Preamble

Stour Valley Underground believe that if the DECC fails to appropriately revise the NPS relating to Energy, this will result in both massive inappropriate investment in transmission infrastructure and massive environmental detriment. We argue that a far more radical revision to the NPS is required than is suggested by the thinking embodied in the Draft Governement Response to the NPS Consultation and indeed the views expressed by DECC/Ofgem Officers at the recent National Symposium on Future Energy Networks held in London and Chaired by Tim Yeo MP, Chair of the Energy Select Committee.

Executive Summary

The UK is at a pivotal point in the history of its energy industry. A new geography of generation will change the nature of the transmission grid. Renewable energy resources bring new potential revenue streams for the UK. The UK transmission system can become a revenue earner not just a cost to the UK energy user. A secure, efficient, economic, almost carbon free and low environmental detriment energy system is within our grasp. New thinking as to how to develop a transmission grid for the future is needed. A radical redevelopment of National Policy and Energy Industry Regulation is required to make this possible. This redevelopment must allow the timely and appropriate adoption of new transmission technologies. National Policy and Regulation must be a driver for appropriate grid development and must avoid inefficient, ad hoc grid connections. This we argue implies that National Policy and the Regulatory Regime (RIIO) must be developed in tandem to work together to deliver the required outcomes. In the short term, it must be ensured that current NPS do not hamper grid development using new transmission technologies that build toward the grid of the future as was recently described by the Prime Minister and as is identified in EU agreements to which the UK is a signatory.

Background.

Stour Valley Underground provided a submission to the original consultation on the National Policy Statements for Energy and in particular EN 1 & EN5 and feel that our assertions as presented in that document still hold true. We also urge you to take on board the new submissions to this consultation from the amenity groups of both the East and West of England together with the powerful submission from Suffolk County Council. The paper here presented is not intended to conflict with any of these documents but instead steps back from the direction of travel of the current consultation and presents a wider strategic argument for a more radical redevelopment of the NPS based on a clear view of where NPS and the regulatory regime must drive transmission grid development. This is because the landscape of energy production and transmission is very fast developing and commitments by the UK to the developing North Sea and European Supergrids mean that a complete reassessment of the objectives and strategies embodied in EN1 & EN5 are needed.

This paper therefore argues that a much more far reaching review of National Policy with respect to energy is required such that the economic potentials the new resources, technology and geography of generation bring the UK are fully realised.

We therefore present a rationale for this wider redevelopment of policy and whilst accepting that much of the underlying logic of the existing Government NPS draft still holds good, a great deal of restructuring is needed along with rewriting to build in the flexibility needed to embrace some of the real possibilities and strategies we outline here.

This paper is intentionally in brief outline form and we will be pleased to flesh out our ideas if that would be helpful.

The Case for the more extensive redevelopment of the National Policy Statements

(1)It is no longer the case that the UK transmission grid needs only to deliver the secure, economic and efficient transmission of electricity to a market which is the population of the UK. It now needs to deliver electricity to a market that is Europe and in all probability Eumena (Europe, Middle East and North Africa) and this transmission to a hugely wider market needs to be secure, economic and efficient for that wider purpose. This is essential for a number of reasons:

(1.1) The UK has readily and economically available, wind energy resources equivalent to more than 3 times our National need which brings huge potential for a major boost to the UK economy through energy export of a magnitude calculated to be greater than North Sea Oil and Gas has been. To capitalise on this potential, the transmission grid must be redeveloped to place a great emphasis on the fullest integration with the developing North Sea Grid. Logically, this could mean that the UK operated grid could eventually be delivering twice as much energy to mainland Europe as it does to the UK and that there is no reason why this energy should be transmitted through the UK with the attendant cost and environmental detriment that entails.

(1.2) A failure to develop National Policy relating to Energy appropriately will lead, as is currently happening, to ad hock connection of renewable generation to the on-land grid bringing enormous environmental detriment through a proliferation of overhead transmission lines across the landscape.Of great importance is the fact that this is economically inefficient in that far more transmission equipment is needed and that:-

(1.2.1) much of the energy isdelivered into the on-land grid, only to be taken back off-shore and back undersea to the European grid and market

(1.2.2) the energy from distant windfarms is converted from HVDC to HVAC, transmitted through an unnecessarily over-specified on-land grid (with all the additional cost - both fiscal and environmental that that entails) and then reconverted to HVDC for transmission undersea to the European energy grid/market. This also adds to transmission charges and therefore adds to the price of the energy exported making us either less competitive or reduces our margins.

(1.2.3) the conversion from HVDC to HVAC and vice versa incurs losses in terms of both electrical energy ( which means revenue) and heat to the atmosphere, adding directly and unnecessarily to global warming. HVDC/AC converter stations are hugely costly and any excess capacity needed due to poor strategic development of the grid will bring a proportional amount of unnecessary cost. This means that on two levels, a failure to redevelop the grid to take account of the new circumstances will bring major negative impact on our economy.

(2)Other models of grid redevelopment are possible that:-

(2.1) will fully embrace the new energy export potential that renewable generation brings to the UK

(2.2) results in a more secure and economic energy supply for the UK

(2.3) allows the UK to achieve and surpass its 2020 commitments

(2.4) results in a grid that earns the UK income rather than simply being part of the cost of our energy supply

(2.5) results in a boost to employment in the energy industry

(3)Alternative models for the grid of the future include:-

(3.1) an undersea grid down the eastern seaboard of the UK linking all of the new coastal and offshore generation with nodes linking to the European grid and also to the UK with undersea and under estuary links to distribution hubs serving the major population centres. Cross country transmission can then be accomplished with the now available and more efficient and secure tunnel installed Gas Insulated Lines (GIL) with a future upgrade path being likely with more efficient/higher capacity superconducting cable technology if and when that becomes available.

