This is entry number 217, published on 21 February 2011, of a blog on the Planning Act 2008 infrastructure planning and authorisation regime. Click here for a link to the whole blog.
Today's entry considers whether enough energy projects are coming forward to meet demand.
A previous blog entry looked at the reasons for the predicted shortage of electricity generation in the UK by 2017. The main drivers are the (non-carbon, ironically) emissions limits placed on fossil fuel power plants, and the country's ageing nuclear plants coming to the ends of their natural lives. Just to maintain the current demand for electricity, a further 25 gigawatts of capacity must be built by 2025, but since wind farms typically only provide 1/3 of their stated capacity and most of the new capacity is from wind energy, the government estimates that 43GW of new generating capacity is needed by 2020 and 60GW by 2025.
This is a tall order - will the the requisite new electricity generation will be provided even if the Planning Act regime works perfectly?
Theoretical project delivery
The main sources of new generation are offshore wind farms and nuclear power stations. The third round of offshore wind farm site allocations have the potential to deliver 32GW of electricity-generating capacity. The eight sites identified for new nuclear power stations, if two reactors were built at each, have the potential to deliver a further 25GW of capacity. According to paragraph 3.3.12 of the Overarching Energy National Policy Statement, a further 20GW of generation has been consented but not yet built or is under construction. That is a total of 77GW. There are therefore enough identified projects in the pipeline, although a high proportion of them will have to come into operation as 2025 approaches for the required generation to be provided. Environmentalists fear that any shortfall will be met by new gas plants, which are the fastest to bring into operation, committing the UK to more fossil fuel production.
What is less certain is whether this programme will be enough to meet the EU target of 15% of energy consumption coming from renewable sources by 2020. As this target is for all energy and not just electricty, the other main energy sources of gas (for heating) and oil (for transport) are unlikely to switch to renewable sources by 2025, electricity will have to meet the shortfall. In other words, around 30% of electricity generation will have to be from renewable sources by 2020. The main type of generation to meet this target is wind energy - gas (even CO2 captured) and nuclear are not renewable sources, although biomass and energy from waste projects do count as renewables. It seems that pretty much all of the Round 3 offshore sites will have to come into operation by 2020 to meet the 30% figure.
Actual project delivery
How are the projects doing in terms of coming forward before the Infrastructure Planning Commission (IPC)?
Of the 52 projects on the Infrastructure Planning Commission (IPC) website here, 36 relate to energy infrastructure. I have added up the capacity of each project and pessimistically taking the lower bound where a range is given, the total is around 23GW, a long way short of the 57GW that needs to be under development. Only four of the eight nuclear sites have appeared so far. All but one of the round 3 wind farm sites do appear, but several with less than their maximum expected capacities. Only two applications for energy projects have been accepted by the IPC in its first year of operation.
Nevertheless, the dates given for the projects suggest that they could come onstream at about the right rate to replace the infrastructure going offline towards 2025. Having said that, I confidently predict that virtually none of the applications will be made by the dates currently shown on the IPC website.
If past performance is a guide, back in October 2009 the IPC was expecting 48 applications by 1 April 2011, but it has only received three. Looking to the future, the next four projects where applications are expected are a gas-fired power station at Tilbury, the Hinkley Point C nuclear power station and two wind farms in Wales, expected on 28 February, 'Winter 2010/11', 31 March and 1 April respectively. Given that the Tilbury power station has not started its pre-application consultation yet, that date cannot be met. I am told that the application for Hinkley Point will not now be made until this summer - indeed, the promoters have just launched an additional round of consultation that closes on 28 March, due to changes to the project. Of the two wind farms, one has not started its pre-application consultation yet. There is a chance that the other may meet its application date, but that is only a 25% success rate.
Projects are clearly slipping - why? As I have said before, projects always slip: this is not a unique feature of the new Planning Act regime. Sir Mike Pitt, Chair of the IPC, has said that project time advances at about half the speed of real time, and that may well have a ring of truth for projects generally. What is a feature of the new regime is that the original and then revised application dates are published for the world to see. Projects slip from their expected application dates because of the unexpected happening. New environmental assessments are required. Changes are made to the project that need to be reconsulted upon. Personnel changes. Funding comes forward slower than expected or market conditions change. Negotiations with third parties take longer than expected. This is a general feature of project development and the Planning Act regime is no different.
The combination of almost all identified projects needing to be delivered together with the realities of project programming and delivery are beginning to conspire to threaten the replacement electricity, and all the more, the renewable energy programme. This should be of concern to us all.
The final instalment of this thread of analysis will consider whether the Planning Act regime itself - and the proposed changes to it - are contributing to project slippage, and, whether or not that is the case, to what extent changes to the regime could help.