal (Marine) 90% power

3.11 Gas turbine 39% power stations

3.13 Combined Heat 36% (85% if heat and Power included)

3.09 Coal fired 34% electricity generation

3.10 Nuclear power 33% (current) -36% (next generation)

3.12 Wind turbine 27 to 35% power

3.18 Energy from Waste 22 to 28% Burning waste produces CO2 and as such is neither a renewable nor a low carbon option.

3.15 Solar PV 15% This percentage is increasing significantly, as technology improves.

3.16 Geothermal 15% electricity

3.219 Anaerobic Figures unavailable Digestion

F4 4 Drivers For Change / Legislation Energy Security 4.1 The UK is increasingly reliant on fuel exports (see 3.11). North Sea oil and gas is now largely accepted to have peaked. Delays over decisions mean that there is potential for an energy supply shortfall in the coming decade. It is expected that energy prices will increase annually by a minimum 20% over the coming years (see 4.28 for previous price increases). 4.2 Renewable energy is now seen by many governments as a safe way (post the Fukushima nuclear meltdown) to provide a large part of the mix to ensure this security without the need to import fossil fuels. Indeed the Mixed Oxide (MOx) nuclear fuel plant in Sellafield, UK closed in late July 2011 as a direct result of the Japanese nuclear incident and the consequent reduced demand for this nuclear fuel. European Union Emissions Trading Scheme (EU ETS) 4.3 Set up in 2005 across the EU to reduce greenhouse gas emissions under the Kyoto Protocol; the EU ETS is the principal method employed to make an 8% reduction on 1990 levels by the first Kyoto commitment period (2008-2012). It is the largest multi-country, multi-sector, green house (GH) gas emissions trading system in the world and includes around 11,000 large installations (excluding aviation) accounting for around 45% of the EU’s CO2 emissions. The EU ETS operates by the allocation and trading of GH Gas emissions allowances throughout the EU; one allowance represents one tonne of CO2 equivalents. This scheme sits above the scope of the Council’s legislative requirements but is included here to provide an overview. EU Directive - 15% Renewables by 2020 4.4 Alongside the Electricity Market Reform White Paper (July 2011), the Government also published its Renewable Roadmap. This sets out how the UK is to meet its target of generating 15% of its energy from renewable sources by 2020. The Governments own renewables target of 10% renewables by 2010 was recently missed. Only 6.7% of electricity was achieved by renewable sources. The Roadmap sets out to tackle the barriers to the deployment of renewable energy. These will need to increase four-fold by the end of the decade in order to reach the target. Climate Change Act (CCA) 2008 4.5 The Climate Change Act enacts mandatory UK targets for reducing carbon. Specifically from 1990 levels, a 34% carbon reduction by 2020 with 80% by 2050. Carbon Budgets 4.6 As part of the CCA (2008) Carbon budgets are a cap on the total quantity of greenhouse gas emissions emitted in the UK over a set time. Under the system, every tonne of CO2 emitted between now and 2050 (80% target) will count. Where emissions rise in one sector, corresponding falls will have to be achieved in another. Each carbon budget will cover a 5 year period. The first 3 of which were set in law in 2009 and run 2008-12, 2013-17 and 2018-22. The fourth was set in law in June 2011 and runs 2023 to 2027.

