RCEP

STUDY ON ENERGY AND THE ENVIRONMENT

Paper prepared as background to the Study

The views expressed in the paper are those of the authors and do not necessarily represent the thinking of the Royal Commission. Any queries about the paper should be directed to the author indicated * above.

Whilst every reasonable effort has been made to ensure accurate transposition of the written reports onto the website, the Royal Commission cannot be held responsible for any accidental errors which might have been introduced during the transcription.

This paper examines the role of renewable energy sources, and the scope for their deployment within the UK energy system over the period between now and the middle of the next century. For the most part, quantitative assessments of the potential for renewable energy are restricted to the short term (to 2010) and the medium term (to 2025). However, the long-term importance of renewable energy (to 2050 and beyond) is one of the principal conclusions of this study.

Section 1 of the report introduces the national and international context in which renewable energy is currently developing, pointing out key driving forces, and the impact which these are beginning to have on technological development.

Section 2 outlines the individual renewable energy technologies, identifying their present as well as their potential future contributions to energy supply in Europe and the UK. This section also provides anecdotal details of successful - and not so successful - development of renewable energy, at home and abroad. It draws from these experiences a number of important lessons for the future development of renewables in the UK.

Section 3 provides a more detailed discussion of the institutional and policy context in which renewable energy is developing, including in particular: the experiences gained through the UK's innovative Non-Fossil Fuel Obligation; the importance of international negotiations to reduce greenhouse gas emissions; the relevance of the EU's recent White Paper on renewable energy; and the burgeoning commercial interest in renewables by key multi-national companies.

Section 4 draws out some of the critical institutional and policy issues from previous sections and discusses them in more detail. Considerable attention is given to the question of appropriate pricing structures for renewable energy, taking into account the hidden costs of conventional fuels, the social impacts of higher fuel prices, the long-term economic and social benefits of renewable energy, the increasing liberalisation of the energy market, and the apparent willingness of consumers to pay premium prices for "green" energy. This analysis is set against an in-depth discussion of the vexed question of public acceptability, in particular in the light of difficulties in siting renewable energy plants in the UK.

Section 5 summarises the main conclusions from the study. It frames a number of critical questions about the development of a comprehensive policy framework for renewable energy. In particular, it discusses the future of an appropriate access mechanism for renewable energy in the wake of the Non-Fossil Fuel Obligation.

The term "renewable energy" refers to energy that flows naturally through the environment on a continual (though time-varying) basis. The origin of most of these energy flows is the solar radiation incident on the earth's surface. Notable exceptions are tidal power which results from the gravitational force between the moon and the earth, and geothermal energy which flows from the heat which is continually discharged from the core of the earth. Direct solar radiation is itself converted naturally into a number of other energy flows: wind energy arises from thermal gradients across the earth's surface; wave energy results from the interaction between the winds and the oceans; hydroenergy comes from the potential energy stored in the hydrological cycle; and bio-energy (or biomass energy) refers to the chemical energy stored in living organisms (usually plants) via the process of photosynthesis.

Fossil fuels like coal, petroleum and natural gas are generally believed to have been formed from decayed biomass. The energy which is stored chemically within such fuels is therefore also solar in origin. The critical difference between renewable and fossil energies is analogous to the difference between a current account and a deposit account. The renewable "current" account is constantly replenished by incoming solar (and gravitational) energy. However, the "deposit account" of fossil fuels was accumulated over many thousands of years of biological activity and is replenished, if at all, only very slowly. An energy system which relies mainly on fossil fuel resources has been likened to an economy which survives by depleting its capital reserves. From this perspective, the development of renewable energy resources - generating the ability to live within the constraints of the solar budget - is the path of long-term economic prudence.

Resource scarcity is, however, only one of the reasons for considering renewable energy. Increasingly, implementation of renewable energy is advocated on environmental grounds. The environmental problems associated with fossil fuel consumption are manifold and well-known. They arise in part from the mining, extracting and processing of mineral fuels, and in part from the inherently dissipative nature of energy conversion processes. Combustion processes release energy (in the form of heat) from the chemical bonds in the fuel; but they also release a wide range of material by-products: unburned hydrocarbons, particulate matter, sulphur and nitrogen oxides, carbon dioxide, and trace metals, for example. Some of these material by-products can be recaptured before they enter the environment; others are more difficult to manage. Perhaps the most intransigent of the environmental problems associated with fossil fuels is the release of the "greenhouse gas" carbon dioxide which is a major contributor to the problem of climate change.¹

Renewable energy resources rely mainly on flows of energy which are carried in physical rather than chemical form. Generally therefore, energy conversion can take place without breaking chemical bonds and dissipating materials into the environment. The exception to this rule is bio-energy, where the useful energy is stored in the form of chemical bonds, and released as heat through combustion. As with all combustion processes, biomass combustion involves the dissipation of material by-products. For example, carbon dioxide is released into the atmosphere when biomass is burned. Provided that the biomass is sustainably harvested however, the rate of release of carbon into the atmosphere is less than or equal to the amount of carbon fixed in biomass. In other words - to use the same analogy used above - bio-energy recycles carbon within the constraints of the carbon current account, whereas fossil fuels release carbon which has been held in deposit over many millennia.

