An Energy policy for Wales - Understanding the Challenges

An Energy Policy for Wales – Understanding the Challenges A discussion paper commissioned by Leanne Wood AM and the Plaid Cymru Assembly Group.

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Forward Since the discovery of how to make fire the use of energy has been vital to human well being, but the industrial revolution ushered in a period of massive increase in energy use and transformed the way in which societies and economies function across the globe. As the demand for that energy continues to rise and the effect of intensive energy use on the planet as a whole becomes better understood there is an increasing need to revisit the way in which we manage our energy dependency.

At the same time increased global demand for energy is likely to result in higher prices and highlight issues of energy security and reliability. How energy is sourced, priced, used and the effects of that use are vital considerations in the wellbeing of any modern economy.

With this in mind I have focused on these challenges and to tried to assess how Welsh energy policy could and should be shaped in the 21st century. The subject is a very large and complex one, but I hope that this document will provide a useful summary of the current role of energy both in Wales and more widely and the main factors to be taken into account when considering policy priorities for the future.

This document is intended as a guide for an informed debate on a long term energy policy framework for Wales and I hope that it achieves that end.

Madoc Batcup Â

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Introduction The area of energy is a highly controversial one. At a time when we as a society have become increasingly dependent on energy for every aspect of our daily lives, the limited availability of our traditional source of energy since the industrial revolution, fossil fuels, has become more apparent, as has the damage which their increased use can do to the environment.

In principle the requirements for a country’s energy policy are quite simple; they are to achieve secure sources of energy supplies at an affordable price for both residential and business/institutional users and to do so, as far as possible, in an environmentally acceptable way.

However achieving this is far from simple and has significant and fundamental implications for the success of any economy and society, not just in providing energy, but in underpinning wider economic and social outcomes. Energy policy must therefore be a balance of competing principles and practicalities. This is consequently a very large topic and in some areas, particularly with regard to the economic impact of energy projects, information is difficult to come by. For this reason this research does not purport to be comprehensive but to lay out the current energy position in Wales and, to the extent that this is possible, provide a brief over-view of the international energy picture and future trends and then describe the various policy options that are (or ought to be) potentially available to improve the current situation of energy supply and demand in Wales, and to have some understanding of what the economic and environmental consequences of such policy options might be.

Energy investment and policy initiatives are very often by their nature long term. It is therefore entirely logical that the development of energy policy should seek to address what kind of energy model is required in the long term for Wales, how we would seek to reach that goal, what powers a Welsh government would need to implement such policies, and to assess what legacy issues (with the powerful example of the coal industry) any current and planned energy policy for Wales might create. Wales is also a significant exporter of electricity, and the degree to which Wales could or should use its natural resources to generate surplus electricity for export, and what impact this would have on the Welsh economy are also matters for consideration.

With the possible exception of fracking and/or coal bed methane it seems unlikely that Wales will be a substantial producer of fossil fuels in the foreseeable future. There is very little fossil fuel produced in Wales, while there is a very considerable amount of electricity generating capacity and it is likely that the production of electricity is the most probable indigenous source of meeting Wales’s energy requirements in the years ahead.

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The Current energy situation of Wales and the UK. The production and consumption of energy in Wales is highly integrated with that of the UK as a whole. The context of the current situation in respect of UK energy can be summarised by the key points provided at the start of the Department of Energy and Climate Change (DECC)’s Digest of UK Energy Statistics1 (DUKES).

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In 2011 UK energy production was down a record 13.2 per cent on a year earlier, its fastest rate of decline for over 40 years, as a number of oil and gas production facilities were affected by maintenance issues.

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Primary energy consumption was down 6.9 per cent. Final energy consumption fell by 7.3 per cent with less energy used for heating (more details are available in Energy Consumption in the UK www.decc.gov.uk/en/content/cms/statistics/publications/ecuk/ecuk.aspx

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On a temperature adjusted basis, primary energy consumption was down 1.7 per cent continuing the downward trend of the last six years. In 2011 the average UK temperature was 10.7 degrees Celsius, 1.8 degrees higher than in 2010, and 1.0 degrees higher than the average temperature between 1971 and 2000.

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The UK remained a net importer of energy, with a dependency level that increased to 36 per cent. Fossil fuels remain the dominant source, accounting for 87.5 per cent of [total] supply, though this is a record low level. Supply from renewables increased, with its contribution accounting for 3.8 per cent of consumption on the EU agreed basis.

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In 2011 within electricity generation, there was reduced use of gas, but there were increases in coal and nuclear output, and higher levels of renewables output, with sharp increases from both wind and hydro.

While underlining the fact that both energy consumption and production has gone down in the recent past, this does not give an insight into the way in which the energy system in the UK has been transformed over past decades nor what challenges can be expected in the future. The energy mix in the UK has changed significantly over the last 40 years as shown in a fact sheet published by DECC ‘Energy consumption in the United Kingdom: 2012’ 2. As pointed out on p.5 of the document “Overall energy consumption increased by 2.3 million tonnes of oil equivalent (2 per cent) between 1990 and 2010. Over this time energy consumption by the industry sector fell by nearly one third (11 million tonnes of oil equivalent) and the services sector by 5 per cent (1 million tonnes of oil equivalent) in contrast the transport and domestic sectors saw increases of 6.5 and 7.7million tonnes of oil equivalent (13 per cent and 19 per cent) respectively.” Indeed, it points out that the level of primary energy consumption in 2011 was similar to that last seen in 1985, and was 5 per cent lower than in 1990 and 3 per cent lower than in 1970.

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https://www.gov.uk/government/publications/digest-of-united-kingdom-energy-statistics-dukes-2012-printed-version2 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/190618/chapter_1_overall_energy_cons umption_in_the_uk_factsheet.pdf

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Chart 1: Total primary energy consumption, unadjusted and temperature corrected, UK, 1970 to 2011, 3 In 1970 solid fuel (largely coal) and petroleum constituted 90% of the primary source of energy in the UK, and gas 5%. By 2011 coal constituted only 15%, with gas and petroleum providing about 35% each and bio-energy and renewable electricity etc. the rest. Electricity only forms some 18.5% of final energy consumption4, with petroleum constituting some 48% and gas nearly 30%. This takes into account the fossil fuels used to generate electricity. Although it has risen significantly since the 1970s electricity still only provides under 20% of the UK energy requirement, while petroleum throughout that period has averaged about 45% of final energy consumption.

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https://www.gov.uk/government/publications/digest-of-united-kingdom-energy-statistics-dukes-2012-printedversion-excluding-cover-pages 4 See Chart 1.5 of DUKES

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Chart 2: Final Energy Consumption 2011, graph 1.5 from DUKES p.15 5 Energy consumption in the UK has remained virtually flat over the last 20 years or more, and this has largely been due to a decline in industrial energy requirements, although the slack has largely been taken up by the domestic and transport sectors, and while the role of coal has declined radically and gas taken its place, electricity is still under 20% of final consumption. Having said that there had been a gradually rising trend since the mid 80s which was significantly reversed by the current downturn.

The situation in Wales is very similar, although it has a higher proportion of manufactured fuel constituting some 10% of fuel consumption, which is probably due to the importance of the steel industry in Wales, since it includes blast furnace gas6, and bio-energy and waste - see ‘Energy in Wales a statistical overview’ from DECC given at RenewableUK Cymru’s 7th annual conference which took place in Cardiff on 1st May 20137, (‘Energy in Wales’).

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https://www.gov.uk/government/publications/digest-of-united-kingdom-energy-statistics-dukes-2012-printedversion-excluding-cover-pages

6 Manufactured fuel – is defined by DUKES as including manufactured solid fuels such as coke and breeze, other manufactured solid fuels, liquids such as benzole and tars and gases such as coke oven gas and blast furnace gas.

7 http://www.renewableuk.com/en/utilities/document-summary.cfm?docid=48403C48-3C36-4AA09AC149AECF197EA9

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Charts 2 and 3: Energy Consumption in Wales by Fuel and Proportion of UK Consumption Occurring in Wales, Energy in Wales, slide 58 Future energy policy for Wales will have to take into account the continuing importance of petroleum and gas as sources of energy. Radical measure will be required to reduce dependence on these two fuels providing some 80% of energy needs, in the transport sector (such as the introduction of electric cars), in the industrial sector in terms of using electricity instead of gas for certain industrial processes, and in the domestic sector in terms of energy for heating and cooking.

It is unlikely Wales will find any substantial amounts of fossil fuels which are economically and environmentally viable in the near future. Considerable claims have been made in respect of shale gas, and its potential in the UK, given the enormous reserves that are being exploited in the United States through fracking, but exploitation of shale gas in Europe is likely to be more problematic9.

The dense population of the UK is likely to make these processes even more contentious than they are in the US10, and wells are rapidly depleted meaning that multiple wells have to be drilled. There is substantial concern11 that extraction of shale gas through fracking has serious environmental consequences, both in respect of water pollution, the types of chemicals used to frack the gas bearing rock more effectively, the amount of water required for the process and how to dispose of it etc. Following the seismic activity at Preese Hill near Blackpool DECC has looked at the issue of fracking. In a recent ministerial statement12 DECC has concluded that fracking should be allowed

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Ibid

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http://www.ft.com/cms/s/0/53328f06-ac1d-11e2-a063-00144feabdc0.html#axzz2SiNl3C00 http://shalebubble.org/ 11 See for example the BBC Science correspondent report http://www.bbc.co.uk/news/science-environment20595228, which looks at a number of the considerations or the website http://shalebubble.org which typifies the concerns of those opposed to fracking.

12 https://www.gov.uk/government/speeches/written-ministerial-statement-by-edward-davey-exploration-for-shalegas

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to continue subject to certain safeguards. Less attention seems to have been paid as to the infrastructure necessary to distribute the gas once extracted.

Some estimates in respect of shale gas in Wales have been quite bullish, but it is noticeable that in one case13 they have defined the opportunity in respect of the UK’s energy requirements, rather than that of Wales, estimating a 16 year life for shale gas reserves in south Wales, rather than a life some 20 times longer for Wales alone.

For all the above reasons it is still not clear either what the potential of shale gas is, or what the environmental consequences of its exploitation would be. It would be premature to view shale gas as an important constituent of Wales’s energy requirements for some time to come.

The other source of fossil fuel gas which might be available to Wales, and is often associated with fracking is coal bed methane (CBM). This uses a similar method to extract natural gas from coal bed seams. This may provide additional potential, given the substantial amount of these resources, particularly in south Wales. These resources have been under investigation for a number of years, but it is now starting to come under serious commercial appraisal. Another technique to extract gas from coal seams is Underground Coal Gasification (UCG), which involves burning coal underground. Since the coal is only partly combusted the process also releases usable gas to be collected at the surface. Recent applications to use this technique in Wales have also been made.14 Explanations of the various techniques are given on the Frack-Off site in respect of both coal bed methane15 and UCG16.

A significant number of applications have been made to exploit these resources in the UK as a whole and a number covering large areas of the south Wales coal field. DECC has published a lengthy document which details the potential for the exploitation of ‘unconventional hydrocarbon resources of Britain’s onshore basins’ in the UK17, which also shows the areas where licences have been granted. However these are more conveniently shown in map form with references on the Frack-Off site with more specific information.18 The responsibility for granting such licences lies with DECC, and to some extent the Coal Authority, (this is the residuary body of the National Coal Board, based in Nottinghamshire and is an NDPB (non-departmental public body) sponsored by DECC: “The 1994 Coal Industry Act clarified that the ownership of methane did not rest with the Coal Authority. As a petroleum product, the crown owns the methane associated with coal and the rights to the gas are regulated by DECC under the Petroleum Act 1998.

DECC Oil and Gas Division licence exploitation by means of onshore Petroleum Licences generally issued in "rounds". More information on this process and the location of existing licenses can be accessed on the DECC web site at www.og.decc.gov.uk

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http://www.walesonline.co.uk/news/wales-news/2013/03/07/shale-gas-under-south-wales-could-power-uk-for16-years-91466-32944247/#ixzz2MzdItZTS 14 http://www.walesonline.co.uk/news/wales-news/oil-industry-expert-reveals-plans-3867952 15 http://frack-off.org.uk/coal-bed-methane-the-evil-twin-of-shale-gas 16 http://www.groundtruthtrekking.org/Issues/AlaskaCoal/UndergroundCoalGasification.html 17 https://www.og.decc.gov.uk/UKpromote/.../Promote_UK_CBM.pdf 18 http://frack-off.org.uk/locations

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Whilst DECC is the licensing body for methane the consent of the Coal Authority is required before any works take place that intersect coal and/or coal mine workings (whether abandoned or not) vested in the Authority.”19 It is therefore clear that control of the exploitation of these resources together with control of any benefit deriving from their exploitation rests firmly with DECC. With all these techniques there is also the issue of how to transport the gas extracted, and given the issue of how rapid depletion might be and the economic cost of installing and burying the necessary pipelines this may be another area of significant public concern.