F5 Carbon Reduction Commitment – Energy Efficiency Scheme (CRC-EES) 4.7 Sitting beneath the EU ETS and a major outcome of the CCA (2008) is the national (CRC-EES) envisaged and launched as a financial recycling scheme, it is now a tax on carbon emitted. Whilst it currently applies to organisations with electricity use in excess of 6GWh/year (6,000,000kWh/ year) from half hourly meters, this threshold is expected to be reduced and so is likely to capture this Council in due course. For context, the Council’s reported energy use for 2008 (baseline year for the CRC-EES) was a little less than 5,000MWh (5GWh) although this included the two leisure centres. Local Economy – Smart Grid – Decarbonisation 4.8 The smart grid is conceived as using novel technologies and services with intelligent controls and monitoring and diagnostics that will better facilitate a more varied mix of energy generation technologies (from household rooftop scale solar photovoltaics (PV) and community wind turbines to large scale wind and combined heat and power (CHP), nuclear and gas turbines. Councils are now able to generate and sell renewable energy produced. 4.9 The smart grid will supply consumers with greater information and options for choosing their supplier. By reducing reliance on fossil fuel power generation, the carbon intensity of the process (with a focus on allowing the easier integration of localised renewable the system) will reduce the environmental impact of generation and transmission. The system aims to maintain or improve the existing high levels of system reliability, quality and security of supply along with service efficiencies. Climate Change Levy 4.10 The Climate Change Levy (CCL) came into effect in 2001 and is a charge on energy usage for business and the public sector (not applied to domestic, transport energy sectors or renewable electricity) introduced to encourage energy efficiency. From April 2011, it is 0.485p/kWh for electricity. Climate change agreements allow energy intensive organisations a discount on the levy if they achieve energy efficiency targets. National Planning Policy Framework 4.11 On 25th July 2011 the Government published its draft National Planning Policy Framework (NPPF) for consultation. The intention is that this will, once approved, replace all current Government planning guidance (Planning Policy Statements and Planning Policy Guidance notes). The draft NPPF clearly states that the Government’s objective is that planning should support the transition to a low carbon economy, and the planning system should provide active support for energy efficiency improvements to existing buildings and the delivery of renewable and low-carbon energy infrastructure. National Policy Statements 4.12 On 19th July 2011 the Government designated six National Policy Statements (NPS) for energy. These set out national policy against which proposals for major energy projects will be assessed and decided on by the Infrastructure Planning Commission or its successor. One of the six energy NPS relates to renewable energy infrastructure, and covers onshore installations (wind,

F6 biomass, waste) of over 50MW and offshore wind installations of over 100MW. Code for Sustainable Homes 4.13 Introduced as a voluntary (mandatory in the case of social/public housing) route-map to carbon zero (code level 6) homes by 2016, there are current Government lead plans to dilute this due largely to lobbying pressure from developers. The target for zero carbon by 2016 (to be implemented through Building Regulations) relates only to the energy efficiency and renewable energy aspects of the Code. However, the Code itself also covers many other sustainability issues as well. Constructors can meet the code through focussed attention on sustainability measures from a range of areas. These include a Fabric First approach focusing on a highly insulated, air tight construction with energy efficient appliances water and waste reduction measures, micro- generation with renewable technologies, sustainable transport and sustainable urban drainage systems (SUDs). BREEAM 4.14 The BREEAM scheme is a voluntary score sheet for corporate and commercial buildings and allows measures such as energy efficiency, water use, waste, transport, renewable installations to be addressed in order to score points to reach levels of excellence. Fuel Poverty and Rising Fuel Prices 4.15 Many areas (particularly in Aylesbury Vale) are rural and off the mains gas network. Residents in these properties are restricted to high energy costs through heating with oil, LPG and electricity. There are many residents living in older properties which have solid walls, including the large estates of Claydon, Waddesdon and Chilton . Between 2004 and 2009, there has been a 122% increase in gas prices and a 75% increase in electricity costs. These increases have been unmanageable for many residents in the UK, resulting in 5.5 million households now living in fuel poverty (paying more than 10% of their household income on energy) and this figure is set to grow. 4.16 Three of the big six energy companies have announced major price rises towards the end of 2011. This will push more residents into fuel poverty, likely up to 6 million. The average level of fuel poverty across the four Buckinghamshire districts is 9.2% In off-mains gas areas, renewable heat technologies such as Air and Ground Source Heat Pumps become more economically viable and grants beyond the Renewable Heat Incentive (see 5.3) make them even more attractive (see 4.30). Renewable Heat Premium Payment Scheme 4.17 This grant launched 1 August 2011 and ending 31 March 2012 provides £15m of funding to support the installation of renewable heat technologies including ground and air source heat pumps, biomass boilers and solar thermal heat collectors. It offers up to £1,250 per installation with the intention of pump priming 25,000 installations by its close in 7 months. It is targeted at the 4 million homes in the UK that are not on mains gas.