For these reasons, renewables are generally seen as inherently less polluting forms of energy supply than fossil fuels. In reality, no conversion process is entirely free of environmental impacts, and it is particularly important that the environmental and social implications of renewable energy technologies should not be glossed over in the search for sustainable energy systems. Nevertheless, it is generally true that renewable energy offers significant environmental advantages when compared to conventional supply systems, in particular in relation to the emission of greenhouse gases, and other conventional atmospheric pollutants.

It is largely these environmental advantages which have stimulated an increasing interest in renewable energy over the past decade. In 1987, the World Commission on Environment and Development argued that renewable energy "should provide the foundation of the global energy structure during the 21st Century".² In 1992, the United Nations Conference on Environment and Development called on participating nations to "increase the contribution of environmentally sound and cost-effective energy systems, particularly renewable ones".³ The World Energy Council published two major studies in which they considered the feasibility of an accelerated penetration of renewables to supply up to 50% of energy needs by the middle of the 21st Century.⁴ Several European nations including Denmark, Germany, Ireland, Italy, the Netherlands, Portugal, Spain and Sweden have adopted action plans for the energy sector which include specific implementation targets for renewable energy.

If anything, this interest has escalated during the last twelve months, spurred on perhaps by the negotiations which culminated in the signing of the climate change protocol at Kyoto last December. In November 1997, the European Commission published its White Paper Energy for the Future⁵ calling for a doubling of the contribution to primary energy supply from renewables from 6% to 12% by the year 2010 and setting out an extensive action plan to achieve this aim. A part of that action plan is a scheme to install a million solar photovoltaic roofs in the European Union (EU) by 2010. The Clinton administration has recently established a similar scheme in the US; and in December 1997, the Indian government announced an ambitious programme to install a million and a half solar roofs by 2002.

The substantial technology market which is implied by this scale of expansion has prompted a flurry of activity from manufacturers. During 1997, two international oil companies announced major new investment programmes in the development of solar energy. After withdrawing from the Global Climate Coalition - a pro-fossil fuel lobby which campaigns actively against carbon emission reductions - BP is to increase its already extensive solar investment programme.⁶ Shell has established a new core business (Shell International Renewables) which is to invest more than half a billion US dollars in renewables over the next five years.⁷ The German government has been quick to support expansion of its domestic solar industries, and in November declared its aim of world leadership in solar photovoltaics production by early in the next century.⁸

The two major political driving forces for renewables in the EU have been their environmental advantages and the question of energy imports. The EU has taken a proactive international position on greenhouse gas emission reductions. At the same time its dependency on energy imports is currently 50% and is expected to reach 70% by 2020 if no action is taken. Renewables are therefore seen to offer indigenous sources of low-carbon energy where these are at a premium. But there are other factors prompting the European Commission to argue for an increased commitment to renewable energy. Many of the leading renewable energy technology manufacturers are European. Thus, to support renewables is indirectly to support European companies, with potential advantages in terms of increased employment and the promotion of an expanding export market in energy technologies.

The prospect of a substantial technological shift in the energy market has quite profound economic, social and geo-political ramifications. The promised expansion of the market in solar photovoltaics has already been likened to the growth in the automobile industry in the early part of this century or the computer industry in more recent times.⁹ Those companies which are able to gain early competitive advantage are likely to reap large dividends in the transition. Those countries which take the lead in developing, implementing and exporting new energy technologies are likely to be dominant players in the emerging geo-political power structure. Conversely, those companies and countries which fail to take such opportunities may lose out substantially in the longer term.

The UK has been fortunate in possessing (and perspicacious in developing) extensive oil and gas reserves during a period when many other European countries have had to rely extensively on imported fuels. However, this good fortune has tended to obscure and at times impede the development of renewable energy in the UK. Following the oil shocks of the 1970s, Britain was at the cutting edge of research in new, renewable energy technologies, and was beginning to develop domestic manufacturing capabilities, for example in wind energy. A substantial cut in government research and development (R&D) spending in the mid-1980s had a profound effect on our position as world leaders in particular technologies. By the time the government introduced a support mechanism for renewables under the 1989 Electricity Act, it was too late to save some domestic companies: wind turbines installed under the Non-Fossil Fuel Obligation (NFFO) are almost exclusively manufactured by Danish companies.

The new UK government has a target to meet 10% of electricity demand from renewable energy sources by the year 2010.¹⁰ Given that renewables currently supply only 2% of electricity demand - and 0.7% of gross inland energy consumption - this target is clearly an ambitious one. Whether or not it is realistic depends on a wide variety of different factors. These factors include not only the availability and viability of the technologies themselves, but also the economics of energy markets, the political and institutional context, the environmental implications, and the social aspects of technology implementation such as public acceptability, equity, and employment.

The aim of this paper is to provide an overview of each of these various aspects of renewable energy. The structure of the paper is as follows. The following section (Section 2) summarises the principal features of individual renewable energy technologies, providing anecdotal examples where appropriate, and highlighting the critical technical, economic, environmental or social issues associated with each technology. Some indication of the potential contribution from each technology is also provided in this section. For the most part, quantitative assessments are restricted to short and medium-term contributions. However, some assessments are also made throughout the paper of the potential long-term contribution from renewables. Section 3 discusses the changing political and institutional context for renewable energy in greater detail, highlighting in particular the implications of the action plan set out in the EU White Paper, the UK's NFFO, and the changing perceptions of renewables in major multinational energy companies. Section 4 addresses several issues which are critical to the development and implementation of renewable energy: internalisation of external social and environmental costs, liberalisation of the energy market, the premium pricing of renewable energy, and questions of public perception and social acceptability. Finally, Section 5 summarises the prospects for renewable energy, and highlights the most important issues for future analysis and discussion.

