Marine Energy: an industrial growth opportunity

The Government will shortly publish its review of ROCs banding for renewables and the Energy & Climate Change Select Committee will be turning their attention to marine energy when Parliament returns.  Dr Andrew Tyler, who was recently appointed Chief Executive of tidal technology company, Marine Current Turbines, gives his perspective on the main steps that need to be taken to industrialise marine energy in this country.

As a country with one of the largest marine energy resources in the world, the UK has the very real potential to be a global leader in this emerging part of the renewables sector. The DECC roadmap believes that the UK can deliver 300MW by 2020. Currently the UK’s position at the front is a fragile one and the next two to three years will be crucial to secure this advantage.  Furthermore, there is a huge potential for export, which carries with it enormous benefits for UK manufacturing.

The future of the industry will need funding of a different magnitude to which it has received thus far if it is to secure the transition from developmental to commercial scale deployment. This will require public funding and the right policy framework to simultaneously attract the very necessary private investment. This must happen within the next three years if the industry is to succeed.

MCT developed and installed the world’s first commercial-scale tidal current turbine, SeaGen, in Northern Ireland’s Strangford Lough thanks to government grant support in tandem with private investment. Since 2008, the 1.2MW SeaGen has been harnessing the predictable and regular tides to generate electricity into the local grid. As a demonstration plant, MCT has been able to learn from SeaGen’s operation, make improvements and develop the technology to the point where it is now ready to be deployed on a much wider and commercial scale.

Whilst MCT has already completed the development stage and has a tidal product ready for commercial deployment, we are the only company to have reached this next stage. Presently, there are a number of technologies that are entering their development phase and if marine projects are to be deployed on a commercial basis, investors need a clear signal that they will see a return on their investments and 5 ROCs would deliver this.

All new technologies are expensive and require public support initially until they are able to commercialise when economies of scale will mean that they can become profitable without subsidies.  All conventional forms of energy generation relied on government support during their developmental stages; indeed the nuclear industry still requires this support.  For marine, there is solid evidence to confirm that costs will become competitive once a few large scale projects have been successfully rolled out.

MCT has plans to roll out two commercial scale tidal arrays in UK waters over the coming years, provided we see the right level of investment.  We believe that the initial ROC costs will remain relatively very small in the context of the UK renewable energy market but that the ROC benefits will ultimately be very high if they can kick off a major new industry – one that enables marine to deliver a meaningful and low-carbon part of the UK’s energy mix, generate new jobs and export opportunities for British firms.

Marine Current Turbines (www.marineturbines.com) is based in Bristol. Its main shareholders include Carbon Trust Investments, EDF Energy, ESB International and Siemens Energy.  MCT is developing, in partnership with RWE npower renewables, the 10MW Skerries tidal project off Anglesey, an 8MW tidal farm in Kyle Rhea (Scotland’s Isle of Skye) and is working with Minas Basin Pulp & Power to deploy a single SeaGen tidal system in Canada’s Bay of Fundy.   In addition, MCT has an approval for a lease from The Crown Estate to deploy a 100MW tidal farm off the Orkney Islands.

For further information, please contact Andrew Tyler via andrew.tyler@marineturbines.com or Taylor Keogh.

Smart Metering: it’s not too late to take a different approach

Whilst the benefits of smart metering are obvious, there are still widespread concerns about the cost and timescale for the roll-out across the UK.  In this article, Hans Kristiansen, Chief Executive of smart meter firm Orsis (UK) Ltd (www.orsis.co.uk) is urging the UK Government to adopt a far simpler and less costly approach.

The impending smart meter rollout programme is not in any way simple. In fact it's the opposite. It looks like being highly complex. And complex things tend to follow one rule of management, "if things can go wrong, they usually will".

The current specification is far too complicated and over-specified. And the speed at which technology advances means that much of the technology involved will have to be updated regularly (or put another way, will quickly become obsolete).

Over-specified products cost more and break down more often. Every household in the UK already has an abundance of domestic appliances, from TVs to washing machines, that are overly complex and therefore need expensive maintenance and repairs. Hand on heart, have you ever used all 30 programs on your washing machine?

The UK's track record in implementing large-scale IT projects will not fill householders with confidence either - the NHS National Programme for IT is a £12.7 billion project that is already four years behind schedule. But the smart meter project is too important to our long-term energy security to let it fail.

The operation of the home area network is a largely unknown area too. And contradictory statements have already been made about what it will and what it won't be able to deliver - including the ability to manage individual appliances remotely.

This truly is a leap into the dark that introduces an unnecessarily high level of risk. Surely an existing, tried and trusted solution would be more appropriate?

Smart metering alone will not improve the change of supplier process. There are currently 38 steps in the process, and the provision of an actual read will not resolve all of these issues. In fact, the consumer transfer programme (CTP) completed by the Energy Retail Association in 2005 revealed that it was possible to have a much improved change of supplier process without an actual read.

The CTP also recognised that the single biggest cause of failure in the change of supplier process was data quality. Recommendations were made to improve this, but they have never been implemented. Simply changing the meter and providing an actual read will not resolve all of the problems. There are many stages in the process that must be examined before the change of supplier experience improves for the consumer.