F7 Energy Company Obligation (ECO) 4.18 This will take the place of the Carbon Emissions Reduction Target (CERT) and Community Energy Savings Programme (CESP) schemes and will play a vital role in subsidising energy efficiency measures to vulnerable and low- income (fuel poor) households. Where CERT and CESP were a carbon reduction and energy savings programmes, the ECO has a greater focus on affordable warmth. Green Investment Bank 4.19 The first of its kind in the world, this bank will be dedicated to greening the UK economy whilst delivering sustainable growth. At arms-length from Government, the bank will elicit financial and environmental expertise, unlocking private capital to deliver green initiatives. Other allied policies include the creation of a National Infrastructure Plan (Launched in October 2010 and outlining the scale of the challenge facing UK infrastructure and the major investment that is needed to underpin sustainable growth in the UK. Focus is on energy, transport, digital communications, floodwater, waste management and in science), reforms to the electricity market, changes to the CCL (see 4.17), introduction of the RHI (see 5.3), review of waste policy and reviews of Office of the Gas and Electricity Markets (Ofgem) and Office of Water Services (Ofwat). Green Deal 4.20 To be launched in September 2012, the Green Deal aims to improve the energy efficiency of buildings across Britain. Whole house measures are to be introduced to 14 million homes by 2020 with 12 million more planned by 2030 along with 2.5 million SME properties. The scheme is a loan of between £6,000 and £9,000 on a fixed interest rate of around 6% to be secured on the property, rather than the occupier. What is referred to as the “Golden Rule” is that savings from installations implemented must be greater than the cost of the loan. Measures are likely to include renewable energy but this area currently remains unclear. More information on the green deal will be set out in a future report as and when details become clearer. The sustainability team are leading on a conference with the United Sustainable Energy Agency (USEA) on the Green Deal on 16 September at the Oculus.

5 Financial Incentives for Renewable Technologies Feed in Tariff (FiT) 5.1 The FIT scheme was introduced in 2010 following successes across Europe. The 25 year scheme pays installers of electricity producing renewable technologies for generating electricity. There are also payments for exporting same to grid. Technologies include Solar Photovoltaics (PV), Wind Turbines, Small Scale Hydro Electric, Anaerobic Digestion and Combined Heat and Power (CHP). The cost of this scheme (ca £1bn so far) is effectively added to all energy bills regardless of status. Large scale PV installation were reviewed in 2011 and generous generation rates on large scale installations (of the magnitude to the one already installed at Westcott Venture Park) were reduced significantly from 1 August 2011. A wholesale review of the FIT is to take

F8 place in April 2012. It is expected that rates will be reduced significantly as technology improves and cost to produce fall. Renewable Heat Incentive (RHI) 5.2 To be launched on 30 September 2011, the RHI, in a similar way to the FiT will financially incentivise renewable technologies but in the case of the RHI these will be heat producing technologies rather than electricity generating ones. Typically the index linked incentives will run for up to 20 years in order to encourage the take-up of such technologies. 5.3 Conclusions 5.4 In terms of renewable energy generation, of the technologies outlined in sections 3.10 to 3.20 (on and off shore wind, farm scale solar PV, CHP, AD, hydro, EfW and marine technology), only wind technology has the scale of capacity to bridge the shortfall in electricity generation required when coal is decommissioned. Solar financial incentives (FiT) for MW (GWh) scale farms (necessary to make these farms viable given current material costs and yield) have been downgraded to a point of marginal economic viability, CHP supported by successive governments since 1990 has failed to meet projected demand and as industry declines, the demand for local heat continues to reduce, AD, like EfW is a waste technology providing energy as a by-product and so will never provide the necessary scale of energy generation required. Hydro has a small part in the mix but the days of building large dams in the UK are over. Hydro (see 3.18) currently amounts to less than 1% of the mix. Marine technology is not yet sufficiently advanced (see 3.15) to bridge the looming gaps in electricity supply but may have a significant future role. 5.5 Consequently, Wind turbines must be considered in the round and a key technology in the mix of technologies required to meet national electricity demand. It is of course acknowledged that there are particular challenges with regards to this technology in terms of impact on the local environments where they are positioned, as there are with many of the other energy generating options.

6 Resource Implications 6.1 There are no direct additional resource implications relating to this report.

7 Response to Key Aims and Objectives 7.1 The report meets the key aim of a great environment to protect and enhance the local environment and promote the sustainable use of resources.

Contact Officer Alan Asbury 01296 585112 Background Documents N/A

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