National Infrastructure Commission
Printable version

Phil Graham: speech to Clean Energy Infrastructure Summit

Below is the full text of National Infrastructure Commission Chief Executive Phil Graham’s keynote speech to the Clean Energy Infrastructure Summit in London on 24 April.

Check against delivery.

It’s great to be here today and to see that so many of you are grappling with some of the big strategic questions in energy. We will need to keep engaging with these if we are going to get our priorities right and make good decisions now – both for the future of the country’s infrastructure, and, with the Intergovernmental Panel on Climate Change giving its starkest warnings yet of what could happen if we don’t act now, for the future of the planet.

I’m here as the Chief Executive of the National Infrastructure Commission. We were set up, with cross party support, for the express purpose of giving the long term strategic view to government for its decisions on infrastructure.

Since we were formed three years ago we’ve examined issues ranging from future transport connections spanning the North of England to the economic future of the Growth Arc spanning Cambridge, Milton Keynes and Oxford; and from the development of 5G mobile connections to the development of artificial intelligence and digital twin technologies.

And we have a strong track record already.

Of the 45 recommendations we’ve made in the six bespoke studies that we’ve published, the Government has accepted 42 of them – that’s a 93 per cent success rate.

They range from trials of 5G mobile technologies and new definitions of mobile connectivity more suited to people’s real-life experiences, to plans for a Northern Powerhouse Strategy to include improvements to transport links across the region.

But the culmination of our efforts is the National Infrastructure Assessment. The first of its kind in this country and of its scope anywhere in the world, it identifies clear priorities for the UK’s economic infrastructure over the coming years and decades, based on a thirty-year forward look at the changing shape of our economy and society and at the potential impacts of environmental and technological change.

It looks across key infrastructure sectors like transport, energy supplies, and digital communications while also considering cross-cutting issues like financing, and embedding good quality design into the planning of major projects.

So now we look forward to government’s formal response. The government issued an interim response with the Budget last year, committing to responding via a National Infrastructure Strategy later this year; and last month in the Spring Statement, the Chancellor announced plans, assuming Brexit is agreed, for a full three-year Spending Review before the summer recess, to be concluded alongside an Autumn Budget. The National Infrastructure Strategy will be published alongside it.

The National Infrastructure Strategy will be a clear litmus test for the government’s credibility on infrastructure. It is vital that the government meets the commitments they made in the charter and makes it clear where it agrees or disagrees with our recommendations in the Assessment, setting out its reasons for any disagreement and its alternative approaches.

Nowhere is this more important than in energy, where we are also awaiting a white paper from the government in the next few months. We are also looking to this to start to address some of the issues, tradeoffs and choices for energy policy presented in the National Infrastructure Assessment.

One thing is clear: there’s a massive amount going on in the energy sector. We’ve already heard today from speakers on some of the current energy challenges and opportunities, including for renewables, storage and electric vehicles; and we’ll hear more later this afternoon on the role of local networks and the decarbonisation of heat.

In the Assessment, the challenge we set ourselves was to look at what should be done now so that the UK can achieve its carbon targets in the most cost-effective way possible amidst all this change and uncertainty.

Our proposals for the UK’s energy system include strong investment in renewables so that by 2030, half the country’s power should come from these sources – and we should start being more ambitious in finding low carbon alternatives to fossil fuels for our heat too.

This could be beneficial both in terms of the environment but also in protecting the money in people’s pockets: analysis for this Commission shows that moving towards low carbon and renewable sources for our heat and power, combined with the move towards electric cars, could mean the customer of 2050 pays no more in real terms than customers today.

Last month, we welcomed the government’s new Offshore Wind Sector Deal, which includes a commitment to a third of the UK’s electricity coming from this source by 2030. This sits alongside plans for further auctions through the Contracts for Difference scheme, focussed on more support for offshore wind. But this alone is not enough.

It is increasingly unlikely we will see any new nuclear power plants come onstream during the 2020s, apart from Hinkley Point C. Carbon capture and storage also looks unlikely to be able to compete on cost with renewables and therefore should not be funded by electricity consumers in the short to medium term. The coming decade is the time to target large scale delivery of multiple proven renewable technologies to fill the capacity gap, including solar and onshore wind.

A review we’ve recently commissioned from the Met Office demonstrates that solar and wind are complementary technologies in the UK and can be used to help deliver an electricity system resilient to changes in the weather. The research shows that solar irradiance is likely to be higher than average during weather events where wind speeds are low and electricity demand is high.

The ambitions in the Sector Deal would lead to an estimated 30 per cent of our electricity generation coming from offshore wind by 2030. The Commission has recommended that at least 50 per cent of generation should be coming from renewables by then, putting us on track for a highly renewable system. The best outcome for consumers will be the lowest cost mix of proven renewable technologies coming forward – and we are not on track to deliver this. We want to see Ministers ensure that these technologies can compete for Contracts for Difference auctions on a level playing field with offshore wind, to get maximum renewable capacity installed.

Not only does this make good economic sense right now: these technologies could come forward with minimal, or even zero, subsidy with government backing and guarantees; but it is the best way of truly keeping all our options for the future of the energy system open; as well as building our understanding of how a highly renewable system will operate in practice.

Looking longer term at the electricity system beyond 2030, the Commission’s analysis found that based on current expectations and existing technologies, system costs were essentially flat for a range of generation scenarios. These ranged from low renewables and high nuclear, right up to 90 per cent of generation coming from renewables.

This was based on current assumptions, but evidence to date suggests renewables have the greatest potential to exceed our expectations for cost reductions, while costs for nuclear have shown no discernible cost reduction over many decades, including in places like France where fleets of similarly designed reactors were constructed.