To what extent these resources could or should provide an important part of the energy mix of Wales in the future is not entirely clear. What is clear is that while all these issues are of considerable importance to the people and economy of Wales the role of the Welsh Government and the Welsh Assembly is at best tangential. The research service of the Welsh Assembly has looked at the issue of shale gas and CBM, and the competencies of the Welsh Government which largely relate to environmental issues.20 Whether these resources are exploited and how, and on what terms is essentially decided elsewhere.

The potential for fossil fuels sourced within Wales to provide energy to Wales in the future therefore appears to be somewhat limited, or at the very least requiring difficult choices to make in respect of their exploitation. The true potential and risks of fracking in the UK will not be known for a number of years, the amounts of coal mined in Wales are minimal (only some 2.2 million tonnes of coal were mined in Wales in 2011, of which nearly all was surface mining, and the industry employed 1,105 people)21 and carbon sequestration to make coal environmentally more acceptable is still in its infancy. The prospects for natural oil and gas in Welsh waters do not appear to be attractive.

Wales is, however, well equipped to import both petroleum and gas, through its facilities in Milford Haven. Indeed in 2011, according to DECC over 30% of UK gas imports came through Milford Haven.22 These imports of liquefied natural gas are then sent through a pipe line to Gloucestershire.

In contrast to the Ukraine which charges Russia for the transport of gas across its territory, Wales receives no benefit for this pipeline. On the same rate of charges as the Ukraine applies ($3 per 1,000 cubic metres of gas per 100 kilometres), Wales would receive some £100 million in transit fees.

It is clearly in the interests of Wales both economically and environmentally to reduce its dependency on fossil fuels, in order to achieve greater self sufficiency and security of supply as well as reduce environmental damage. Wales will therefore need to focus on renewable and sustainable energy as a major future source of energy to produce electricity.

Although there tends to be a focus on the amount of electricity generation capacity, it is preferable to look at the amount of electricity actually generated (capacity used times the number of hours generated) measured in Megawatt hours (MWh) a thousand of which make 1 Gigawatt hour (GWh), in order to assess the degree to which the energy industry meets demand.

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http://coal.decc.gov.uk/en/coal/cms/publications/mining/seams/seams.aspx www.assemblywales.org/12-041.pdf 21 DUKES, Table 2A 22 http://www.renewableuk.com/en/utilities/document-summary.cfm?docid=48403C48-3C36-4AA09AC149AECF197EA9 20

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Wales’s total energy consumption is approximately 100,000 GWh equivalent. Wales generated some 27,000 GWh in 2011, of which some 25,000 GWh was produced by the major power providers – see Appendix I. Final consumption in Wales was some 18,000 GWh, approximately 4,000 GWh were used in using electricity for pumped storage, some 2,000 GWh were lost in transmission, distribution and transfers and Wales exported some 3.6 GWh to England. But only three years previously in 2008 it generated some 36,000 GWh of which it exported 12,000 GWh to England. This was as a result of a reduction in gas fired power generation (see below).

One other notable feature in respect of the generation of electricity is the amount lost in transmission and distribution (which is nearly 15% of the net electricity supplied in the case of the UK as a whole). In addition generating electricity using fossil fuel continues to be inefficient.

DECC calculate that the energy input equivalent of some 900,000 GWh was required to produce the 350,000 GWh of net electricity supply.23 There is therefore a significant cost to generating electricity using primary fuel to burn in large power stations located at some distance from customers, and providing a distribution network, as well as ensuring that there is enough capacity to meet spikes in demand, given the fact that it is very difficult to store electricity. In terms of cost per KWh, electricity is about 2.5 times more expensive than the cost of using fuel directly24. So the way in which electricity is generated and distributed and the degree to which it uses fossil fuels are both important components in determining the viability of moving to a greater dependency on electricity It remains to be seen how rapidly demand for energy in Wales and the UK will grow in future, and the degree to which energy can be used more effectively but if we assume a relatively stable demand with the potential for energy conservation, and no large change in manufacturing capacity, the challenge will remain to provide more of the total Welsh energy requirement by means of electricity, and to generate more of that electricity through sustainable and renewable means. There may also need to be more focus on non grid electricity generation.

The Electricity market Wales produces far more electricity per capita than does England, and has been by far the largest generator (and exporter) of electricity per capita in the UK if we go back to 2008 see ‘Electricity generation and supply figures for Scotland, Wales, Northern Ireland and England, 2008 to 2011’25 Wales was generating some 10% of total UK electricity as recently as 2008, and this has now fallen to some 7.4% as a result of Wales producing less gas fired electricity26 (gas has become dearer compared to other fuels over the past few years, which has led to a comparative increase in coal, nuclear and renewables across the UK and a decrease in gas fired power generation). This resulted in the closure of the 230 MW Barry gas fired power station owned by Centrica.27 Gas fired electricity generation reduced across the UK during this period, but was most marked in Scotland

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See DUKES, Tables 5.1 and 5.6 and electricity flow chart on p. 116 See DECC’s United Kingdom housing energy fact file 2012, graph 3c, p.14.

25 https://www.gov.uk/government/publications/electricity-generation-and-supply-figures-for-scotland-walesnorthern-ireland-and-england-2008-to-2011 26 http://www.renewableuk.com/en/utilities/document-summary.cfm?docid=48403C48-3C36-4AA09AC149AECF197EA9 27 http://www.bloomberg.com/news/2012-02-23/centrica-may-mothball-more-gas-plants-as-capacity-trimsprofits.html

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and Wales, doubtless partially due to the fact that the closure of one large power station would have a disproportionately larger effect in a smaller market. However a number of coal fired power stations have run out of the operating hours allowed under EU rules, with further closure anticipated over the course of the next few years, and Centrica has now signed a contract for Barry to be operated to meet peak power requirements.28 It seems likely to be the case that, notwithstanding Wylfa closing down Wales’s share of electricity generation will stabilise or even rise again in the future, given that the 2GW Pembroke gas fired power station is generating, and there are a number of other energy projects across Wales.

Despite the fact that Wales is a net exporter of electricity the consumption and generation of electricity are not well co-ordinated within Wales. There is an excess of generation in N. Wales, and a lack of generating capacity in S. Wales, with the latter actually importing electricity, and paying relatively high electricity prices as a consequence. As Miller Argent argued in its proposal in respect of mining at Ffos y Fran in 2006 “due to the lack of distribution network between North and South Wales, South Wales has to import power from England. As a result, South Wales has one of the highest electricity prices in the UK. This not only makes it less affordable for more people in South Wales, but also starts to make it a less competitive market, particularly in industries such as manufacturing with large power requirements.”29 This statement also highlights the fact that not only is there a lack of balance between north and south Wales in respect of supply and demand, but there is currently no infrastructure to redress this within Wales. In January 2011 Ofgem launched a £1 million study for the national Grid to look at the potential for connecting north and south Wales with an underwater cable across Cardigan Bay. It is not clear what the status of this project is. There is no direct reference to it in the latest update of the national Grid reinforcement plans, even though there is an indication that the very large Irish Sea wind farm array would be connected to both the Wylfa power station and Pembrokeshire30, but with no direct connexion between north and south Wales. It is undoubtedly the situation that much of the justification of any such connexion will be made on the anticipated outputs of a new nuclear power station at Wylfa as well as the power output from the Irish Sea array. Interestingly in a recent technical document31 reference was made in respect of another project to the fact that ‘Site selection process to commence when ongoing requirements are confirmed in light of new AngleseyPembroke HVDC cable’. From a Welsh government point of view the status of such an interconnector, its costs and the case for its construction, are vital considerations in terms of obtaining a functional connexion between north and south Wales generating and transmission capacity.

The plans to have interconnectors between there are plans to have a connexion between Wales and Ireland are rather more advanced.32 There are plans to connect both north and south Wales to Ireland.33 There are also plans to connect north Wales to Scotland, as outlined in the latest update to the national Grid reinforcement plans34 “The project constructs a new HVDC link between Hunterston substation in central Scotland and Connah’s Quay substation in North Wales. The

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http://www.lse.co.uk/FinanceNews.asp?code=vfi37emr&headline=Mothballed_British_gas_plants_to_gain_from _coal_closures 29 http://www.millerargent.co.uk/welsh-mineral-planning-policy 30 https://www.gov.uk/government/uploads/.../4264-ensg-summary.pdf, figure 6. P.25 31 TRANSMISSION OWNER MAJOR PROJECT STATUS UPDATE - MARCH 2013 32 http://www.elpower.com/element-power-accepts-first-grid-connection-uk-ireland 33 http://www.walesonline.co.uk/news/local-news/irish-wind-farms-could-power-2021560 and http://www.bbc.co.uk/news/uk-wales-19958668 34 https://www.gov.uk/government/uploads/.../4264-ensg-summary.pdf, figure 6. P.25

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connection will be via an undersea cable sited along the west coast of Great Britain. The project has already been allocated some funding by Ofgem for preconstruction works and further funding has been requested.” The project is anticipated to cost some £1 billion.

In summary Wales therefore currently produces more electricity than it requires but there is an existing imbalance within Wales. There are plans to link Wales to Scotland and Ireland, but any plans to link Wales internally seem more uncertain.

The structure of the electricity industry The energy industry in the UK has become considerably more complicated since the privatisation of the electricity industry in 1990 and through a series of transactions the national Grid was privatised, merged with the gas distribution network, sold off certain assets in the UK and acquired some in the US35. There is now a market of competing private companies, some of whom are suppliers and some generators and some both. There are a number of ‘major power producers’ or MPPs and there are a multitude of smaller producers of energy who supply the grid. National Grid plc owns and maintains the high-voltage electricity transmission system in England and Wales, together with the operating the system across Great Britain, balancing supply with demand, while local distribution is now operated by 14 different private companies who all belong to six groups and are known as Distribution Network Operators or ‘DNO’s.36 The DNO for south and much of mid Wales is Western Power Distribution, and the DNO for north and the remainder of mid Wales is SP Energy Networks. Western Power is ultimately owned by the Pennsylvania Power and Light Company, headquartered in Allentown, Pennsylvania.37 SP Network is a subsidiary of Scottish Power which is owned by the Spanish utility Iberdrola. The main electricity supplier in north Wales is Scottish Power and in south Wales Swalec, which is a subsidiary of Scottish & Southern (SSE), which is a Scottish company headquartered in Perth. (SSE recently received the largest fine ever from Ofgem of £10.5 million for miss-selling). As can be seen, in the case of north Wales the main electricity supplier is vertically integrated with grid transmission, but not in south Wales. Customers are not required to choose the predominant supplier in their area (this applies to both residential and commercial/industrial users) and as a consequence the companies compete in respect of price and service to attract customers. The electricity market as a whole is regulated by Ofgem.

The power plants in Wales (as in the rest of the UK) are owned by a variety of companies – see Appendix II. These, together with a number of independent generators, sell electricity through the grid and DNOs to the electricity companies which supply the clients. The grid and the DNOs charge the transmission costs to the electricity companies which then pass on these costs (up to about 20%) for transporting the electricity and operating the system to their clients. The major electricity supply companies then supply the electricity to residential, commercial and industrial clients etc. Transmission losses are an important consideration in terms of the total cost of electricity (see above).

As can be seen the energy market in the UK in general and that of Wales in particular is complex and fragmented. It is controlled by a number of large companies, none of whom is ultimately headquartered in Wales. As a consequence of this it is difficult for power generating companies to plan ahead, since they cannot be sure what their returns will be and the attractiveness of their investment will depend on a number of factors, often controlled by other companies (as well as UK government regulation), and this limits the risks that they are in a position to take.

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http://www.nationalgrid.com/uk/About/history http://www.nationalgrid.com/uk/Electricity/AboutElectricity/DistributionCompanies 37 http://www.pplweb.com 36

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About half the electricity capacity in Wales consists of combined cycle gas turbines, about 19% coal, and biomass, about 20% pumped storage and some 4% nuclear (until 2012 the share of nuclear was about double this as Wylfa reactor 2 was not retired until 2012). However pumped storage is only used at peak times (and is a considerable user of electricity at other times) and nuclear provides a base-load, so the actual amount of electricity generated by these various sources is very different, especially when taking into account smaller renewable energy resources. In 2011, nuclear was nearly 9% of total generating capacity, but produced nearly 20% of Wales’s electricity.

Quite apart from the issue of capacity there is the question of energy security and energy pricing.

Wales relies heavily on natural gas to power its electricity generation, and this will have to be sourced outside the UK to an increasing extent. While a large part of UK gas imports come from Norway, their North Sea fields are depleting and a significant portion of the UK’s imported gas is from parts of the world which are politically unstable, such as the Middle East, north Africa and to some extent Russia. Wales is therefore very vulnerable, and likely to be increasingly so, to the disruption of gas supplies, both as a direct source of energy and as a means of generating electricity.