(3.2) an undersea ring main for the UK, essentially the eastern undersea grid extended around the coast to link the renewable energy from Ireland, the western coastal UK renewable/low carbon generation including the Scottish renewable generator output, to carry this to market and again provide transmission via the estuaries to include western and southern UK population centre distribution hubs. This model reduces further the required capacity of the on-land transmission system which brings an even greater reduction in environmental detriment caused by the energy industry.

(4)Objectives such as these do not imply or make necessary the wholesale abandonment of the UK on-land grid. They do however bring the real possibility of a competitive marketplace for electricity transmission.

(4.1) The current monopoly supplier of transmission capacity or NETSO-E, National Grid, and the industry that serves it has a vested interest in maintaining the status quo.

(4.2) This results in thinking about the future grid that iscurrent gridcentric because that is how the issue has traditionally been thought about and because that is in their best fiscal interest. The overhead transmission equipment manufacturers quite reasonably want to maintain their market as does the NETSO-E its monopoly.

(5)Alternative models of development are available: there are other ways of thinking about grid development.

(5.1) rather than developing the existing grid out to the coastal areas, a process seen to be made necessary by the new coastal geography of generation and making numerous, ad hoc connections to it from that generation, the problem can be though about from the other end.

(5.2) By considering both the needs for efficient and cost effective UK transmission/ supply needs alongside the energy export requirement, an offshore bulk transmission system becomes the natural choice, linked to the UK shore only where it needs to supply the distribution system.

(5.3) In this model of development, a more blank sheet of paper approach would set out to idealise the offshore grid and delivery to UK and European energy markets and the existing on-land grid would be used where appropriate. Clearly this on-land grid would not need the capacity that is currently envisaged and this could lead to a reduction of the enormous environmental detriment caused by same. Importantly, this implies that investment in the current overhead line based transmission system does not need to be so great as is envisaged in the ENSG "Vision for 2020" document.

(6)Taken together, the above suggests a need for a more radical approach to the redevelopment of the National Policy Statements than is suggested by the current process and Government Draft NPS. Transmission technologies must be considered not just on cost but on the way they integrate into the wider objectives of the future transmission grid and the new economics of energy. For our Nation to meet its 2020 objectives, achieve energy security and importantly, reap the benefits to the economy that the move to renewable/low carbon generation brings, National Policy for Energy must broaden its objectives and the outcomes it seeks to achieve.

(6.1) To achieve the outcomes implicit in this paper, National Policy must drive the appropriate development of the grid and this must include driving the co-ordinated development of the transmission system that links the coastal and renewable generators - together, to market and to shore. Only if this happens can the result be an economic, secure, efficient and environmentally responsible energy system.

(7)National Policy must see the minimisation of environmental detriment as a key outcome to be sought.

(7.1) Environmental detriment can be quantified and costed and must be integrated into cost benefit calculations for new energy infrastructure.

(8)Affordability must also be calculated and included in any assessment of "cost" or determination of the economic viability of a transmission project.

(9)Whole life costing and not just the up-front cost of transmission technology must be a key consideration in making transmission investment decisions and this must therefore be enshrined in National Policy.

(10)National Policy Now: The interim period - perhaps prior to the new NPS taking effect. Making planning decisions that build toward the new energy transmission future:-

(10.1) In light of the above, we argue that all current grid reinforcement projects should be considered against the issues and objectives laid out here. Reinforcement projects should be examined to establish whether they are necessary given that the logical way forward is to build an undersea grid. We argue therefore that given that the short term market for the output of the Anglia 1 windfarm is London, that the connection of said windfarm and Sizewell C should be undersea to the Thames Estuary and that all reinforcement of the East Anglian on-land grid should be held back until as and when it is shown to be necessary given the reduction of capacity requirement brought about by the undersea grid. The proposed undersea connection would naturally form part of the greater North Sea Grid and its cost should be seen in light of that.

(10.2) Similarly, the connection from the proposed Hinkley Point new nuclear generator and the offshore windwarms in the same vicinity should also be achieved by undersea connection as part of the development of the western undersea grid and the cost of this seen in the context of that wider long term development. This again would reduce the need for new on land transmission capacity and negate the need for the proposed environmental detriment to the Mendips and Somerset Levels

(10.3) Again, the development of the new nuclear generator on Anglesey should be linked into a western undersea grid and the environmental blighting of the Snowdonia National Park avoided. This again argues for a western side to the undersea grid which can also carry renewable energy from Ireland to the UK and European markets and a southern section to the undersea grid could carry the power to the south and south east distribution hubs and on to Europe.

(10.4) We here argue not that NPS should advocate these strategies,but simply that the NPS must make them possible if deemed the right way forward.

Conclusions.

A revolution in energy generation, transmission and system management technology together with changes in user behaviour (through the advent of the coming Smart Grid) is about to spread across our Nation. A failure to appropriately redevelop the National Policy Statements and Regulatory Regime could have catastrophic consequences in terms of hampering the economic development of the UK, failure to capitalise on the economic potential renewable energy brings, wholesale inappropriate investment in infrastructure and vast environmental detriment. All of this can be avoided it the opportunity is embraced to invest for the future and fully capitalise on the opportunity that lies before our Nation through an appropriately visionary and radical redevelopment of the National Policy Statements. Finally, the Ofgem regulatory regime, RIIO must be fully redeveloped in light of the new NPS to ensure total co-ordination of NPS and RIIO such that the appropriate grid developments take place. The perceived need for the independence of Ofgem is no excuse for any inadequacy in the NPS/RIIO regime due to to ill co-ordination or poor integration of the two. The legacy of a failure to embrace all of this now will be felt for generations to come.