The extent of the global renewable energy resource base is enormous. Solar radiation is absorbed on earth at an average rate of 120,000 TW,¹¹ around four orders of magnitude (10,000 times) higher than the current global energy demand. Almost a third of this energy is converted to latent heat - and subsequently potential energy - in the hydrological cycle. Smaller quantities are converted to kinetic energy in the form of the winds and waves. Around 30 TW is converted via photosynthesis into biomass energy. Table 1 shows the breakdown of the global renewable energy resource base by type of energy.

Table 1: Global renewable energy resources
	Resource base TW	Recoverable resource TW
Solar radiation	90,000	1,000
Wind	300-1200	10
Wave	1-10	0.5-1
Hydro	10-30	1.5-2
Tidal	3	0.1
Biomass¹²	30	10
Geothermal	30	?

The Table also shows the estimated "recoverable resource" for each type of energy, taking into account known geographical constraints and state-of-the-art conversion efficiencies.¹³ These recoverable resources are considerably smaller than the total resource base, and are likely to remain so for theoretical reasons. However, there are certainly some prospects for increases in the recoverable resource as conversion technologies improve. Furthermore, it is clear that the technical potential for renewable energy implied by Table 1 considerably exceeds the present rate of commercial energy consumption (~10 TW) - a view widely endorsed by experts in the field.

For a number of reasons, assessing the size of the recoverable resource does not satisfactorily answer the question of the viability of renewable energy as a source of commercial energy supply. In particular, of course, the cost of exploiting these resources must be taken into account. The energy flow itself may be free, but its often diffuse nature means that capture devices are likely to be spatially extensive and therefore capital-intensive. In addition, the requirement for capture devices is a requirement for material infrastructure. As with all material interventions, environmental burdens will occur both from intrusion in nature, and from the life cycle impacts of materials extraction, processing, use, and disposal. The idea that renewable energy is free and non-polluting is seductive, but inaccurate. As later sections of this paper will show however, renewable energy technologies do generally show considerable environmental advantages over conventional fuel cycles. Furthermore, there are a number of technologies already competitive with fossil fuels; and a number of other technologies likely to become competitive shortly.

It is to be noted from Table 1 that the indirect forms of solar energy (wind, wave, hydro and biomass) offer considerably lower recoverable resources than direct solar radiation. Nevertheless, these sources represent significant concentrations of the diffuse solar flow at given locations. In particular, hydro and biomass energies can be highly concentrated, making them relatively easy to convert to useful power. It is partly for this reason that biomass and hydro provide the most significant contributions to commercial energy use today. Approximately 20% of global energy consumption currently comes from renewable energy with hydro providing around 6% and biomass 14%.¹⁴ Contribution to global energy supplies from other renewables is negligible. In the EU, renewable energy sources accounted for 5.4% of gross inland energy consumption in 1995: 3.3% came from biomass and 1.9% from hydro.¹⁵ In the UK, hydro currently provides around 2% of electricity demand and 0.7% of total primary energy supply, with much smaller quantities coming from biomass, and very little from any other renewable technology.¹⁶

Another reason for the relatively high contribution from biomass and hydropower is that the conversion technologies for these energy sources are now mature and well established in the energy markets. In the past two or three decades however, a range of new, or improved, conversion devices drawing their power from widely different renewable energy flows have entered the arena. These new technologies are developing, in some cases, extremely fast. Rapid improvements in conversion efficiency are improving the technical and economic viability of the technologies, and some of them are already competitive with conventional sources of power.

One of the inherent features of renewable energy is the multiplicity and variety of technologies involved. There are some surface similarities between certain kinds of technology: for instance, a group of technologies comprising tidal energy, wave energy, and ocean thermal energy are sometimes grouped together (and we have followed that tradition in this paper) simply because they all involve the ocean. Beneath the convenience value of this grouping, however, lies a complexity that simply does not exist in conventional energy supplies. In fact, the three ocean technologies have little in common with each other at all, and even less in common with most of the other technologies. Sources of energy are different; types of energy are different; resource characteristics are different; conversion technologies are different; economic, institutional, social and environmental implications are different.

Partly as a result of this complexity, determining the significance and relevance of renewables to the UK is no easy task. We will argue later in this paper that it is misguided simply to demand of renewables commercial power at a competitive price, and short-sighted to assess the technologies purely against this yardstick. This argument requires however, a broad understanding of the range of issues which renewable technology raises. The following subsections aim to achieve that task. They will necessarily be too brief to provide a detailed discussion of individual technologies. But will hopefully be sufficient to establish our arguments later in the paper. More detailed information can be found in the references listed in endnote 17.¹⁷

One of the tasks that we have undertaken in the discussion that follows is to identify the current extent of implementation of different technologies and the prospects for implementation in the future. For the main part, we have tried to identify both the longer-term resource potential and the prospects for commercial implementation by the year 2010, as predicted by various expert sources. This has been done at three geographical scales. Firstly, we have collected together certain estimates of the global potential. These have mainly been drawn from two studies carried out by the World Energy Council.¹⁸ Next, we have addressed the European scale. For this task, we have made substantial use of The European Renewable Energy Study, parts one (TERES I) and two (TERES II).¹⁹ This study has also formed the basis for the recent European White Paper on Renewable Energy, which draws some justification for specific targets from the TERES "best practice" scenario.