In addition Wales has no significant gas storage facilities.38 In light of the above there is a strong incentive for Wales to try to obtain secure energy supplies, and given its sustainable agenda this needs to examine the degree to which it can generate electricity using its own natural non fossil fuel resources. As can be seen from the figures in Appendix I, Wales currently generates about 7.9% of its electricity from renewables - as compared with and England’s 6.2% and Scotland’s 26.8% (of which about half is accounted for by hydro)39.

The definition of total energy consumption for the purposes of the Renewable Energy directive (RED) 40is somewhat different, and since electricity is only part of the total energy consumption and the UK statistics are compiled in a slightly different way from the European statistics, this results in the UK producing only 3.8% of its energy from renewable energy resources for the purposes of the RED. It is required to reach 15% of its energy from renewable resources by 2020 under the provisions of the directive – i.e. the UK and Wales will have to produce about four times as much electricity by renewable means over the next seven years as it does currently.

Different forms of generating electricity have their own advantages and disadvantages. Wales has already essentially exhausted its advantage in respect of indigenous fossil fuels in the form of coal.

As mentioned above it does not have the advantage of any large scale fossil fuel alternatives, with the possible exception of shale gas and oil and coal-bed methane, and it must therefore focus on the natural resources from which it does benefit. It is perhaps helpful at this stage to try to distinguish between sustainable, renewable and low carbon forms of energy. These terms are often used interchangeably, and there appears to be no clear difference between them. Fission nuclear energy, for example, is clearly low carbon, and is often described as sustainable, although it is not renewable.

This seems surprising since it relies on a finite source of nuclear material such as uranium, with a limited amount of supply (52% of uranium is mined in six countries, Canada, Kazakhstan, Australia, Niger, Russia and Namibia).41 It can only be regarded as sustainable to the extent that it is thought that uranium supplies are less far from depletion and its capacity for energy generation once mined is for a longer period. It would be preferable to distinguish between nuclear and really

see DUKES 2012, table 4.438 39 The way in which the figures are compiled by certain sources to calculate renewable energy are open, see http://syniadau--buildinganindependentwales.blogspot.co.uk/2012/08/not-as-bad-as-reported.html 40 See paragraph 6.28 and Table 6.7 of DUKES https://www.gov.uk/government/publications/digest-of-unitedkingdom-energy-statistics-dukes-2012-printed-version-excluding-cover-pages 41 http://www.world-nuclear.org/info/Nuclear-Fuel-Cycle/Mining-of-Uranium/Uranium-Mining-Overview

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sustainable forms of energy such as wind, wave, tide and solar. The degree to which biomass is both renewable and sustainable is also debatable, and will largely be a matter of scale and origin of feedstock.

Renewable Energy The major sources of renewable energy are wind (both onshore and offshore), wave and tidal, solar and biomass.

Renewables generally suffer from the problem of intermittency and unpredictability. This is very important since it is very difficult to store electricity. It is therefore the case that electricity must be available when it is demanded and it must be consumed when it is generated. The difference between peaks and troughs during the day and between summer and winter are very considerable as the graph below shows:

The provision of electricity is priced in half hourly time slots and the greater the demand the higher the price. Electricity is worth a lot more at 5.30 pm in the winter than it is at 4.30 am in the summer. Electricity generation base load is provided by those generators who have the cheapest marginal cost of generation, and power sources for whom interruption of generation is costly/problematic. Nuclear energy therefore provides a substantial part of the base load, together with the lower cost fossil fuel providers. The system is therefore relatively inflexible at accommodating unpredictable sources of electricity. The output from solar installations and tidal range generation are relatively predictable, but this is less the case for wind.

The generation of energy by wind has been very controversial in Wales for a number of reasons – the location and size of the turbines, the connexion of the turbines to the grid through the use of pylons across attractive countryside, transmission losses due to long distances to carry the electricity to major sources of demand from isolated sites, and the ineffectiveness of wind generation due to its intermittency and unpredictability, and the need for back-up generating capacity, are some of the issues raised. In addition questions have been raised as to where the benefits lie in respect of the construction of wind turbines.

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Wind power DECC tends to lump wind, wave and solar together in its statistics, but taking these together, Wales generates about 9% of the UK’s wind power, while Scotland generates nearly 45%. However DECC has shown the sources of renewable energy in this graphic below (In the infancy of the wind industry 10 years ago Wales generated nearly 30% of total wind power).

Chart 4: Renewable electricity generated in Wales as a share of the UK, Energy in Wales, slide 1642 These statistics are likely to change quite radically in the future following the construction of offshore wind farms. The Crown Estate which owns the seabed out to 12 nautical miles has been involved in an extensive programme of licensing operators around the UK coast. The largest wind farm to date is Gwynt y Môr, owned by RWE, Siemens and the München Stadtwerke, the municipal utility company of Munich, with a capacity of 576 MW, and an estimated cost of €2 billion.

However there are far larger schemes planned around the UK coast, including Wales where two large developments are planned, one in Irish Sea off Anglesey, the other in the Bristol Channel.43 The degree of expansion is therefore very considerable. There are already some offshore 1,000 wind turbines with approximately 3,300 MW capacity, generating some 5,000 GWh per year, but the Crown Estate estimate that this will grow by between three and five times by 2020.44The final potential is much higher, as the Crown Estate has awarded total capacity to date of 50 GW, i.e. more than 10 times the current figure.45

42

http://www.renewableuk.com/en/utilities/document-summary.cfm?docid=48403C48-3C36-4AA09AC149AECF197EA9 43 See the excellent analysis of these projects in Syniadau on 21st June 2011 - http://syniadau-buildinganindependentwales.blogspot.co.uk/2011/06/tan-8-and-devolving-energy-to-wales.html 44 http://www.renewableuk.com/en/utilities/document-summary.cfm?docid=673CBEC1-4F6E-49A0A5378B36F1DEBFC4 45 Investor’s introduction to the UK Offshore wind programme November 2011.

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On shore wind has also been controversial in Wales and the legal position under the TAN 8 is relatively obscure to the general public. Current installed wind farm generation in Wales is overwhelmingly (over 80%) below 50MW capacity, above which size responsibility for planning lies with DECC rather than within Wales.46 However planned and consented wind farms are a fivefold increase of current capacity, of which half would be from wind farms of over 50MW Technical Advice Note (TAN) 8 Review of Wind Farm Developer Interest 201247. On the basis of these plans onshore wind farms alone could therefore provide perhaps as much as 3000 GWh of electricity, or about one sixth of current Welsh electricity consumption.

In the TAN 8 document published in 2005, the indicative capacity targets for ‘strategic search areas’ totalled 1,120 MW. The Welsh government announced that: “The Assembly Government has a target of 4TWh of electricity per annum to be produced by renewable energy by 2010 and 7TWh by 2020. In order to meet these targets the Assembly Government has concluded that 800MW of additional installed (nameplate) capacity is required from onshore wind sources and a further 200MW of installed capacity is required from off shore wind and other renewable technologies” As can be seen there is a considerable discrepancy between what was announced by the Welsh government in 2005 and what now seems to be happening with a substantial part of the proposed development being of a scale that results it being outside the control of the Welsh government.

As can be seen from the figures in Appendix I, currently only about half of the renewables target had been met by 2011. On the other hand the current planned and consented additional onshore wind farm capacity is about twice that indicated in 2005. Current plans for wind farms are therefore ambitious, but the construction and location of wind farms is problematic for a number of reasons.

Firstly they tend to be in areas located quite a distance from large centres of population, which means that constructing connexions to the grid can be expensive and intrusive and transmission losses are relatively higher. In the case of wind farms in mid Wales they would be connected to the grid in the English midlands, so they would not provide direct electricity supply to Wales.

Secondly, because of their intermittency, they require back up generating capacity, until such time as electricity storage through large scale batteries or other means becomes economically feasible.

This additional cost must be factored in when assessing the ultimate cost of wind power. In addition the cost of the wind turbines has to be depreciated over their lifetime of approximately 25 years.48 Offshore wind generation suffers from a number of the same problems as onshore wind in terms of distance from market and transmission losses. Although their maritime location means that the wind is more reliable and generation yields are higher, the marine environment is quite hostile and maintenance and longevity as important issues. Currently the offshore wind industry is focusing on reducing the cost of wind energy down to £100 per MWh.

46

The research conducted by Hyder for the Welsh government indicates a current installed capacity for the purposes of TAN 8 of 388 MW46, but the Welsh Government paper ‘Energy Wales: a low carbon transition stated that ‘Current operational wind farms have a capacity of 562MW’. The difference may be between onshore and offshore wind 47 http://wales.gov.uk/topics/planning/planningstats/windfarminterest/?lang=en 48 E.g. see www.pbworld.com/pdfs/regional/uk_europe/pb_ptn_report2006.pdf figure 4, p.14

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According to a report by Parsons Brinckerhoff (PB), on behalf of the Royal Academy of Engineering, published in 200649 onshore wind was the cheapest way to generate renewable electricity, with wave and tidal significantly more expensive. However not only has technology changed since that time, but a significant part of such estimates rely on the discount rate used to calculate the cost of capital; the lower the discount rate the cheaper a capital intensive project is.

As a result of the change in the world financial markets since that time, the cost of long term borrowing has substantially reduced (PB used a discount rate of 10% p.a. for their paper), and the cost of capital intensive projects should therefore be more competitive.

The employment and economic opportunities that may result from an expansion of wind power are dealt with below. However it is worth mentioning here that part of the reasons for the public antipathy to wind energy is its ownership structure, and the way in which it is financed often with inadequate benefit to the communities affected. As the Committee on Climate Change’s document ‘The renewable energy review’ pointed out50 ownership structures in other countries are rather different: “Experience in Denmark and Germany Germany currently boasts the largest installed wind capacity in the EU (around 27 GW), substantially more than the UK (just over 5 GW) or Denmark (3.7 GW). Unlike the UK, where the majority of onshore wind projects are developed and owned by commercial companies, the majority of projects in Germany and Denmark are characterised by a ‘community ownership’14 model (in Denmark around 80% of all wind turbines are community owned): • Communities pool resources to finance the purchasing, installation and maintenance of projects, either through savings or loans (communities are generally able to secure finance at rates below those commercially available, meaning financial costs are likely to be lower). A cooperative or partnership style of ownership (which is the most common) involves individuals purchasing shares in the project, with entitlement to a share of the annual revenue in proportion to their initial investment.

New UK approach In February 2011 the Government announced that business rates paid by renewable energy developers will be retained for investment directly back into the local community. RenewableUK’s ‘Wind Protocol’, reached through voluntary negotiations with the industry, specifies minimum payments by wind projects of £1000/MW per year into a community benefit ‘fund’, the allocation of which will be determined by individual communities. The intention is that these financial incentives will assist in generating more local support for wind projects in the UK.” Further research needs to be done to investigate these forms of ownership to ensure that where development does take place communities receive a fair proportion of the commercial benefit.

In addition it is worth noting that there is a substantial discrepancy within the UK in respect of the generation of wind energy. Scotland has encouraged the technology, while England has been tremendously reluctant to do so. At the time of the Committee on Climate Change’s review, they calculated that there was a pipeline of 13.3 GW of electricity generating capacity, of which 8.3 in

49

www.pbworld.com/pdfs/regional/uk_europe/pb_ptn_report2006.pdf p.16 Ibid p.106 Box 2.4

50

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Scotland, 1.4 in Wales and only 2.5 in England, with under 50% of both small and large projects expected to get planning approval (by contrast it was expected to be 100% in Wales for small wind farms (there were no large wind farm planning applications at that time) and 66% for small and 76% for large wind farms in Scotland)51 Hydro In the case of Wales the rivers are relatively short with steep run-offs, and there is limited potential for large scale hydro. However, there is potential for small scale hydro, as a report by Entec for the Environment Agency concluded: “a) Small-scale hydropower has an important but limited role to play in renewable energy generation Our findings suggest that small-scale hydropower at the barriers considered could deliver a theoretical maximum of 3660GWh electricity per year, or about 1% of the UK’s projected electricity demand in 2020. Realistically, this potential will be considerably lower due to practical constraints, such as access to the local electricity distribution network, and environmental impacts.”52 It also provided a map of where the best opportunities were for such generation (see Appendix IV).

According to the technical report, which studied the generation potential in further detail about one third of the maximum power potential was in Wales – nearly 400 MW.53 It should be emphasised that a number of such opportunities existed in sensitive areas, (including consideration of fish life) and it calculated that over 80% of the potential schemes in England and Wales required difficult choices, as opposed to the 7% which were ‘good choices’. Where there is no nearby requirement for the electricity connexion to the grid would also be an issue. Nevertheless there is considerable potential for small scale hydro power generation in Wales which would assist in energy security, and Wales has the expertise to install and maintain these small scale projects.

