Why the CBI wants less wind

The CBI, the UK’s main business group, has called for a number of changes to energy policy. Efficiency, grid investment, faster planning processes and support for low-carbon investment are all on the list. But it’s their calls for reduction in expected wind power growth that have gained the most attention. The report, which uses modelling from McKinsey, draws a ‘business as usual’ scenario, in which wind accounts for 24 per cent of the generation mix, and a ‘balanced’ scenario where it makes up 20 per cent. (Click the image below to view details of the scenarios). 

The primary argument is that the government’s slow and inadequate support for CCS and nuclear means the UK will spend more than is necessary to reach its targets, and end up with expensive energy supplies and difficulty meeting its later goals for 2030 and 2050.

How does wind figure in this?

It’s not just wind per se that comes in for criticism, but wind fits in with the rest of the energy complex and how government planning will aid or hinder different sources.

The CBI warns:

The picture that emerges is unsettling. Faced with concerns over how
quickly new nuclear will progress through the planning and licensing
system, and the possibility that even coal plants that are compliant with
existing EU environmental regulation may be forced to close early by the
proposed Industrial Emissions Directive, generators have little choice but
to prepare to build a second wave of gas-fired plants (ie in addition to the
8GW currently under construction) to keep the lights on before new
nuclear and some CCS coal plants start to come onto the system in the
2020s. Wind will be built in quantity given the subsidies available, but
probably not to the extent envisaged by the government to meet the
EU-set Renewables Target.

This, they say, will reduce carbon emissions as coal plants close and ‘keep the lights on’. But the CBI argues it will be unsustainable beyond the 2020s. Their primary concern is that a great deal of new gas capacity will be built: 8GW are already under way and their modelling suggests another 17GW will be built as existing plants age and coal plants look more likely to be shut down early. The CBI says this will make the UK vulnerable to expensive and insecure international gas markets, and will pose a problem for storage. (Part of the expense is also because the UK has more power plants up for retirement than its neighbours.) The CBI also says this gas-fired boom would make 2020 targets reachable, but not 2030 levels, as carbon reduction gains will flatten out in the 2020s once the gas power stations are up and running.

Wind, the CBI says, will contribute to the increase in gas-fired plants as they will be needed to supplement wind’s intermittency. The CBI also argues this will also contribute to price volatility, while offshore wind, they say, requires too much expensive infrastructure, including the cost of connecting to the grid.

And where does the CBI stand on this? It has after all been largely supportive of the UK government’s ambitious emissions reduction targets (although in this paper they argue that renewables should not play such a big part of that reduction as the government had planned). The Green Alliance even welcomed the CBI’s calls in 2007 for the UK government to enact measures to reduce carbon emissions without waiting for a global agreement – or at least, they said it represented a welcome change of heart from the organisation from its stance under its previous director-general, Digby Jones. But Greenpeace today said the CBI’s new report does a disservice to UK renewable companies and claimed it represented the interests of members such as EDF. The group also questioned the CBI’s views on the cost of nuclear energy, pointing to the well-publicised cost overruns of the plant being built in Finland.

Either way, the CBI’s criticisms raise some uncomfortable questions for the UK government on matters such as planning, policy clarity and speed. The hazy progress towards a lower-carbon future, indecision over nuclear, and a tendency to default to natural gas to reduce emissions all sounds a little reminiscent of the US, which it shouldn’t, because the US has the disadvantage of not having had a coherent policy on emissions reductions for the past eight years.

Related links:

CBI urges shift from wind to nuclear power (FT, 12/07/09)
Ministers urged to act fast on green investment (FT, 07/04/09)

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