At UK level we draw extensively, although not altogether uncritically, on a study on renewable energy commissioned by the DTI and carried out by ETSU in 1994.²⁰ The ETSU study identifies the potential for implementation of electricity-producing renewables in several different ways. Firstly, it estimates what is called an "accessible resource" at a cost of 10 p/kWh or less. This estimate represents "the resource which would be available for exploitation by a mature technology after only primary constraints are considered". Next it estimates a "maximum practicable resource" at a given price which takes account of "additional constraints" on development. Finally, it reports on the results of a modelling exercise, to estimate the actual implementation of renewables under different scenario assumptions. For reasons which we discuss later, assessment of widely different technologies under such criteria is not always satisfactory and is, in some cases, misleading. Nevertheless, we have included information from this study where we have felt it to be useful.

Finally, we should include a brief word about numerical units. There are a number of different conventions concerning which units to use for different kinds of energy supply, and also about how to account for primary electricity in the fuel mix. A great deal of confusion is engendered because different units and conventions are used in different places. In the following we have attempted to translate numbers taken from different sources into a consistent framework. Primary inputs and thermal outputs are both expressed in terms of million tonnes of oil equivalent (mtoe). Electricity outputs are always expressed in terawatt hours (TWh). Where it becomes an issue, we have followed the Eurostat convention of accounting for primary electricity inputs (from wind, wave, hydropower for example) in terms of the electricity delivered, rather than the fossil fuel equivalent input.

Bio-energy or biomass energy is the energy recovered from biomass - that is, from the chemical bonds formed via photosynthesis in living (or once-living) matter. Before the discovery and widespread exploitation of fossil fuels, biomass was the main source of fuel for heating, cooking, and industrial smelting. It remains the single most significant source of energy in the developing world today providing 35% of total primary energy supply in developing countries.²¹ Traditionally, the main source of biomass fuels has been wood and the main conversion technology has been simple combustion in open fires, kilns, or ovens. Today, a variety of other biomass fuels are recognised, and new conversion technologies have been, or are being developed.

Increasing attention is being paid to the last of these sources, that is to agricultural crops grown specifically for their energy content. A wide variety of different crops have been suggested for this purpose including short-rotation, fast-growing trees (such as willow or eucalyptus), herbaceous crops (like miscanthus, sorghum, sugar cane, or maize), and vegetable oil-bearing plants (such as soya, sunflower, rapeseed, and palm). One of the driving forces behind the renewed interest in energy crops - particularly in the EU - is the crisis which has been gathering pace in agriculture for a number of reasons, mainly historical over-production. Energy cropping is seen as a means of maintaining a healthy agricultural sector of the economy, whilst avoiding the massive over-production of foodstuffs.

Some types of biomass are used directly. Others are converted first to intermediate fuels which are later used to produce heat or electricity production. Intermediate fuels include charcoal (still used for smelting for example), bio-ethanol (from the distillation of sugar cane), sewage gas (from the digestion of sewage and animal residues), landfill gas (a by-product of landfill waste disposal), and other forms of biogas (for instance from the gasification of energy crops).

The principal biomass conversion technology remains direct combustion. Biomass resources of various types are burnt in stoves, furnaces and boilers either to provide energy directly to end-users, or else to raise steam for electricity generation in steam turbines. However, thermochemical and biochemical conversion processes are becoming increasingly important.

The basic thermochemical process is pyrolysis which uses heat to break down solid biomass into a gas mixture, an oil-like liquid and an almost pure carbon char. The proportion of each of these components depends on the conditions under which the pyrolysis takes place. Gasification is a pyrolytic technology which has been used since 1830 to produce biogas - a mixture of methane and carbon dioxide - from organic matter. It has been estimated that a million gasifier-powered vehicles helped to keep basic transport systems running when oil resources were in scarce supply during the second world war. Interest in the technology was rekindled during the oil crises of the 1970s, and extensive demonstration programmes were carried out in some developing countries. In Brazil, for example, small charcoal gasifiers have been extensively installed in rural areas for power generation, or to provide gas for internal combustion engines.²² In principle, gasification offers the possibility of using high-efficiency power conversion cycles.²³ However, the economics of gasification are currently marginal, particularly for power generation.

The main biochemical conversion process is fermentation, the breaking down of organic matter through the metabolic action of microbial organisms. Anaerobic fermentation is a simple, reliable, and versatile method of producing biogas from organic matter. There are reported to be five million anaerobic digesters in operation in rural China, and some 700,000 in India. The original purpose of the Chinese digesters was to reduce disease among rural communities by stabilising local sewage. However, their subsequent optimisation for biogas production has been a substantial benefit in terms of rural energy provision. Ethanol fermentation is another well-known and relatively simple biomass conversion process in which micro-organisms (usually yeasts) are used to convert carbohydrates into alcohol. Distilled ethanol can then be used, for example, as a transport fuel.