Dinorwig54 in north Wales, is well known for its pumped storage facility. It is owned by Mitsui, the Japanese conglomerate, (which also owns the smaller Ffestiniog facility). The station started generating in 1983, providing electricity at peak moments of demand within 16 seconds, and has a capacity of some 1,700 MW. At a time of increased use of renewable energy, which is less reliable, and in the current absence of large scale affordable battery technology there may be an increased call for intermittent energy generation to smooth the fluctuations in demand. It is arguable that further research should be done into other locations in Wales that might also be capable of providing this hydro-powered generating capacity.

51

Ibid, p. 105, Table 2.2 Opportunity and environmental sensitivity mapping for hydropower in England and Wales, February 2010, Non Technical Report 53 Opportunity and environmental sensitivity mapping for hydropower in England and Wales, February 2010, Technical Report, Table 4.5 54 http://www.fhc.co.uk/dinorwig.htm 52

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Biomass The use of biomass for fuel is a large subject in its own right, encompassing as it does a number of different technologies from wood chip stoves, through wood chips and pellets for generating electricity, to the use of animal wastes for the production of gas and to the use of plant crops for fuel.

It would be beyond the scope of this document to go into this in too much detail, but it is clear that the burning of bio-fuels creates carbon dioxide and that there is therefore the issue of whether over the lifecycle of the fuel source it is carbon neutral, and the degree to which use of e.g. bio-fuels can distort the market and impact on e.g. the use of land for growing bio-fuels instead of food. Biomass can be used in conjunction with existing coal fired plants, so that for example the Drax power station, the largest coal-fired power station in the UK, and the core of an independent energy company with the same name is converting to predominantly biomass generation.55 One of the advantages of biomass over other forms of renewable energy is that it is predictable and it can act a source of dependable energy.

On a UK wide basis the UK government is looking to phase out the application of ROCs for biomass generation and has placed a regulatory cap of an additional 400MW of new capacity before instituting a consultation to remove the ROC regime from biomass, although it has made an exception in the case of Combined Heat and Power (CHP) generation.56 There is also the issue of to what extent biomass plants use local material to burn, rather than having to import it. Two different proposed projects in Wales illustrate this point. Prenergy Power Ltd., owned by Switzerland-registered Global Wood Holdings, partly owned by TMT Co. Ltd., the Taiwanese shipping group obtained planning permission in 2007 to build a £400 million, 350 MW capacity, wood burning power station near Port Talbot. It was claimed that this would provide 150 jobs and be capable of providing electricity for half the homes of Wales. It would have required the import of three million tonnes of wood chips and required the disposal of 80,000 tonnes of ash.57 The proposals received planning permission in 2007. It was intended that the wood for this site would be imported from north America. The core justification for biomass plants is that they are more environmentally friendly, but shipping huge quantities of wood half way round the world, perhaps largely to benefit from subsidies does not seem likely to achieve this underlying goal. The project seems to have met with a number of difficulties, and appears to have been acquired by an Italian private equity firm, Clessidra, which then tried to sell it in 2010 before any work had actually started on the project58 and it now looks as if it may not proceed.59 By contrast there is the much smaller project, nearby in Margam with a 14 MW capacity, which is now up and running, which claims to have created 20 new jobs and with an expected energy output of 110 GWh, and which sources the majority of its feedstock from Welsh forestry sources.60 There is also the recently announced project designed by NET Energy Group, which has received planning consent from Caerphilly Borough Council and will be built at Capital Valley Eco Park

55

http://www.draxgroup.plc.uk DECC, Renewables Obligation Banding Review for the period 1 April 2013 to 31 March 2017, p.25 57 http://biomassmagazine.com/articles/1609/big-wood 58 http://uk.reuters.com/article/2010/01/15/clessidra-prenergy-idUKLDE60D28W20100115 59 http://www.bbc.co.uk/news/uk-wales-south-west-wales-19542279 , http://www.thisissouthwales.co.uk/Campaigners-celebrate-Prenergy-cuts-ties-National/story-18167274detail/story.html#axzz2UC5JGl00 60 http://www.eco2uk.com/en/our_projects/project_detail.asp?project_id=12 56

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near Rhymney. It is reported that it will produce 1.3 megawatts (MW) of electricity which will be supplied to the grid, and 4.3MW of heat which will be used to dry the 40,000 tonnes of premium pellets produced. The construction phase will employ about 30 people on site, with 30 being directly employed once the plant is operational and up to 150 indirectly. The plant will use loppings and other waste products from local forests for its raw material.61 These examples are taken to highlight the difference between small scale bio-mass taking local materials for their fuel source and industrial scale projects. As with other sources of renewable energy the ability to generate more energy locally and lower dependency on centrally produced large scale energy distributed through a grid is one of its advantages.

It does not seem likely that biomass will make a significant contribution to the energy mix in Wales in the future, but it may be important in providing relatively small scale capacity in a number of different locations.

Solar Power Wales is not generally thought of as an attractive location for solar power. However the efficiency of solar panels has increased markedly over the last few years, as has their reliability, while their cost has continued to decline quite rapidly, largely due to huge investment in manufacturing capacity in China (to the extent that the European Union was considering imposing high tariffs on Chinese made solar panels). This meant that the UK government has cut the feed-in tariffs (see below) for solar very substantially since introducing them. However this is an indication of the falling cost of generating electricity through solar panels. Photovoltaic panels do not require bright sunshine to generate electricity, and in general the southwest of the UK is the best place for solar power generation. Southwest Wales is a comparatively attractive part of the UK to generate solar power – see the Met Office map in Appendix V.62 Interestingly Ynys Môn seems to have good potential for solar given its more northerly location, and this might merit further investigation.

Given the advances in solar power generation there is an increasing expectation that ‘grid parity’ (i.e. the point at which solar electricity requires no subsidy, which is affected by both of amount of sunshine and the price of electricity in the country concerned) may be achieved in the next few years or so.63 Indeed a report by Deutsche Bank released this year indicated that a number of European countries have already achieved grid parity.64 The cost of solar power is already below the £100 per MWh target for offshore wind. Solar installations can be on buildings, both commercial and residential as well on a larger scale (e.g. over 5 MW) in solar parks. Such parks have the advantage that when situated on relatively flat land and behind hedges they are not visually very intrusive, do not create smells or noise, and allow the land to be used for grazing still. They do, however, require approximately 6 acres per Megawatt capacity. There is therefore substantial scope for solar power to provide an increasing amount of Wales’s renewable energy. For large installations there are issues in respect of connectivity to the grid, but smaller installations will increasingly enable communities to source a proportion of their electricity requirements locally.

61

62 63

http://www.walesonline.co.uk/news/business/business-news/biomass-plant-scheduled-2014-operation-2502781

http://www.metoffice.gov.uk/renewables/solar

GLOBAL OVERVIEW ON GRID-PARITY EVENT DYNAMICS Ch. Breyer and A. GerlachQ-Cells SE, Sonnenallee 17 - 21, 06766 Bitterfeld-Wolfen OT Thalheim, Germany, 64 http://www.pv-magazine.com/news/details/beitrag/deutsche-bank--sustainable-solar-market-expected-in2014_100010338/#axzz2LyRXuVHd

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Marine Power Wales is well endowed with marine power. Much has been written about the Severn barrage, so that information will not be repeated here.65 Suffice to say that it would be a very large project indeed, and the ultimate benefit to Wales is a matter of much debate, as is the environmental impact. At the moment there is very little detailed information for such a complex project, and it is highly unlikely that the current government will make space in the parliamentary timetable to pass the necessary legislation. The project is based on the premise that it would receive renewable obligation subsidies during an initial period, during which the debt would be paid off. After that period it would generate electricity at very low cost. However the construction risks (and predictable costs) of such a large project are substantial as are the environmental risks and the ultimate ownership (and therefore benefit) after the financing costs are paid off is not clear.

However there are other developments such as a 200 MW plus tidal lagoon in Swansea Bay, with the capacity of producing 400,000 MWh of electricity, about 2.5% of Wales’s consumption.66 But there are much large opportunities further up the Severn estuary and on other locations along the Welsh coast. In addition the development of such energy would be incremental, and although each individual part is not new the combined configuration is. This provides the potential for Wales to become a leading centre for expertise in tidal range energy generation.

In addition there are projects to harness tidal stream energy. by the Welsh company Tidal Energy Limited in Pembrokeshire67, and new investments in tidal stream arrays off Anglesey68.

These projects provide the potential for the development of real expertise in Wales to exploit not only the resources of Wales, but also to provide a centre for excellence which can generate the potential for long term employment and export opportunities.

Nuclear Power One of the most controversial plans in respect of energy generation in Wales are those in respect of the new Wylfa power station.

The previous Horizon plans anticipated creating a plant with a total capacity of 3.3 GW – i.e. 3.6 times the size of the combined total of the two Wylfa reactors. However the Horizon website currently states that “Following the acquisition of Horizon Nuclear Power by Hitachi, we plan to deliver at least two Advanced Boiling Water Reactors (ABWRs) – generating a minimum of 2,600MW at Wylfa. Our development will also allow for a third unit at Wylfa, providing an additional 1,300-1,400MW of electricity to the UK.” This would be about the 80% of Wales’s total current electricity generation and considerably in excess of Wales’s current total electricity consumption. The development site itself is a massive 232 hectares which dwarfs the site of the existing power station, being some ten times the size.69

.

66

http://www.tidallagoonswanseabay.com http://www.tidalenergyltd.com 68 http://www.bbc.co.uk/news/uk-wales-north-west-wales-21604951 69 http://www.horizonnuclearpower.com/files/downloads/wylfa_information_pack.pdf 67

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Nuclear power carries with it many uncertainties. The type of reactor being proposed for Wylfa the Hitachi GE Advanced Boiled Water Reactor (ABWR) is different from the reactor being proposed

by EDF, which is the AREVA European Pressurised Reactor (EPR). The latter has already been approved for use in the UK, while the former has still to go through this procedure. The EPR reactor is being constructed both at Flamanville in Normandy and at Olkiluoto in Finland, but it has suffered severe delays in being rolled out, and considerable increases in cost, although other plants in China appear to be on schedule. The ABWR design is different, but it may still be the subject unanticipated delays in planning, increases in cost, and in construction delays, and indeed greater maintenance downtime than expected. The estimated cost of producing electricity by nuclear energy should therefore be treated with caution. The House of Commons Energy Select Committee has recently re-iterated these concerns in respect of Hinkley Point70. The Committee pointed out their concerns that the UK government might take some of the risk of cost over-runs on construction. The issue is contentious referring to the fact that EDF had seen massive cost overruns and delays at the Flamanville nuclear project in France. Centrica, which pulled out of the Hinkley Point project in February 2013, said that the costs had “rocketed hugely” and that the timescale for building the plant had doubled.

In addition there is the issue of what to with the nuclear fuel at the end of the life of nuclear reactors. In the case of Wylfa Horizon stated “There will be no wastes associated with reprocessing (High Level Waste) generated at Wylfa, only spent fuel. The secure storage of spent fuel at Wylfa will be an integral part of the proposed new site and will be within the nuclear licensed area. It will only leave the site once a central repository is ready to accept it.”71 However no country in the world has such a central repository or yet decided on a permanent solution to its disposal. The US spent many hundreds of millions of dollars on looking at the Yucca mountain site in Nevada, but has abandoned this option, and in the UK Cumbria County Council has voted against proposals there.72

70

http://www.telegraph.co.uk/finance/newsbysector/energy/10065162/Ministers-urged-to-clarify-nuclear-costoverruns.html 71 http://www.horizonnuclearpower.com/files/downloads/wylfa_information_pack.pdf 72 http://www.bbc.co.uk/news/uk-england-cumbria-21253673

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It is certainly the case that the nuclear companies are confident that these problems are much less than they were. Horizon, when still owned by German utilities stated: “Nuclear reactors are now designed specifically with decommissioning in mind: in fact, PWR technology typically takes around 10 years to decommission, as opposed to the 50-100 years required to decommission a Magnox or AGR nuclear power station. The amount of waste generated by new nuclear power stations is small compared to the nuclear waste that already exists: studies undertaken for the Government have estimated that the waste generated from the operation of 10 new nuclear power stations in the UK for 60 years, generating 25% of the UK’s electricity, would add 8% to the existing volume of nuclear waste in the UK.” Under the new ownership of Hitachi, as noted above, a different system will be used, but doubtless the same reassurances will be made in respect to the spent fuel. Given such confidence and notwithstanding the transport risks it might be reasonable to require the power station operator to remove the fuel from the site at the end of the operation of the power station to deal with it elsewhere, or transport it to a central depository if one exists at that time, although this would be dependent the company being a going concern and having the financial resources to do this when the time came, which is likely to be many decades in the future.

