Europe's green energy


It is a dazzling vision of a clean energy future. An entire continent powered by solar panels, wind and wave turbines, geothermal and hydroelectric power stations — and all stitched together by a European “supergrid” stretching from the sunbaked deserts of the south to the windswept North Sea, from the volcanoes of Iceland to the
Gregor Czisch, a German academic at the University of Kassel who developed the concept, claims it would cost €45 billion (£40.5 billion) to build. The numbers add up, he insists, and all of Europe's electricity supplies could eventually be harvested from the wind, water and the sun.

Such dreams of renewable energy certainly catch the imagination but for Britain, which generates just 1 per cent of its electricity from renewables — the least in the European Union after Malta and Luxembourg — the gap between ambition and reality seems particularly stark.

The truth is that, despite the Government's talk of a green energy revolution, Britain's renewable energy industry is in crisis.

About 40 per cent of the UK's power stations were built before 1975 and urgently need to be replaced. But the combined impact of the credit crunch, falling oil and coal prices and the weaker pound now threaten to hold up wind projects just as the UK has raised its commitment to green electricity.



“The economics a year ago were already tight but the cost of capital and the foreign exchange movement have made it much harder,” says Sarwjit Sambhi, director of power generation at Centrica, one of Britain's Big Six power companies, which is trying to build a 250 megawatt (MW) wind farm off Lincolnshire, big enough to supply 170,000 homes. “We are not going to make investments below our return on capital so my goal will be to spend as little as possible until the economics improve,” he said.

In last week's Budget, the Government announced incentives designed to bolster investment in huge offshore windfarms and ensure that Britain hits its target of raising the share of electricity produced from renewable sources to 35 to 40 per cent by 2020.

So will they work? Not according to Jim Skea, director of the UK Energy Research Centre. He has just undertaken a big research project into how the UK can slash its carbon emissions by 80 per cent by 2050. “In none of the scenarios we looked at were renewables picked up nearly fast enough to meet the 2020 targets,” said Professor Skea. “It will be a big struggle. We are not spending nearly enough.”

Wind power, easily the most economically attractive form of renewable energy in the UK, remains hugely expensive when compared with gas and coal.

A recently approved gas-fired station in Pembroke will cost £1 billion and will be the largest in the UK, producing 2,000MW. It would cost six times as much to build a windfarm of similar capacity.

While a strengthened subsidy regime and up to £4 billion of extra funding from the European Investment Bank (EIB) announced in the Budget are welcome, Professor Skea believes that far more radical action will be required, including huge increases in research spending to accelerate the development of better technology, and a dramatic rise in the price of traded carbon emissions, up from £13 presently to £200 a tonne.

But that is not all. Sceptics scoff that wind, wave and solar power are inherently unreliable. A solution could lie in back-up gas and nuclear plants and a far smarter grid that includes technology to balance the load at moments of reduced supply.

This could range from sophisticated centralised networks right into homes, where chips embedded in non-essential appliances could force them to switch off for brief periods as and when the grid demanded it.

Such technology exists but it is a world away from today's grid, some of which dates back to the 1930s, and it will require vast investments and sweeping regulatory change to accomplish.

Until Europe's governments grapple with the fine detail of these issues, the Continent's dreams of a supergrid and a future free of fossil fuels are likely to remain in the realms of science fiction.

Ultimately, according to Professor Skea, an international deal at the UN climate talks in Copenhagen in December will be critical to achieving the political momentum required to achieve all of this.

Nevertheless, the BWEA's Adam Bruce remains upbeat: “It's certainly a challenge but these problems are not insurmountable. The more renewable energy you create the less it costs. People focus on the upfront capital cost but not the longer-term benefits.”