The Brazilian Proalcool programme is the most extensive ethanol fermentation programme in the world, currently producing 12 billion litres of ethanol a year, equivalent to around 60% of the country's automotive fuel requirements. Eight million petrol-driven cars now run on fuel containing 22% ethanol without modification, and with no mileage penalty. A further 4 million cars use hydrated ethanol in specially designed Otto-cycle engines. Between 1976 and 1985 the Proalcool programme was estimated to have cost Brazil around US$6.5 billion (in 1986 prices). At the same time however, it saved almost US$9 billion in avoided petrol costs. In spite of such economic gains, the programme has not been without its problems. Perhaps the most significant of these has been the disposal of the "stillage" produced during the distillation process. The earlier solution of dumping these wastes in rivers has turned out to be environmentally unacceptable. Increasingly, the wastes are now subject to further treatment. Anaerobic digestion is used to generate biogas (which can be used for energy) and liquid fertilisers (which can be recycled to the sugar cane fields). A number of other countries including the USA, Zimbabwe and Malawi have also developed bioethanol programmes.

The use of bioenergy has been widely advocated in Scandinavia. Five Nordic countries now produce a total of 15 mtoe of bioenergy annually and the exploitable potential is estimated at twice that figure. Of these countries, Sweden has almost half the exploitable potential, and biomass already accounts for 17% of primary energy consumption. Swedish policy-makers first became interested in promoting biomass-for-energy use following the 1979 oil embargo, a time when Sweden was dependent on oil for more than 70% of its energy needs. In the mid-1980s, concern to reduce oil consumption subsided, but in its place policy-makers began advocating the use of biomass-fired electricity as a way of alleviating the difficulties of a proposed phase-out of nuclear power. Over the past twenty years the Swedish government has invested more than 2 billion Swedish kronor (almost £200 million) in developing biomass.²⁴. Subsidies covering up to 25% of the capital cost of plant have resulted in a doubling of the contribution from biomass between 1970 and 1995. Much of this capacity has been installed in the pulp and paper sector, with a significant further contribution in the form of district heating plants.

Several other countries have developed successful biomass programmes. For example, Austria has increased the contribution of biomass to primary energy supply from 0% to 10% in little more than a decade. More than 10,000 woodchip-fired combined heat and power/district heating schemes have been installed. During the same sort of period of time, the USA has expanded biomass-fired electricity generation from 250 MW to 9,000 MW. In addition to the Proalcool project, Brazil produces around 7 Mt of charcoal a year to replace the use of coal in pig-iron and steel production. In the UK, a variety of different kinds of biomass projects - ranging from incineration of residues to gasification of energy crops - have been set up under the NFFO (see Section 3 below).

The costs of biomass energy vary widely, and are heavily dependent on a number of factors, including the type, availability and quality of the feedstock, and the conversion technology employed. Some biomass feedstocks - those which are drawn from industrial wastes and residues for example - may have a "negative cost" in certain situations because of the avoided costs of alternative disposal, and give rise to highly competitive generation options. In countries with extensive biomass contributions, such as Sweden, the market for woodfuels is relatively well developed. But costs - in the region of £2-3 per gigajoule (GJ) - are competitive with conventional fuels. Other biomass options - such as gasification of energy crops for electricity generation - are still not competitive with conventional sources of power at the present time, but could become competitive within a decade or so.

Assessing the scope for increased exploitation of bioenergy is complicated by a number of important factors. Some of these factors are positive, in the sense that they favour biomass development, and others are negative, or at least sound a cautionary note with regard to the wide-scale exploitation of biomass resources.

Biomass is the only renewable resource in which energy is stored in the form of chemical bonds in matter. Even this simple fact has contradictory connotations. It is a positive advantage in the sense that these chemical bonds operate as an energy storage medium. Bioenergy can therefore be delivered flexibly at the point of demand as and when required. The energy density of most biomass fuels is not so high as that of most fossil fuels. Nevertheless, solid biomass can generally be stored in sufficient quantity to ensure flexible operation of furnaces or boilers; liquid biofuels provide an appropriate mobile fuel in the transport sector; and biogas can be drawn off, compressed in storage tanks, and used as required to meet demand.

The negative side of the nature of biomass as a chemical fuel is that useful energy is released through the process of combustion, involving an inherent dissipation of the material constituents of the fuel. In fact, uncontrolled burning of woodfuels, although usually less polluting than combustion of fossil fuels, can nevertheless release a range of pollutants into the atmosphere including particulate matter, sulphur, carbon dioxide and toxic heavy metals. Some of these pollutants can be controlled or removed - at a cost - from the flue gases. Removing carbon dioxide from the flue gases is still problematic. Biomass can only be regarded as sustainable from the point of view of the carbon cycle, if the rate at which carbon is released into the atmosphere through combustion is no faster than the rate at which carbon is fixed from the atmosphere in new biomass by photosynthesis.

Historically at least, this constraint has not generally been met. Biomass exploitation has tended to exceed supply, leading to deforestation, and sometimes even the desertification of former woodlands. This is a common story in many developing countries today. Woodfuel shortages were a critical factor in the transition to coal which took place in the UK between the seventeenth and the nineteenth centuries. Coal was a well-known fuel before that time but, as Adam Smith remarked,²⁵ it is a far less pleasant fuel than wood or charcoal, and no one ever used it unless wood was in short supply or too expensive. It is salutary to note that the population of the UK in 1700 was still only 6 million people. In other words, traditional exploitation of woodfuels was already unsustainable before the industrial revolution for a much smaller population than exists in the UK today.