There is therefore a very serious long term consequence and cost of nuclear generation, the solution of which has eluded generations of politicians. There is of course a fund which has been established in the UK to meet nuclear decommissioning costs – the Nuclear Liabilities Fund Limited73, in respect of previous nuclear power stations, but it is by no means clear that its resources are adequate – certainly the experience at Sellafield is not reassuring74, and the provisions for its funding changed in 2009 when British Energy was acquired by EDF. Unlike other forms of power generation therefore there are huge potential future costs (quite apart from the environmental and security risks that spent nuclear fuel poses) which are impossible to calculate with any degree of accuracy.

The Pricing of Power Much of renewable electricity generation is in its infancy and has not reached the scale and/or efficiency to be competitive with fossil fuel generation. This partly due to the fact that it is new technology, an partly due to the fact that fossil fuel is under-priced – it is generally priced at the marginal cost of production, rather than on a fully depreciated basis to take into account that it is a finite resource. This inadequate accounting of replacement cost (even if the world has not yet reached peak oil, it is undoubtedly the case that the deposits which are cheapest and easiest to extract have already largely been discovered and exploited. Future resources will undoubtedly be more expensive to extract, and replacement cost of existing reserves will inevitably be higher). As a consequence of this price disparity governments in many countries have put in place pricing regimes to make renewable energy more attractive. In the UK, these fall basically into three

73

http://www.nlf.uk.net http://www.bbc.co.uk/news/uk-england-cumbria-21298117

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categories – Feed In Tariffs (FITs) Renewable Obligation Certificates (ROCs) and Contracts for Differences (CfDs). FITs are essentially long term price tariffs for sub 5 MW capacity and ROCs a system under suppliers of electricity have to show that a proportion of their electricity is generated from renewable sources. They do this by buying renewable electricity and acquire the ROCs which they transfer to Ofgem, or pay a fine if they have insufficient ROCs. Once they start generating renewable energy generators receive a pre determined number of ROCs for a long period of time (20 years), which they can then sell in the market. For example DECC published at the end of last year the relevant tariffs applicable to solar and biomass for projects completed over the next three years.75 CfDs is a pricing mechanism through which a long term pricing structure is agreed between an energy supplier (to customers); this provides the energy generator with certainty about the price it will receive for the electricity over a number of years which helps it finance the construction of the generating capacity. How this will work in practice is still not fully clear, but it is the pricing mechanism proposed under the Energy Bill and is the basis of the discussion between the UK government and EDF in respect of the pricing arrangement to underpin the construction of nuclear power stations.

The result of such arrangements is that final customers will see higher bills in the immediate future.

Whether customers’ bills will be higher in the longer term will depend on price increases in the fossil fuel market. Lower reliance on the importation of fossil fuels will also increase energy security.

It is sometimes claimed that the cost of renewable subsidy has led to a sharp rise in energy bills, but according to the Committee on Climate Change in 2011 the renewable subsidy was responsible for only 6% of the increase in domestic electricity bills between 2004 and 2011, which went up by 79%, and did not form any part of the 121% increase of gas prices. Carbon pricing (9%) and energy efficiency funding (13% for electricity and 7% for gas) did add additionally to bills, but changes to wholesale fuel prices was responsible for responsible for 66% of the rise in gas prices and 54% of the rise in electricity prices. The potential long term vulnerability to fluctuations in imported fossil fuels can be seen from these figures, and the creation of sources of energy which are not dependent on these changes should be seen in this context.

75

Renewables Obligation Banding Review for the period 1 April 2013 to 31 March 2017

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Chart 5: Estimated contributory factors to domestic energy price rises Feb 2004 to Jan 2011 The Committee on Climate Change did anticipate that in the absence of further measures to promote energy efficiency, there would be an increase in the average cost of electricity between 2010 and 2020 from 12.6p to 17.8p per KWh, of which 2.7p would be the cost of carbon pricing or renewable energy or energy efficiency funding, while only 1.5p would be as a result of a change in wholesale pricing76:

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Household energy bills – impacts of meeting carbon budgets Committee on Climate Change, December 2011

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Chart 6: Projected increases in domestic retail electricity prices (2010-2020), Source: DECC Quarterly Energy Prices, Ofgem, CCC calculations, 77 However it is important to note that these figures are subject to substantial variability; the cost of wholesale fuel prices is far more volatile than other components of the calculation, and also outside the government’s control. If the experience of the previous seven years is any guide it may well be the case that wholesale prices are considerably higher, although it is true that discoveries of shale gas and the difficult economic climate may exert a dampening effect. More important however, is that renewable energy not only provides greater security of supply, but also an investment in the future and in jobs. Creation of renewable sources of energy in the years ahead will provide a legacy where future costs of generation are likely to be lower, either due to improved technology or because the capital costs have been partly defrayed and there are no ongoing fuel costs. In addition jobs may be created in the renewable energy industry. By contrast there will be no such legacy for the continued use of fossil fuel, but the increased likelihood that future prices will be higher and continue to be unpredictable and insecure. Expenditure on renewables should be regarded as investment, while expenditure on fossil fuels is consumption. The Committee also felt that there was substantial scope for further measures (e.g. in preventing the sale of less energy efficient appliances) which could substantially reduce domestic electricity demand.

Transport As can be seen above the transport sector in particular is highly reliant on fossil fuels. Given the strategic nature of the rail network, and although electrification has come very late to Wales, electrification of the rail network provides an important means of reducing the dependency of Wales on fossil fuels. Not only do electric trains have lower running costs, higher potential speeds and cause less wear on the track, they also provide the opportunity to provide transport using a more sustainable source of energy if the electricity is not generated by fossil fuels. However unless and until there is an increasing take up of electric cars, lorries and buses there will be little fundamental change in this area. The use of bio-fuels is likely to be rather limited, given the other demands on global agriculture. The take up of electric vehicles has been disappointing world-wide, and we remain firmly wedded to the internal combustion engine. There are a number of factors involved in this resistance to change, but there is a degree of ‘chicken and egg’ to the extent that individuals and companies are reluctant to invest in such vehicles until the infrastructure exists to provide refuelling in a reliable and convenient manner, and there is reluctance to invest in such infrastructure until such time as the demand justifies this. These issues can certainly not be seen in just a Wales-wide context, but there are a number of measures that can be taken in Wales to improve the situation.

There is scope for improvement in the use of electric buses. Vehicles with predictable and often relatively short journeys and with garage facilities lend themselves to using non fossil fuel energy.

Wales is rather behind the rest of the UK, as the Western Mail pointed out recently:

77

http://downloads.theccc.org.uk.s3.amazonaws.com/Household%20Energy%20Bills/CCC_Energy%20Note%20Bi ll_bookmarked_1.pdf

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“Grants in Scotland and England help operators bridge the gap between the up-front cost of conventional diesel buses and greener alternatives. Last year alone, the Department for Transport helped companies buy 434 green buses for urban and rural areas across England.

The Scottish Government has provided about £7.7m since 2010 towards 94 low-carbon buses, as it aims for a 42% cut in Scottish carbon emissions by 2020.

The Green Bus Fund in both countries sugars the pill of cuts to other grants. Wales has cut bus funding deeper – but without balancing incentives to invest in green technology.

The situation could be a double whammy for Welsh passengers – already hit by large fare rises – if diesel prices increase, because hybrid buses consume about half the fuel of normal buses. Some English buses now even run on biogas produced from farm waste and sewage.”78 The potential for reducing fossil fuels in transport requires further research and a better understanding of the key inhibitors, but even the easiest incentives are not being adopted in Wales.

The potential for energy conservation The above has dealt with the potential for additional energy generation. However there is substantial opportunity to reduce the amount of energy used. Much of the reduction of energy used in the UK is a reflection of both the move away from heavy and manufacturing industry, and the lower level of economic activity over the last five years or so. Given the changes in economic activity it is very difficult to disaggregate changes in energy usage by the commercial and industrial sectors except on an industry by industry basis, which would be a complex and time consuming task. This document will therefore focus on energy conservation in the domestic sector. However part of this reduction in energy consumption is due to energy conservation measures, whether individual or government initiatives, such as double glazing, loft conversion or wall insulation.

Domestic consumption of both gas and electricity has been falling for some considerable time.

From 2005 onwards the consumption of gas fell by over one third by 2011, and the consumption of electricity by around 10% over the same period.79. Although some of this may be the result of the difficult economic climate, and the reduction of gas doubtless reflected in part the comparative increase in gas prices over the period the trend lines are rather smooth and indicate a more gradual reduction in use, rather than sudden downturn after 2007/8.

78

http://www.walesonline.co.uk/news/wales-news/environmental-campaigners-call-eco-bus-grant-3871522 Energy Generation and Consumption for Wales, 2011 Statistical Bulletin, Statistics for Wales, 19/2013, pp 13, 14, charts 12 & 13 79

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Chart 7: Average domestic gas consumption per consumer, Source DECC from Energy Generation and Consumption for Wales, 2011 Statistical Bulletin, Statistics for Wales, 19/2013, pp 13.

Chart 8: Average domestic electricity consumption per consumer, Source DECC from Energy Generation and Consumption for Wales, 2011 Statistical Bulletin, Statistics for Wales, 19/2013, pp 14.

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There are however variations between local authorities as the table in Appendix VI shows.

The rate of house building in the UK is very low -. As the UK Housing Energy Fact File points out: “There are now 27.3 million dwellings in England, Scotland, Wales and Northern Ireland, but fewer than 180,000 new homes are built each year, and far fewer homes are demolished. The total number of dwellings changes very slowly over time: the average growth in numbers of dwellings from 2000 to 2010 was only 210,000 – less than 1% per year”.80Wales faces a number of particular challenges in this respect. As part of the UK with a relatively stable and relatively poor population, the number of new houses being built is not great, so that the replacement of the existing housing stock will take some considerable time. Much of the housing stock is already quite old and does not necessarily lend itself easily to e.g. wall insulation, so there may be limited measures that can be adopted on an economically feasible basis. There has, however, been a significant improvement in the insulation quality of new houses being built, as shown in the table below, (where SAP stands for the Standard Assessment Procedure in terms of a dwelling’s insulation qualities, the higher the rating the better):

Source: Stats Wales/ WG Average SAP rating for houses in Wales

1997/8

35.9

2004

2008

46.5

50.3

Average SAP rating for new homes in Wales

2009

2011

78.8

80.3

Indeed taking all these factors into account there has been a general increase in the SAP rating of the UK housing stock over a number of years:

80

p.17

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Chart. 9. The SAP rating of average GB homes, Average SAP 2005 ratings by year81 There is therefore clearly scope for substantial improvement in energy efficiency through the building of new homes, but this would come about as a result of changes in the system of house building policies and incentives. Energy conservation may be a beneficiary, but it is unlikely to be a driver of such changes. As a result energy conservation measures need to focus primarily on retro-fitting the current housing stock in terms of making a significant difference in the near future.

A significant proportion of what is achievable has already been done in respect of loft insulation and double glazing82, although there are differences in the quality of double glazing and depth of loft insulation, and the proportion of walls capable of cavity wall insulation has also increased, as has the use of more efficient gas boilers.

UK Government initiatives in respect of insulation do appear to have had some impact83, although these programmes have been responsible for some of the increased cost in electricity bills, and perhaps such increases have been viewed more as a result of renewable energy costs rather than energy conservation costs. The Welsh government has placed a particular emphasis on improving the energy performance of housing through the Arbed programme84, which also covers solar panels and heat pumps and part of the cost to install more efficient gas boilers. According to the Welsh government it is the largest programme of its kind in the UK, and the first phase was for more than £68 million, of which some £37 million came from the Welsh Government, and £20 million from social housing providers, with the remainder from energy suppliers, using the UK government incentives referred to above. Although described as an investment, the programme appears to be more by way of an improvement grant. According to the Welsh Government the first phase provided help for more than 7,500, so on average around £9,000 was spent on each home under the scheme. A new scheme started in May 2012.