Experience in other countries is already indicating that a rollout of smart metering is far from simple and that consumers will resist change unless they understand it.  In the Netherlands, 20% of consumers refused to have a smart meter which has led to the establishment of a “switched off” smart meter, where the functionality exists but is not used!  We are far from sure that all consumers in the UK understand what smart metering means to them, how to use it effectively, and we’re almost certain they don’t know what it’s going to cost them in addition to already rising fuel costs.

Orsis has additional concerns on the feasibility of rolling out this many meters in only 5 years.  The initial rollout was to take 10 years, but due to huge delays in decision making, this has been squeezed to half that.  There simply isn’t the workforce available to install this many meters in that short a period of time, and that shortage can mean one of two things – poor quality of service or rising costs.  In Sweden, some 70% of installations occurred in the final 18 months of the programme; if that happens here, then the deadline of 2019 looks even more “aspirational” rather than achievable.  And DECC have already suggested that this deadline be brought forward to the early part of 2019!

Much of the benefits of smart metering to the consumer are said to be in reduced energy consumption as a result of having an In Home Display device to inform them how much, and when, they use their energy.  The success of these devices in producing significant and lasting changes to a consumers’ energy usage is still unproven.  I am genuinely concerned that once the “novelty factor” of these devices wears off, or the batteries need replacing, consumers will consign them to a kitchen drawer never to be seen again.  The lasting reduction in their energy bills will simply not happen.

Orsis is the UK division of China’s Revenco Enterprises which has extensive experience of metering. It is shortly to roll out smart meters to more than 27 million households in Guangdong. That is equivalent to installing over half of the 53 million smart meters in the UK's programme. Despite the enormous strides that the Chinese have made in developing their country, the Chinese revere simplicity. Throughout their long history, they have understood that simple things cost less and usually work first time. They work for longer and when they go wrong, they can be quickly put right. Let's take a leaf out of their book and make smart meters simple.

For further information, please contact Hans at hansk@orsis.co.uk or Mike Harrison at Taylor Keogh.

Gas security – UK manufacturing urges action

The UK Government must set a timetable for new gas storage capacity to commit to construction and ensure the country can maintain its energy security during gas supply shocks and volatility associated with intermittent wind power generation.  This is the main conclusion from an independent survey of some of the UK’s largest users of gas, commissioned by a cross-section of interested parties involved in the UK gas industry, including EEF The Manufacturers’ Organisation, the Energy Intensive Users Group and the Chemical Industries Association.

The majority of the companies surveyed, representing 12.5% of UK manufacturing industry’s annual gas demand and including INEOS, Tata Steel, Outokumpu and GrowHow, also said that the UK Government should establish an enhanced storage Public Service Obligation, which requires utilities to hold in store a set proportion of their gas sales and is common throughout mainland Europe.

The survey also indicated that companies do not believe that OFGEM’s new gas balancing plan, designed to deliver more gas storage, will work.  On the contrary, it may result in intensive process manufacturing companies prioritising mainland Europe over the UK for future investment because companies require a high security of gas supplies. The Government’s current plans still envisage the possibility of future gas supply interruption, accompanied by uncertain levels of compensation. 

Steve Radley, Director of Policy at EEF The Manufacturers’ Organisation, said: “This survey highlights the importance industrial gas users place on the physical security of energy supplies and the role that storage plays in delivering it. Manufacturers see compensation as a last resort and not as a solution to the growing gas security challenge. So the survey is a challenge to both the government and the regulator to address the barriers which are holding back investment in this crucial area.”

Laura Cohen, Chief Executive of the British Ceramic Confederation and a member of the Energy Intensive Users Group said: “The ceramic industry, and indeed other sectors of the British economy, relies upon secure and affordable energy supplies.  Whilst our members are constantly seeking ways to improve the energy efficiency of their operations, interruptions to gas supplies are financially catastrophic to their business. 

“OFGEM’s current proposals to amend the gas market framework and indeed the Government’s own statements about more pipeline and LNG import capacity do not give our members sufficient assurances about their long-tem energy security.  More physical storage capacity needs to start being built in the UK market within the next two years and there needs to be a requirement for gas suppliers to have sufficient contingency reserves. This contributes to more stable prices and a more stable environment for UK manufacturing.”

Jeremy Nicholson, Director of the Energy Intensive Users Group said: “This survey highlights the importance industrial gas users place on the physical security of their energy supplies and shows how critical a factor storage would be in supporting availability of gas in a distress situation.  It is vital that the government and OFGEM take the opportunity to address the barriers which are holding back investment in this crucial area.  Inadequate regulatory oversight failed in the case of the financial sector and we are determined this is not allowed to happen with the country’s critical energy supplies.”

The UK Gas Security survey was undertaken by the research company ComRes Ltd, between June and August 2011, in collaboration with Taylor Keogh.  The survey report was also supported by the British Ceramic Confederation, the British Glass Manufacturers Confederation, the Food & Drink Federation and the Confederation of Paper Industries. 

For a copy of the survey, please contact Paul Taylor at Taylor Keogh.