Today, a whole range of different sources of biomass and considerably more efficient conversion systems have emerged. Energy crop yields are considerably higher than could have been envisaged three centuries ago. On the other hand, such yields depend on modern agricultural techniques: the availability of chemical fertilisers and insecticides, and the use of farming machinery. These techniques are themselves energy intensive, and the use of agricultural chemicals has impacts on human health, water quality and soil quality.

The overall message is that the cultivation of energy crops does offer some potential for rejuvenating the European agricultural sector. But if extensive contributions to energy supply are to be sought from biomass, then a careful assessment of the environmental impacts of energy cropping is essential.

When it comes to considering waste and residue-related biomass, the issues involved are no less complex. Amongst the positive features of waste-to-energy options are the secondary advantages in terms of waste management. For example, methane leakage from landfill sites is a significant health and safety hazard, and methane itself is a more powerful greenhouse gas than carbon dioxide. Drawing off and burning landfill gas will therefore avert local hazards and reduce the burden of greenhouse gases in the atmosphere. Likewise the generation of useful energy from sewage wastes has positive environmental impacts at the local level.

Recovering energy from the incineration of municipal refuse or industrial wastes reduces the quantity of wastes which have to go to landfill, and is clearly preferable to incineration without energy recovery. On the other hand, there are concerns about the environmental impact of emissions from waste incineration. Waste streams typically contain a wide variety of materials including sulphur, nitrogen, chlorine, fluorine, chlorinated hydrocarbons, heavy metals, and derivatives of these materials. Particular concerns exist about the formation of dioxins during the incineration process. Although modern technologies are now believed capable at least of limiting this problem, dioxins (and related chemicals) are acutely carcinogenic, and understandably attract considerable public concern. Public opposition to waste-to-energy plants must therefore be regarded as a significant obstacle to implementation (Section 4.2).

Increasingly, environmental management guidelines now emphasise the importance of waste prevention, that is of finding ways to minimise the quantities of waste which require disposal in landfill sites and incinerators. The development of waste-to-energy potentially conflicts with the general intention of this strategy. Successful waste prevention would reduce the flow of municipal solid waste and reduce the feedstock for waste-to-energy plants. On the other hand, the widespread development of waste-to-energy systems would reduce the incentive to engage in waste prevention, which for a number of reasons must be regarded as the superior waste management option.

These considerations suggest that predicting a sustainable contribution to energy supplies from biomass is not straightforward. In general terms, it should be borne in mind that:

The US Environmental Protection Agency has estimated that as much as 16,000 mtoe per year could eventually be produced from biomass, given a sufficient commitment of land.²⁶ This is getting on for twice the current global primary energy consumption and 16 times higher than current global biomass consumption. In spite of this enormous potential, the World Energy Council's "ecologically driven" scenario predicts only a modest increase in biomass use by 2010. Significantly however, the contribution from traditional biomass declines, and the increase is provided by a contribution of some 400 mtoe from modern biomass sources.²⁷ It is generally assumed that in the short to medium term expansion in modern biomass will come from wastes and residues, although by the middle of the next century around two-thirds of biomass energy could come from energy crops.²⁸ The most versatile biomass technology is generally thought to be ethanol. Gasification is believed to have a huge potential, but is not yet fully competitive with commercial energy sources.

In Europe, biomass currently provides around 45 mtoe or 3% of gross inland energy consumption.²⁹ The technical potential is currently believed to be over 200 mtoe, and under the TERES "best practice" scenario, it has been estimated that an additional 90 mtoe could be implemented by 2010. About 50% of this would come from energy crops with the rest made up from wastes and residues. For the UK, the ETSU report estimated the accessible resource³⁰ for electricity supply at around 250 TWh, equivalent to over 50 mtoe of primary energy. The bulk of this would come from energy crops.

Geothermal energy refers to the energy which flows out from the centre to the surface of the earth. Although the inner core of the earth reaches temperatures as high as 4,000^oC, the average energy flux at the surface of the earth is only 0.06 W/m². This flow is trivial by comparison with the average total flow of renewable energy at the surface of the earth which is in the order of 500 W/m². However, at certain specific locations the power density can be high enough to provide useful sources of heat and electricity.

Geothermal energy is most useful when it occurs in hydrothermal form: springs of hot pressurised water or steam known as aquifers. Low temperature aquifers have been used for centuries for bathing and space heating. More recently, subterranean geothermal aquifers have been tapped with wells, and then either used directly to provide process and space heating, or else converted to electricity in conventional steam turbines, or (more recently) binary cycle plants.

The total installed hydrothermal capacity in 1975 was about 3,100 MW thermal. By 1995, electrical capacity alone had grown to around 9,000 MW around a third of which was in the United States with a further 12,000 MW of installed thermal capacity providing around 9 mtoe of thermal energy. A significant geothermal exploration programme initiated by the United Nations Development Programme led to the development of geothermal resources in a number of developing countries. In El Salvador, geothermal electricity generation accounts for 30% of the total installed capacity. In total however, geothermal energy still represents less than 0.15% of the global primary energy supply. There is only one geothermal aquifer in operation in the UK, at Southampton, where it provides heat to a district heating scheme operated by Southampton City Council.