The new Green Deal is latest programme of the UK government to stimulate the retrofitting of the existing building stock. In short, it allows owners to install energy efficiency measures (e.g. cavity wall insulation, loft insulation, draft proofing etc.) and micro-renewables (e.g. solar PV panels, ground source heat pump etc.) with less/no upfront cost. The costs are then paid back through instalments through householders’ electricity bills. If the owner sells the house, the costs are continued to be paid back by the new owner given that they will benefit from the measures installed. The Green Deal applies to businesses as well as households, tenants and landlords, in addition to homeowners. Properties are assessed by registered Green Deal assessors to assess the best measures for the property and ensure that it is financially viable, i.e. the savings made will counteract the increase in bills from repayments. This does not guarantee a reduction in energy costs, but means there will less of an increase. However, the UK government are keen to point out that there is no way to predict the future cost of energy bills and all calculations will be based on current prices. However it should be noted that the Green Deal is essentially a finance plan under which the homeowner borrows long term money (10-25 years) to finance e.g. double glazing, and this pays for itself by the reduction of the energy bills. The reduction in energy bills is estimated by an assessor, but is naturally based on average outcomes. However the assessors are linked to the companies providing the improvements and there is a danger of mis-selling with people entering into long term contracts that they do not understand. The loan is repaid through reductions in the energy bill and stays with the property, not the individual, so this may affect the ability to sell, and

81

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/48195/3224-great-britainshousing-energy-fact-file-2011.pdf 82 Ibid p. 43 et seq.

83 Ibid p.52 84 http://wales.gov.uk/topics/environmentcountryside/energy/efficiency/arbed/?lang=en

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may make switching from one supplier to another more difficult, although there is a system in place to provide for this. There may also be problems if the home is damaged or destroyed by fire or flooding and whether the loan is insured, and who take this risk. In principle this scheme allows people access to finance to improve the energy efficiency of their home, and the cost of repayment should be less than the energy savings, but it remains to be seen whether the implementation will cause some financial hardship.

The structure of the Green Deal also reflects the fact that privately rented property is some of the least energy efficient; it may well be that this works better for private landlords than residential homeowners, as they may be able to finance multiple projects, and of, course this will be financed long term through the electricity bills of their tenants. However this should improve the energy efficiency of these properties, and any improvements by landlords would have to be financed through an increase in the rents in any event.

Wales faces some particular problems in respect of energy consumption. There are a relatively large number of retired people in Wales who generally need their accommodation heated to a higher temperature than the general population. In addition the energy consumption maps recently published by DECC85 seem to indicate that while the general pattern of energy consumption both in respect of domestic and commercial consumption is broadly in line with what one might expect – e.g. areas of high commercial usage in the industrial areas of south Wales (including Pembrokeshire as a result of energy use in Milford Haven), there are some noteworthy issues.

1. Ynys Môn has particularly high commercial gas consumption. This may merit further attention.

2. There is a marked contrast between energy consumption between rural Wales (higher) and urban Wales. This is particularly the case for Powys and Ynys Môn. This may well reflect a larger number of detached houses, and perhaps generally larger houses.

3. There is contrast between Wales (and indeed Scotland and parts of the north of England) between consumption per capita and consumption per household. The consumption per capita appears to be slightly higher in Wales, as compared with the consumption per household which is more in line with the general UK pattern. This may indicate a higher number of people living in smaller or single person households in Wales (possibly age related). In addition there appears to be a tendency for the poorer areas of Wales to have comparatively higher domestic energy consumption, than e.g. the south Wales coastal belt, and this may reflect poorer housing conditions and an exacerbation of fuel poverty.

Certainly the bulk of south–east England is low in domestic energy consumption, except for a few areas to the south and west of London and in the Midlands. These may possibly be areas of significantly higher affluence and house sizes, but the general picture does not reflect a pattern that greater GDP per capita leads to higher energy consumption.

Recent data published by Consumer Focus Wales86 indicates that the cost of electricity in Wales, and particularly south Wales is higher than most other parts of the UK. For example the average bill on standard credit terms for a south Wales domestic customer is £467, compared with £455 for a north Wales customer and an average of £461 for Wales. The comparable figures for Scotland and England are £455 and £439. As indicated above significant generation of electricity in Wales does not result in lower electricity prices, even in the area of Wales which is a large exporter.

85

https://www.gov.uk/government/statistical-data-sets/maps-showing-average-energy-consumption http://www.consumerfocus.org.uk/wales/publications/welsh-household-electricity-prices-%E2%80%93-fullreport 86

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However, what is even more striking about the electricity cost figures is that the method of payment makes a huge difference in the cost of electricity. The ‘online, on direct debit’ electricity bills for the average customer in Wales is £360, in Scotland £350, and in England £333. While the difference in cost of electricity in Wales compared with the rest of the UK is important (Welsh customers on average have to pay more than customers in Scotland or England for their electricity, irrespective of the method of payment) but this increase of about £100 on an average bill of £360 due purely to payment methods is a far larger factor in Welsh fuel poverty, particularly since it is likely to affect those who can least afford it.

There are a number of factors which influence the cost of electricity to the domestic consumer, and they are dealt with comprehensively in the Consumer Focus document, but they highlight the fact that the fragmentation of the system and the different charging policies of the different suppliers (there are substantial differences in the prices charged by different methods of payments between the different suppliers) which are relatively opaque means that a very substantial part of the domestic cost of electricity is due to the commercial priorities of quasi-monopolistic suppliers in a non transparent market.

This backdrop highlights the need to look at other ways of generating electricity (e.g. through a large number of diversified suppliers, an increase in self generation (e.g. solar panels and heat pumps) and community/municipal/Welsh government ownership of electricity generating assets) as well as a more systemic approach to electricity generation and supply, since the current system appears to produce arbitrary pricing results for an essential commodity, and raises the question as to whether the regulatory system functions effectively. Significant further research would need to be done as to the pragmatic policy initiatives available to the Welsh Government in the short and medium term, such as encouraging community ownership of wind farm projects, as well as the long term policy goals that should be formulated.

The International Context The formulation of an energy policy for Wales must necessarily take into account the global context of the energy markets and the environmental issues that challenge all governments today. While the amount of energy consumed in the UK has been falling, this is certainly not the case on a worldwide basis, where demand for fossil fuels for generating capacity alone is expected to rise rapidly.

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87

To put this chart in context the UK produces under 400TWh of electricity. The rapid expansion of the economies of the developing world has resulted in a huge increase in demand for all kinds of resources, including energy. This has put pressure on supply, and increased prices. Although there may be fluctuation in the speed with which the prices rise, barring a major dislocation of the world economy over and above what has already occurred, it is anticipated that demand will continue to cause the price of energy to rise.

In order to remain competitive Wales must also have an energy pricing policy for its industries which is comparable to other countries involved in the same sector. In large installations, such as a steel works, there is clearly a lot of invested capital, which will tend to militate against production moving elsewhere, but over a period of time and when international companies have to take a decision as to where to invest, clearly this is an important consideration, particularly for energy intensive industries.

The chart below shows the comparative cost for small, medium and large consumers of electricity in a variety of EU countries. As the chart shows the UK is approximately in the middle; the prefatory notes from DECC state: “The average domestic electricity price including taxes in the UK for medium consumers for the period July to December 2013 was the fifth lowest in the EU 15 and was 12.4 per cent below the median price. The UK price excluding taxes was the second highest in the EU15 and was 19.4 per cent above the median price. This points out, but not very clearly, the important role that tax plays in the cost of energy. This is brought out much more clearly in the subsequent charts which shows international prices both including and excluding tax charges for gas and electricity.

87

http://www.carbonbrief.org/blog/2012/11/favourite-graphs-from-iea

33

88

88

https://www.gov.uk/government/statistical-data-sets/international-domestic-energy-prices

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The UK is clearly a very low tax country as far as energy pricing is concerned. Further research would need to be done to understand how the tax regimes across Europe actually affect both energy consumption habits and commercial competitiveness. It is also notable that the USA has very substantially lower energy costs than the countries of the European Union. However this results in the US having an average energy consumption per capita of nearly twice that of European countries and over twice that of the UK (7,000 kg of oil equivalent in the US compared with 3,000 in the UK).89 The difference in electricity usage is even more marked (13,400 KWh per capita in the US compared with 5,700 in the UK).90 Environmental issues Many of these have already been dealt with, but it is undoubtedly the case that climate change is of vital importance to all of us, and Wales is no exception. If all the fossil fuels currently counted as reserves or potential reserves by the major energy companies were actually burnt, it is estimated that this would make it very unlikely that the increase in world temperature would be held to 2%.91 There is a major disconnection between what the major energy companies are planning and financing and the limitations that governments profess that they would like to see. 92 Wales has its part to play in acting responsibly with regard to energy usage, but as can be seen the increasing

89

http://data.worldbank.org/indicator/EG.USE.PCAP.KG.OE http://data.worldbank.org/indicator/EG.USE.ELEC.KH.PC 91 http://www.carbontracker.org/carbon-bubble-interactive 92 http://www.carbontracker.org/wastedcapital 90

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living standards in the developing world is likely to lead to an enormous increase in generating capacity, not least through the use of fossil fuels.

This has major implications for the vulnerability of many major coastal metropolises such as London and New York, Shanghai and Bombay. Given the location of Cardiff, Swansea and Newport this would inevitably by a matter for concern for a Welsh government, requiring a serious look at flood mitigation measures, but that is outside the scope of this paper.

Cui Bono? For whose benefit?

The price, security and reliability of supply of energy are vital to the functioning of a modern economy. It is no surprise that in certain contexts its supply is regarded as a utility, like water (this is true for domestic consumption and to some extent for commercial consumption, but not for the transport sector, where it is essentially a free market). As shown above Wales has significant resources of renewable energy, and potentially resources of fossil fuel should it wish to use them.

However these resources are not under the control of the Welsh government and to the extent that they are exploited it is open to question as to how much benefit will come to Wales.

Wales is a major producer and exporter of electricity, but it does not benefit from notably lower electricity prices. It is an importer and distributer of gas, but does not benefit from the pipeline running under its surface. It has major potential resources of energy from wind, water, solar and marine resources, but has little control over which resources should be developed, where and under what conditions, both from a regulatory and a financial point of view.

In addition energy policy making and planning is by its nature very long term, and once decisions have been made in respect of many of these resources there will be long term legally binding contracts decided upon by the UK government which will inhibit the ability of any Welsh government to be in control of large parts of its energy policy for decades to come.

Control of energy resources and policy is regarded as a matter of vital national interest, and governments are very reluctant to give it up, as is amply demonstrated round the world, not least close to home in Scotland and the issue of North Sea oil. Wales has already seen its natural energy resources exploited largely by outsiders before, during the time of the coal boom during the 19th and early part of the 20th century. The coal industry at least provided jobs for hundreds of thousands of workers, with over a quarter of a million employed in the south Wales coalfields in the early 1920s.

The current energy industry is far more capital intensive, but it too may leave significant decommissioning challenges. Huge resources have been required to re-landscape and treat the soil of the old coal workings, largely at the expense of the public sector. These challenges will be considerably greater in the case of the nuclear industry than in the coal industry, at least in respect of their intensity, sensitivity and longevity, but will also be present in all primary and secondary energy production. There is therefore the possibility, as with coal, that while Wales will not receive the main benefit of the exploitation of its natural resources, it may have to bear a large proportion of the consequent costs of decommissioning.

One of the justifications of energy projects, particularly large scale projects, is that they create jobs.

While it is true that these jobs are notionally being created by private companies, it is very clear that power station projects can only sensibly proceed if there is adequate certainty in respect of the long term prices for electricity where an important part of the component cost is the capital cost upfront.

This is true for both nuclear and renewables generally. This is less true for fossil fuel power 36 Â Â

stations, because they are comparatively cheaper to build and a substantial part of the total cost of the energy they produce is represented by the market price of their fossil fuel.

But in both cases the regulatory system is such that power generators expect to be able to put up prices to ensure that it continues to be profitable to generate electricity. It is a highly regulated market, and Ofgem “determines strategy, sets policy priorities and takes decisions on a range of matters, including price controls and enforcement. The Authority's powers are provided for under the Gas Act 1986, the Electricity Act 1989, the Utilities Act 2000, the Competition Act 1998 and the Enterprise Act 2002”.93 Given this highly regulated market, where subsidies are provided by both the public sector and through long term supply contract pricing, which ultimately is paid by the consumer and can be regarded as an indirect form of tax, it is not unreasonable to look at jobs created as compared with expenditure and ask the question whether the money expended to create power stations could have been used more effectively to create the same number of local jobs.

In the case of the recently opened Pembroke power station for example, a billion pound investment has resulted in 100 permanent jobs. Quite how many temporary construction jobs were created is more difficult to fathom. The DECC announcement claims that “The station represents a £1 billion investment in the region, and has created around 100 long term, permanent jobs in addition to several hundred temporary construction jobs over the past three years.”94. On the other hand the nPower website describing the opening on the 19th September 2012 hand states that “Control of the final unit of Pembroke was handed over to the station team last week, marking the end of over three years of construction, in which over 10,000 contractors worked 7.4 million man hours to complete the state-of-the-art facility. The opening ceremony was also a chance to thank all of the people have been involved in the successful construction of the plant for their commitment and hard work.”

The difference may perhaps lie in how many local construction jobs were created. Certainly the difference between “several hundred temporary construction jobs over the past three years” and “over 10,000 contractors worked 7.4 million man hours” merits some further investigation.