And with the potential for improvements in storage and flexibility technologies potentially shifting the balance further, the Commission concluded that building a highly renewable electricity system should be Plan A in the long term.

This requires a rethink of the government’s current policy on new nuclear. Rather than developing a large fleet, the Commission recommends a ‘one by one’ approach to new nuclear plants. This will allow the UK to pursue a highly renewable mix, which is most likely to be the preferred option, without closing off the nuclear alternative. It is vastly preferable to a ‘stop start’ approach, in which the nuclear programme is cancelled only to be restarted at a later date and will allow the UK to maintain, if not expand, a skills base and supply chain.

We are confident that the judgements we made in the National Infrastructure Assessment are the right ones based on what we know today, but we pride ourselves in being transparent in our analysis and inviting challenge and scrutiny.

Perhaps unsurprisingly, our recommendations for power were not short of challenge.

On our one by one recommendation for nuclear, some have argued this would increase investor uncertainty to the extent that it rules out the possibility of further plants.

We do not accept that not committing now to a large fleet of nuclear rules out the possibility, if the balance of evidence shifts in future, of delivering further nuclear plants. Our recommendation keeps the nuclear alternative approach open and maintains the supply chain while the inherent uncertainty around the lowest cost, lowest risk pathway to decarbonisation is resolved.

On our recommendation to pursue a highly renewable mix, we have been challenged on some of the assumptions in our analysis, in particular on the scale of interconnection and its potential to provide flexibility; and more generally on the ability of a highly renewable system to be resilient to changes in weather and climate.

Clearly there is uncertainty in building a whole system model out to 2050. We made sure all of our input assumptions were robustly tested with a roundtable of experts, including all our assumptions on flexibility, with interconnection taken from Ofgem’s pipeline.

We have, however, already undertaken some further work to try to further build understanding around some of these issues and challenges.

Firstly, we have conducted further sensitivity tests on the electricity systems model. Our analysis found that building backup generation to guarantee a highly renewable system could cope with a high demand and low wind scenario would still leave the cost of a highly renewable system roughly equivalent to the cost of a high nuclear system.

We have also found that even with massively reduced interconnection, our high level finding that costs are broadly flat across different generation scenarios holds, and importantly, that reduced interconnection adds cost in any scenario, demonstrating that pursuing more interconnection is a low regrets approach.

It’s clear that flexibility, provided through storage technologies; interconnection with other European countries; and flexible demand side response, will have a crucial role to play whatever the make-up of the future energy system. Our Assessment reiterated the findings of our Smart Power report from 2016, which found that more flexibility was low regrets in any scenario.

Although progress is being made towards completion of some interconnector projects, several others have stalled – there is a risk that the outcome of the EU exit negotiations will create barriers to future interconnector projects, or affect the UK’s access to power markets and current market coupling arrangements.

But we know that such analysis can only tell us so much, and that there is more to learn on what the challenges would be for a highly renewable system in coping with weather variation and climate change.

No country has yet built an electricity system with very high levels of variable renewables. It will be important to develop a better understanding of how such a system performs under adverse weather conditions, particularly given that climate change itself makes such conditions more likely.

This question forms the basis of the review we recently asked the Met Office to undertake, as world leaders in weather and climate analysis. Their report identifies a range of potential weather-related stress events that a highly renewable system could face; and demonstrates how the UK could make use of complementary solar and wind technologies, geographic weather variation and anticorrelated weather with other parts of Europe to help build resilience in the system.

It found for instance that the most commonly considered potential stress event, a low wind day in winter, is caused by the North Atlantic Oscillation, which creates opposing conditions in Southern Europe and the Mediterranean.

The report also offers insights into how weather prediction and forecasting tools can provide early warning of potential stress events; techniques that could be used to better quantify and model potential stresses; and how climate change and variability might impact on the resilience of the system. We will be releasing this shortly and we believe this will help to bring more scientific rigour into the debate, as well as expose the current gaps in our knowledge.

The Commission will continue to work alongside other interested parties to explore the benefits and challenges of a highly renewable electricity system. The size of the prize is potentially large, both for consumers and for the UK’s industrial strategy.

Our aim is for this work to help the energy community across government, industry and academia to engage productively in this debate. But it also helps bring home the importance of government acting now to address the recommendations we identified in the Assessment.

The National Infrastructure Strategy must set out the government’s response to our recommendation to make a highly renewable system Plan A, and give a clear direction of travel for how it will look to roll out all forms of proven renewable technology over the next decade.

However, this is only one part of the energy challenge. Alongside ambitious action on electric vehicles, major decisions are required by government over the next few years around whether the gas network should be maintained and converted for hydrogen, or phased out in favour of electrification of the network through heat pumps.

The challenge of rolling out a new solution should not be underestimated. But the electricity system represented just such a challenge ten years ago. There are actions that the UK can and should take now.

To reduce the uncertainty around the costs of these options, the Commission has recommended large scale trials for hydrogen with carbon capture and storage; and the creation of an up to date evidence base on costs and performance of heat pumps in the building stock. Improving the thermal energy efficiency of the UK’s buildings is also vital.

Infrastructure can inspire confidence and growth – but it needs a long term vision, lasting plans and stable funding from government.

And as political developments change by the day, or even by the hour, it’s that very long term vision we need more than ever.

Thank you and enjoy the rest of your afternoon.

 

Channel website: https://www.gov.uk/government/organisations/national-infrastructure-commission

Original article link: https://www.nic.org.uk/news/phil-graham-speech-to-clean-energy-infrastructure-summit/

Share this article

Latest News from
National Infrastructure Commission

CyberSecurity Summit, July 9th 2019, Central London. Click here for more information