The Electric Power Research Institute in the US estimated that the potential global geothermal resource could be as much as 1,000 mtoe. The trouble is that the vast proportion of this resource is not in the form of aquifers, but occurs in hot dry rocks (HDR), where the energy is much more difficult to extract. HDR energy extraction has been the focus of research efforts for more than two decades. At one stage, during the 1980s the UK was at the forefront of this research. An experimental research station at the Camborne School of Mines, at Rosemanowes in Cornwall, was one of two leading experimental sites in the world, the other being a multinational project funded by the IEA at Fenton Hill, New Mexico in the USA.

The aim of the Camborne School of Mines project was to establish a hydraulic connection with heat reservoirs located some 2 to 3 km below the ground. Three boreholes were drilled. Success with the first two boreholes was limited: the hydraulic connection was relatively poor with only about 60% of the water being recovered. The hydraulic connection was improved at the third borehole but a review of the project in 1990 concluded that fundamental technical difficulties made the commercial development of HDR unrealistic in the foreseeable future. The UK remains involved in the European HDR programme, which has two experimental sites one at Soultz, near Strasbourg in France, and the other at Bad Urach in Germany, but the downhole work at Rosemanowes has now stopped. The feasibility of HDR power production is now most likely to be demonstrated at the US site, where long-term flow tests have been under way for several years.

A third potential source of geothermal energy is the magma - or molten rock - lying in shallow chambers below the earth's crust. In the two decades since interest was first shown in magma energy, the scientific feasibility has been established, and some successful heat extraction experiments have taken place in the Hawaii Volcanoes National Park. However, the extent of the recoverable resource is not known, and considerable research will be necessary before magma can be considered a viable energy source.

The World Energy Council envisages a fourfold increase in hydrothermal extraction over 1990 levels by the year 2010, although this will still mean less than 0.5% of primary energy supply coming from geothermal sources. The EU's "best practice" scenario suggests a doubling of the electrical output from geothermal aquifers in the same period. Again, however, the contribution to primary energy supply in 2010 remains almost insignificant. In the UK, tests have failed to reveal any significant opportunities for further geothermal aquifers, and in the absence of a breakthrough in HDR technology, Southampton looks destined to remain the only domestic source of geothermal energy for several decades.

Hydropower - the power of falling water - has been used by human civilisation for centuries to carry out mechanical work - milling, grinding, or simply irrigating agricultural lands. During the period immediately prior to the Industrial Revolution there were between 10,000 and 20,000 working water mills in the UK, delivering a mechanical energy equivalent to around 2 mtoe. The first large-scale hydroelectric scheme in the UK was built in Scotland in 1896, and in the intervening century hydroelectric power has become established world-wide as the foremost source of renewable electricity generation. Hydropower now accounts for 18% of global electricity, 13% of EU electricity, and 2% of UK electricity generation.

Hydroelectric installations are characterised as either large scale or small scale. Schemes with an installed capacity of more than 10 MW are usually considered to be large scale, and those of 10 MW and less are small scale. In the UK however, the dividing line is taken to be at 5 MW. In some applications, water is stored in a reservoir and power is drawn from the water flowing through turbines integrated into a retaining wall or dam. In other applications (usually smaller scale), there is no storage and turbines draw their power from the flow of water in the "run-of-river". A useful variant is the pumped storage scheme in which electrical power is used to pump water from a low storage area to a high storage area when the demand for electricity is low. This water can be run back down to the low reservoir through a turbine to provide additional power at times of peak demand. Although extremely useful for the purposes of load management, pumped storage schemes are not generally counted as additional sources of electricity generation.

A large number of hydroelectric stations have been built in the UK ranging from less than 1 kW in size to more than 100 MW. Large-scale hydro in the UK is confined (for geophysical reasons) to mountainous regions in Scotland (1.22 GW) and Wales (134 MW). The majority of the small-scale hydro is also located in Scotland, with around 20 MW installed capacity in England and Wales. The technology itself is now fully mature over the whole range of installed sizes. Reliability of the turbines approaches 100%, and the only constraints on availability are those determined by the flow of water (in run-of-river schemes) or the degree of storage (in reservoir schemes).

Commercial competitiveness of hydroelectricity depends on a number of factors. Turbine costs tend to be closely constrained, but the balance of system costs - civil works and connection to the grid - can vary widely as a result of geographical differences in the nature of the terrain or the proximity to existing power lines. The economics of hydro are almost entirely dominated by the up-front cost of capital, and hence the unit cost of electricity is highly sensitive to the interest rate charged on capital and the period over which loans are repaid. Typically, power sector investments operate under capital repayment periods in the order of 15 to 20 years. The engineering lifetime of most power stations will not exceed thirty or thirty-five years. Hydroelectric schemes can sometimes remain operational, delivering extremely cheap electricity, for periods in excess of fifty years. Capturing the benefit of this longevity in conventional cost-benefit analysis at market discount rates is not straightforward.