The figures for Wylfa may be subject to the same disparities. The Horizon website claims “Our current proposals for a new nuclear power station at Wylfa could see the creation of up to 1,000 permanent jobs, many of which will be highly skilled, and a peak workforce of up to 6,000 during construction. The Welsh government indicates that “The actual number of jobs created during the entire construction period may be three times this”, although it is not clear from this how many Full Time Equivalent jobs they believe will be created over what period.95 Horizon on its website states that “We are keen to harness the skills that already exist and contribute to developing new ones by providing training opportunities to people from the area.”96 However in its information pack (compiled when the company was owned by E.on and RWE) Horizon indicated some 5,000 jobs at peak, and acknowledged the necessity for “a large self contained accommodation campus either on or off the development site” to accommodate the workforce coming from elsewhere.97 It is interesting to note that Horizon predicts a permanent workforce of 1,000, while the gas fired Pembroke Power station which has over half the capacity of Wylfa, even if all three reactors are built, is only expecting to employ 100. It would be helpful to know why a nuclear power station

93

http://www.ofgem.gov.uk/About%20us/Pages/AboutUsPage.aspx https://www.gov.uk/government/news/john-hayes-opens-1bn-pembroke-power-station 95 http://www.learningobservatory.com/news/new-nuclear-power-station-will-provide-jobs-for-generations 96 http://www.horizonnuclearpower.com/wylfa-investing-in-anglesey 97 See – “A new nuclear station at Wylfa” 94

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requires relatively significantly more jobs per Megawatt capacity, and to what degree these are safety related.

The estimation of jobs for the construction and maintenance of such projects is in any event a very difficult area, and studies that have tried to examine this in some detail have a number of caveats in respect of the methodology to be used and comparability, see for example “Issues in estimating the employment generated by energy sector activities” by Robert Bacon and Masami Kojima, of the Sustainable Energy Department of the World Bank, June 2011,98 “Putting renewables and energy efficiency to work: How many jobs can the clean energy industry generate in the US?”99 which focus on green energy jobs and their potential multipliers, and focussing on US examples. The latter modelled employment on renewable/ low carbon sector and found “that all non fossil fuel technologies (renewable energy, EE, low carbon) create more jobs per unit energy than coal and natural gas”. The European Wind Energy Agency has estimated that 15.1 jobs are created in wind energy in the EU for every MW installed. But of the direct jobs created 59% are in the manufacturing and component manufacturing sector, 16% in the development sector and only 11% in installation and maintenance, so it is hard to see that Wales would be able to capture very much of this value chain 100 Although Mabey Bridge manufactures wind turbine towers in Chepstow, there is no wind turbine manufacturer based in Wales, nor likely to be. More generally the work done by Cebr for the Civil Engineering contractors Association (CECA) in respect of jobs created by the UK construction industry, and the multiplier effect looked at a broader economic approach, but looking at the wider industry of construction, rather than just energy projects.101 The net conclusion must be that job creation statistics must be understood in some detail before relying on generalised claims, and are subject to considerable uncertainties. These include the number of people actually that will be employed locally and at what level, the number of people who may commute to a site on a daily level, the number of people who may commute to a site on a weekly basis, but not bring their families as well as the number of people who will move to the area during the construction period and the degree of continuity of labour, as opposed to significant but short term peaks during the construction period. These factors will all have an impact as to whether the economic effect on the area is attractive or not, and over what period of time. There also seems to be very little information in respect of the degree to which local services, such as schools and hospitals may become stretched and even distended during the period of construction, creating temporary short term demand which will then recede and largely disappear when the project is completed.

The multipliers for such jobs are notoriously difficult to assess, but the long term impact is likely to be comparatively small given the number of permanent jobs created, quite possibly in many cases for people who have to be brought into the area because the expertise is not available locally.

The timing of such large scale projects should also be put into context. Although the Wylfa project has been mooted for many years it will still take some time before any construction begins on site, given the fact that the Hitachi technology still has to be approved and planning permission needs to be granted. In practice therefore the creation of even the construction jobs will still be a number of years away. Horizon has indicated that it will cost around £8 billion to build Wylfa (it is not clear whether this is for the two or three reactor scenario, but given general costs this seems likely to be

98

http://siteresources.worldbank.org/INTOGMC/Resources/Measuring_the_employment_impact_of_energy_sector. pdf 99 http://rael.berkeley.edu/sites/default/files/WeiPatadiaKammen_CleanEnergyJobs_EPolicy2010.pdf 100 http://www.ewea.org/fileadmin/ewea_documents/documents/publications/Wind_at_work_FINAL.pdf 101 http://www.cebr.com/reports/impact-of-infrastructure

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the two reactor scenario) and that it will create 1,000 jobs. If Wylfa were regarded as a job creation exercise, it would be difficult to justify on the grounds that it requires £8 million per permanent job, and even taking into account potential job multipliers a number of million pounds per job, with the likelihood that the majority of the jobs, and even more so of the better paid jobs, are likely to be taken by incomers with the requisite expertise.

In addition there is nothing to indicate that Wales might also become a centre of nuclear expertise, able to export that expertise elsewhere. This may be the case, but it should be noted that Horizon’s headquarters are in Gloucester, not in Wales. It therefore does not seem likely that Wales will become a worldwide centre of expertise in this sector like, e.g. Aberdeen in the oil industry.

One of the advantages of small scale renewable projects from an employment point of view is that they can create a pipeline of opportunity, and are more of the size to be within the capability of Welsh companies. Smaller projects will also tend to be of less interest to the larger companies, so there is a greater potential for both creating work locally and maintaining and increasing expertise over a number of projects. The evolution of Dulas, based in Machynlleth, from the Centre for Alternative Technology is an example of the way in which companies can grow gradually, provide local employment in even disadvantaged locations, and have an international reach, due to the level of their expertise.102 The current structure of the energy industry therefore neither seems to provide Wales with a satisfactory energy supply, nor with the potential of an important industrial sector based in Wales creating jobs and expertise and the possibility of export opportunities. To the extent that it does, this seems to be more despite than because of the system. There also does not seem any prospect that this system will change in the future. As mentioned above under the current system there is a considerable likelihood that Wales will benefit less than it should from the exploitation of its natural resources Powers of the Welsh Government Some of the key competencies in respect of energy policy and where they lie are set out in tabular form in Appendix VIII. Essentially although the Welsh government has some passive responsibilities in respect of planning permission and environmental considerations it has very limited scope to shape energy policy in Wales. This is not solely due to the lack of the relevant powers being devolved, but also the way in which the energy system is operated in the UK, with large private sector players and a limited over view by governmental regulators. Energy policy in Wales is also inhibited by the fact that it has no discreet electricity grid of its own, and it is therefore difficult to look at electricity policy within Wales on a holistic and discrete basis.

However there is no doubt that with more devolved powers Wales would start to formulate its own energy policy. The example of Scotland, which has leapt ahead the rest of the United Kingdom in the field of renewable energy shows what can be done by a pro-active government. It is undoubtedly true that Scotland had an initial advantage in respect of hydro electricity, but its control over shaping policy and over renewable obligation banding (also the case in N. Ireland) provides it with flexibility not available to the Welsh government. Indeed as mentioned elsewhere it is intended that the current Renewable Obligation regime be substituted by a Contract for Differences model in 2017. This has created uncertainty. The Scottish government has confirmed the ROC

102

http://www.dulas.org.uk/the-dulas-story.cfm

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banding for wind and its concern over UK legislation.103 The Welsh government is not in a position to participate effectively in this debate.

Another example is in the area of energy mix. As the Welsh government does not have responsibility for energy generation over 50 MW capacity, it is not in a position, as is Scotland, to decide whether it wishes to develop nuclear power. This is clearly a contentious issue, but it is one that should be decided in Wales, not London, particularly when the generating capacity is so clearly far greater than that required by the Welsh market and the project is designed to service the needs of the English market.

This raises the wider issue of the way in which energy policy in the UK may evolve over the coming years. The development of renewable energy, and particularly those types which are still in their infancy, such as tidal, will continue to depend significantly on a stable subsidy regime being available to encourage investment. This system is on the cusp of being changed and it is vital that as and when the Energy Bill is passed its implications are understood as soon as possible, both with regard to the new mechanism of providing support to the renewable energy industry and with regard to the pricing framework that will apply if and when the Renewable Obligation is abolished.

Energy policy is both complex and long term as well as of huge importance. In order to both formulate and implement such policy it is arguable that Wales requires an institution with the specialist skills to carry out this role on behalf of government.

As outlined above the role that energy plays is crucial to a modern economy. To the extent that policy making and implementation does not lie within the remit of the Welsh government it will be significantly inhibited in respect of the way in which it can influence the economic prospects and potential well-being of its people. It will be dependent on the policy priorities of its larger neighbour.

The example of Glas Cymru, which owns Dŵr Cymru, shows that there are alternative ways of carrying out business, particularly in the utility sector, which are perfectly commercial but are different from the standard corporate private sector approach. The distinctiveness of this divergent approach may not have been so easily discernible in the early days of Glas Cymru, but at a time when a number of water utilities in England are owned by foreign investors and subject to a series of further take-over rumours, the advantages of the not for distributable profit model are becoming increasingly apparent. In principle the absence of the need to pay out dividends to shareholders, the reduction of its outstanding debt and the sharing of retained profits between further investment and customers should all enhance the competitive position of Glas Cymru going forward.

The applicability of this model to the Welsh economy should be borne in mind. It is clear that it would be impractical even if it were desirable, to ‘nationalise’ existing energy assets. However in formulating policy in respect of the creation of future energy assets, consideration of the method of ownership and control of those assets should be considered in order to ensure that the value that energy generation creates as well as the energy itself is for the benefit of the Welsh people.

In particular, although new energy assets must be financed at the market rate this will depend to an important extent on the predictability of the cashflow that they generate.

103

http://www.scotland.gov.uk/News/Releases/2012/07/onshore-wind-RoCs23072012

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It is in the nature of many renewable energy projects that they are capital intensive, but have low running costs whereas fossil fuel generation is generally has lower capital costs but higher running costs, since it has to take into account the cost of the fuel as well. It is rather like making a decision as to whether to buy a laser jet printer, and spend a bit more on it, but get far more sheets of paper per cartridge or an inkjet printer where the initial cost is low, but the cost of the ink cartridges is higher. But at least when purchasing an inkjet printer the customer rather hopes that the replacement cartridges will be there for the foreseeable future and will not fluctuate too greatly in price. With fossil fuel these hopes may be less secure.

This is a period of very low long term interest rates for good covenants. From this point of view it is the ideal time to make the transition to generating capacity projects with high capital costs and low future operating costs, where funding can be paid out of energy bills. As has been seen such an approach does add a marginal additional cost in the short term, but this is comparatively small compared with the wide swings in pricing as a result of changes in the wholesale energy market.

Not only does this provide for a more secure energy source, but in addition, as the secular increase in fossil fuel continues it is likely to provide a lower cost of energy over a longer period. This is especially the case for those forms of generation where operation and maintenance costs are a comparatively small part of the total cost. This applies particularly to tidal range marine energy and solar. In the former case the majority of the cost is in the impoundment work, which has a design life up to 120 years; once the financing has been paid off the cost of generating electricity is very low, since no fuel is required and it largely relates to the maintenance and replacement of the turbines. In the case of solar, with the cost of solar panels coming down, once a solar farm has been constructed and connected to the grid, the cost of replacing the panels will be fairly minimal compared to the electricity generated. In the case of wind the machinery is subject to relatively more wear and tear, but even here there is the opportunity to put replacement turbines on existing shafts, and where the concrete base of the installation and the connexion to the grid do not have to be replaced.

For all these reasons it is clear from an economic, environmental and a financial point of view that Wales should focus on maximising its ability to generate renewable electricity over the long term.

In addition it is equally clear that Wales should seek to do so in a way in which it retains the benefit of such a policy.

One way of doing this would be to insist on the right to residual ownership of all renewable energy installations over a certain MW capacity threshold once the funding has been paid off. E.g. for large scale wind farms, on or offshore or for marine installations, once the investor has achieved the return required over e.g. 25-30 years, the Welsh government (also perhaps local authorities for certain schemes) should have the right to acquire the asset for a nominal amount of money. In addition the Welsh government should investigate the opportunities for communities to invest in locally produced electricity, looking at a more co-operative approach to renewable energy ownership.

Another alternative would be to establish a separate entity responsible for energy along the lines of Glas Cymru, as referred to earlier and this would be responsible for managing and operating the residuary estate. Like Glas Cymru/DĹľr Cymru it could outsource much of that work on a tender basis, but it would retain control of the asset, and by having such a body with the relevant expertise, the acquisition of these assets after the run-off of the funding period could proceed smoothly rather than on a series of ad hoc arrangements, and with a commercial management team already in place.

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The Welsh government is currently discussing the status of the Severn Bridge and where ownership will lie when the current franchise expires and the investors have been repaid. The Welsh government should be adopting the same approach ab initio in respect of new renewable projects. It should certainly be seeking control and preferably ownership of the fossil fuel assets of Wales. It would also be important to know where ultimate responsibility lies not just for the decommissioning of nuclear power stations, but also fossil fuel fired power stations, and to what extent at the end of their useful life they represent a liability rather than an asset.

Of course, it is currently the case that the Welsh government has very limited powers indeed to block offshore projects and similarly with onshore projects of over 50MW capacity. Wales is unique among the devolved nations not to have greater powers, but without them it is singularly illequipped to shape its own energy destiny.

The Welsh government should have the same powers as the Scottish government to influence its own energy policy. The Arbed programme shows that the Welsh government does have the ability to instigate behavioural change and to leverage off existing programmes, and it should continue to do this, and focus on how it can encourage further take-up of energy conservation and greater self generation, including looking at what financial mechanisms it can put in place other than outright grants to facilitate this process.

It should look at the way in which it can encourage local ownership of energy generating projects, and the degree to which it is in a position to help business to meet the same objectives.

The above indicates that the current system of energy production has significantly fewer benefits for Wales than might be the case, and that the Welsh government has inadequate powers either to improve the system, to provide a policy framework, to implement its policy priorities in any meaningful way (e.g. sustainability), or indeed to work with the energy industry, except somewhat peripherally, to achieve its objectives.

The ability of Wales to control her own national resources and the planning regulations that affect their exploitation is far too limited. This is true irrespective of which political party is in power.

There is potential for a considerable degree of consensus between the all the political parties that Wales should be in no worse a position than the devolved governments of Scotland and Northern Ireland. Any Welsh government should also seek to have the right to acquire major residual generating assets once the funding has been paid off.

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Executive summary and conclusions: 1. Demand for energy in Wales has been reducing rather than increasing over a number of years.

2. Electricity forms less than 20% of the energy requirements of the Welsh market.

3. It is highly likely that the cost of fossil fuel will rise in the years to come as a result of increasing global demand for energy and increasing cost of extracting new fossil fuel supplies. In addition as a significant and rising part of the UK’s (and Wales’s) fossil fuel supplies come from politically unstable regions security of supply cannot be taken for granted.

4. It is desirable to lower the use of carbon and move to a low carbon economy due to the environmental consequences. As part of the UK Wales also has significant obligations under European legislation and international treaties to reduce its reliance on fossil fuel.

5. It is therefore desirable for Wales to increase the quantity of electricity it produces, and to do so from primary indigenous resources.

6. However the cost of electricity per KWh is significantly higher than that of e.g. gas, and the cost of generating electricity through using renewable resources is currently higher than the cost of fossil fuel generated electricity. In addition in the transport sector the transfer from fossil fuels to electric vehicles is only likely to come about as a result of adoption of new technology on a more global basis 7. However the cost of renewable electricity is likely to be lower in the longer term for a variety of reasons, including improved technology, the absence of a fuel cost input and rising fossil fuel prices (notwithstanding the current fall in gas prices due to shale gas and the potential for shale oil etc.)

8. There therefore needs to be a carefully thought through transition to greater dependence on indigenous renewable energy.

9. The UK government has established a series of regimes to encourage the use of renewables, Feed in Tariffs, Renewable Obligations, and, due to start in 2017, contracts for differences, but unlike in Scotland and N. Ireland powers in respect of these are not devolved to Wales.

10. Wales is currently integrated into the UK grid, and has no means of transferring surplus electricity from north to south Wales. Its domestic electricity charges are among the highest in the UK. Although it is a substantial exporter of electricity, it receives little benefit from its greater electricity capacity.

11. With its more dispersed population and the absence of an adequate north south grid, Wales should focus on encouraging more small scale generation and self generation of electricity, particularly since transmission and distribution costs form such a significant part of the total electricity bill. In addition the potential cost of a north-south interconnector should be taken up with Ofgem and the national Grid who are already looking into this, as a matter of

43

urgency, since the ability to connect the electricity supplies of north and south Wales is of very considerable importance to implementing a coherent policy framework.

12. In addition a very significant part of the domestic electricity bill is accounted for by which payment method is used, with those least able to pay being the most likely to be disadvantaged. This not only highlights that the current system of regulation of pricing needs to be looked at, but also that a system where the key energy assets are controlled by large multinational corporations does not serve Wales well, and further inhibits the ability of the Welsh government to shape and implement energy policy.

13. It is therefore desirable that the Welsh government should implement policies (and seek to obtain the necessary powers to enable it to do so) to have the right to acquire residual rights in new generating capacity, so that over a period of time it would be in a better position to control its own energy policy 14. The possibility of creating a new specialised body which would be responsible for assisting the Welsh government in the formulation and implementation of energy policy should be explored. It could also be the appropriate body to hold the residual energy assets referred to above, and over a period of time might be actively involved in the financing of new energy assets for Wales in its own right.

15. At the moment the exploitation of shale gas, coal bed methane etc are very controversial, and the scale of their potential in the UK is uncertain. The rights to these mineral deposits is held by the Crown. Even if the environmental concerns could be met there would seem to be limited advantage to Wales in these reserves being exploited until such time as the Welsh government could benefit from the revenue stream created by these assets. It should seek ownership of and control over these assets.

16. Low carbon renewable electricity can be developed from a number of sources. As mentioned above there are a number of advantages in small scale electricity production for local consumption. Small scale hydro, biomass, solar, heat pumps and small scale wind etc. provide the potential to meet some of this demand. However there will continue to be a need for large generating capacity , and solar, wind, marine and nuclear are all potential providers of low carbon electricity.

17. Apart from the very considerable environmental considerations in respect of nuclear power, from the environmental cost of mining the bauxite to the construction of the power station, its operation and effect on water temperatures, and the risk during operation and during and after decommissioning of the nuclear fuel source, nuclear power is also financially unpredictable, with projects frequently being delayed, and being very much behind time and over budget. In addition the financial risks of decommissioning and final disposal of the fuel source are exceptionally high and unpredictable. Indeed they are essentially commercially unbearable, which is why funds have been set up to meet decommissioning costs, and why governments and taxpayers ultimately bear the risk of such projects. Wylfa would be a very large project for a country the size of Wales, and will not create many long terms jobs in comparison with the huge amount of capital expenditure. It would represent a huge risk for any future Welsh government, and potential or perceived liabilities on this project alone could jeopardise the financial standing of any future Welsh government.

18. What types of renewable are preferable? Factors to consider include: 44 Â Â

i. Marine and solar power offer a less intrusive form of energy generation than wind, and are capable of providing power near to Welsh demand, whereas wind power, tends to be generated in areas of low population. This not only means a greater requirement of distribution capacity, with its impact on a wide area of landscape, but, as in the case of mid Wales, the electricity generated is not available to Welsh consumers, but has to be exported to England. It is not entirely clear what benefit Wales receives from such electricity generation. ii. Energy generation by solar and marine is more predictable than wind, which has implications for the value of the energy generated (due to time of day) and the cost of back up generating capacity. iii. The costs of onshore wind generation are well understood and quite low. So is the cost of solar. The cost of offshore wind generation is higher and less well understood as it advances into deeper waters. iv. Both solar and onshore wind are relatively mature renewable technologies, and there is limited potential for Wales to become a centre of excellence in these areas. Wales is quite well placed as an area for wind generation in European terms, less so for solar. v. Wales is an excellent location for marine power, it is still a relatively undeveloped source of renewable energy, and offers the potential for Wales to become a centre of expertise, however initial generating costs of marine power of any type are currently a matter of considerable uncertainty. If the Swansea Bay lagoon goes ahead this would be highly significant in establishing some indicative parameters. vi. The potential for retained value once the financing has been paid off is higher in solar and marine schemes than it is for wind, allowing for a more attractive asset once the financing has been paid off.

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Appendix I Generation of Electricity in Wales by fuel source

Major Producers Other Generators

MP OG %

Coal Oil Gas Nuclear Thermal Renewables Hydro natural flow Hydro Pumped Storage Non thermal renewables total Within Which Renewables

24.5% 0.2% 43.3% 18.5% 0.8% 2.1% 8.0% 2.6% 100.0%

MP GWh 6,170 9,880 5,364 76 210 2,301 1,041 25,042

2011 OG GWh 215 790

367 405 58 406 2,241

Total GWh 6,170 215 10,670 5,364

% 22.6% 0.8% 39.1% 19.66%

443 615 2,359 1,447 27,283

1.6% 2.3% 8.6% 5.3% 100.0%

Hydro

0.9%

268

1.0%

Wind, wave, solar

2.6%

1,447

5.3%

Other

0.8%

443

1.6%

Total

4.3%

2,158

7.9%

104

104

Electricity generation and supply figures for Scotland, Wales, Northern Ireland and England, 2008 to 2011

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Appendix II Electricity generating power stations in Wales Company Name

Station Name

Fuel

Installed

Year of

(MW)

year generation

Capacity

commission or

Closure Date

began Centrica

Barry

CCGT

230

1998

International Power / Mitsui

Deeside

CCGT

515

1994

Dong Energy

Severn

CCGT

848

2010

E.On UK

Connahs Quay

CCGT

1380

1996

RWE Npower Plc

Pembroke

CCGT

2180

2012

RWE Npower Plc

Aberthaw B

coal

1586

1971

Scottish & Southern Energy plc

Uskmouth

coal/biomass

363

2000

EDF Energy

Aberdare District Energy

gas

10

2002

EDF Energy

Solutia District Energy

gas

10

2000

GDF Suez (International Power)

Shotton

gas CHP

210

2001

RWE Npower Plc

Aberthaw GT

gas oil

51

1971

Baglan Generation Ltd RWE Npower (Npower Renewables Ltd) RWE Npower (Npower Renewables Ltd) RWE Npower (Npower Renewables Ltd)

Baglan Bay

gas turbine

510

2002

Cwm Dyli

hydro

10

2002

Dolgarrog Low Head

hydro

15

2002

Dolgarrog High Head

hydro

17

2002

Magnox Ltd

Maentwrog

hydro

28

1928

Statkraft Energy Ltd

Rheidol

hydro

49

1961

Magnox Ltd

Wylfa

nuclear

490

1971

International Power / Mitsui

Ffestiniog

pumped storage

360

1961

International Power / Mitsui

Dinorwig

pumped storage

1728

1983

10380

Source: DECC, Digest of UK energy statistics’ (DUKES) https://www.gov.uk/government/organisations/department-of-energy-climate-change/series/digest-of-uk-energystatistics-dukes

Amount of electricity generated by type of energy: MW

%

CCGT

5153

49.6%

COAL & Biomass

1949

18.8%

Gas

581

5.6%

Hydro

119

1.1%

Nuclear

490

4.7%

2088

20.1%

10380

100.0%

Pumped Storage

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Dec-12

Sep-14

Appendix III Technical Advice Note (TAN) 8 - Review of Wind Farm Developer Interest 2012 This is a summary of the output of wind farm schemes in Wales which are being considered, have been approved and are operational. The summary table differentiates between projects for up to 50 MW, which are determined by local planning authorities under Town and Country Planning legislation, and projects over 50 MW, which are determined by the UK Government under the Electricity Act. The summary table also differentiates between the planning stage (‘In Planning’ and ‘Consented’) and the implementation of planning permission stage (‘Operational’). The table also distinguishes between the different Strategic Search Areas (SSAs), as identified in TAN 8, as well as schemes outside of an SSA.

• Figures are in Megawatts.

• ‘In Planning’ refers to schemes at application and appeal stage.

• ‘Consented’ refers to schemes which have been granted permission (including operational schemes).

• The ‘In Planning’ and ‘Consented’ (but not operational) data has been collected from local planning authorities by Hyder as part of their research, commissioned by the Welsh Government, into the consenting performance of renewable energy schemes in Wales - the latest data collected has been used which was received up to the study’s baseline analysis in February 2012.

• The output of those developments which are ‘Operational’ has been taken from Renewable Obligation Certificate data – as of the 31 March 2012.

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Appendix IV Potential win-win opportunities for small scale hydro electric power generation in England and Wales

Environment Agency Opportunity and environmental mapping sensitivity mapping for hydropower in England and Wales. Non-­‐technical report.

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Appendix V The map below represents solar radiation across the UK.

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Appendix VI Local Authority average domestic gas and electricity consumption per consumer

Energy Generation and Consumption for Wales, 2011 Statistical Bulletin, Statistics for Wales, 19/2013, p 15, Table 5

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Appendix VII Powers of the Welsh Government

52

53

54