Aside from their role in energy generation, some hydroelectric projects can operate as part of a multipurpose project delivering a number of benefits including:

However, diverting rivers, damming lakes, and flooding valleys to create large-scale hydroelectric projects has considerable negative social and environmental impacts, including:

For these reasons further development of large-scale hydro is likely to be constrained, at least in the developed world. In developing countries, the situation may be slightly different. Last year the Chinese succeeding in damming the Yangtse river in China in the process of constructing what will eventually be the largest hydroelectric power station ever to be built. Allegedly conceived by Sun Yat-sen, who toppled the Qyng dynasty in 1911, the project will take 12 years to complete, creating a lake 371 miles long, and a dam which rises 607 feet above the downstream riverbed. The finished power station - which will cost an estimated $29 billion - will deliver 18,200 MW of electrical power operating at its peak. Although such extensive projects will surely be the exception rather than the rule, the World Energy Council projects a doubling of large-scale hydropower in developing countries by 2010. Small-scale hydro is also predicted to increase almost threefold by 2010, with most of the expansion coming from North America, Western Europe and China.

In the 15 EU countries, annual electricity generation from hydro is currently in the order of 330 TWh, of which around 90% is large-scale hydro. The TERES study puts the technically exploitable hydro resource at just under twice this level of generation. However, only a limited proportion of the additional capacity is expected to come from large-scale schemes. Very little new large-scale capacity is likely to be installed in Germany, France or the UK because the cheaper sites have already been exploited and remaining sites present increased levels of technical difficulty, higher costs and greater environmental impacts.

Small-scale hydro (< 10 MW) on the other hand represents only 10% of total hydropower in the EU, but the TERES "best practice" scenario envisages a 50% expansion in capacity by 2010. Some at least of this expansion is likely to occur in the UK. Government programmes have aimed to stimulate a wider uptake of commercially available small-scale hydro, in particular through the mechanism of the NFFO (Section 3.1 below); and to support the research, development and demonstration of novel technologies for extracting energy from low-head hydro.³¹ The accessible small-scale hydro resource has been estimated at more than 500 MW, some 25 times higher than the existing installed capacity.³² Even if all of this potential were tapped however, the contribution to annual generation (around 4 TWh) would represent less than 1.5% of current electricity demand.

The oceans represent a considerable source of renewable energy, in several different forms. Some of this energy - wave energy and ocean thermal energy - is solar in origin. Ocean thermal energy conversion exploits the temperature gradient between shallower and deeper layers in the deep ocean. Wave energy arises from the interaction between the winds and the surface of the ocean. Tidal energy by contrast has its origin in the gravitational attraction which exists between the earth and the moon. These different types of energy are all transmitted by the medium of the oceans, and it is therefore convenient (and conventional) to label them together as ocean energy. However, the individual resources and the technologies which are used to exploit them differ significantly from each other. For this reason, we discuss each technology type separately in the following paragraphs.

Of the three types of ocean energy, tidal energy is the only one with any significant installed capacity world-wide. It is also the only technology which can be regarded as fully mature. In fact, tidal mills are known to have operated around the coasts of Britain as long ago as 1100 AD. A number of different kinds of devices have been used to convert tidal energy to a useful output. But the commonest and most effective method remains the same as that used in the old tide mills. Typically, these mills operated by filling a storage pond at high tide, and allowing the water to flow back to the sea again through a water wheel, while the tide was out.

Modern-day electricity generating tidal schemes operate on very much the same principle. Tidal schemes are usually situated in river estuaries where the tidal flow has become concentrated to create a large range between high tide and low tide. In the simplest modern tidal scheme, usually called "ebb generation", a barrage is placed across the estuary to create the upstream storage pond, and the old water wheel is replaced with a turbine to generate electricity on the ebb tide. This scheme typically has three main stages of operation:

There is also sometimes a "holding" period after the ebb flow has reduced the head, and before the inward sluices are opened to re-fill the basin.

In principle, there is nothing to stop generation from being carried out on the flood tide rather than the ebb tide, although this is usually less efficient than ebb tide generation because of the geography of the basin. Some modern schemes - called "double-effect" - generate electricity on both ebb and flood tides. This is sometimes, although not always, more efficient than single-effect generation. In both cases, output can usually be increased by pumping to increase the height of the water in the basin before ebb generation.

One of the problems of tidal schemes is that they can generate only intermittently because of the periodic nature of the tides. This problem can sometimes be avoided by creating linked or paired basin schemes. In linked basin schemes, the general idea is to use two basins, one of which is kept full, by topping it up whenever the tide is high, and the other empty, by draining it whenever the tide is low. Water is sent through a turbine from high basin to low basin whenever electricity is required. The paired basin scheme operates by generating electricity on the flood in one basin, and on the ebb in the second. In principle, it would also be possible to improve the continuity of generation by pairing geographically separated basins, situated such that the ebb tide in one basin corresponded to the flood in another. Another method of providing more continuous flow is to establish a separate pumped storage hydro scheme in the river upstream of the tidal dam. However, such methods increase the capital costs associated with tidal generation.

The first and largest modern electric tidal plant was built in the 1960s and is situated at La Rance in France. It operates a 240 MW, single-effect, tidal barrage, delivering annual generation of approximately 0.5 TWh. Operating experience has generally been very positive both at this site and at other smaller sites in Canada and the former USSR. However, tidal power has been criticised extensively on the grounds of environmental impact, particularly during construction. The French scheme was built "in the dry" behind a temporary "cofferdam" and critics argued that the total closure of the estuary during construction caused "the almost complete disappearance" of the indigenous bird species.³³ Modern construction methods would generally avoid the extremity of this problem, but environmental opposition to proposed schemes has been high, in particular in the UK.

The global technical potential for tidal energy has been estimated at 2,000 TWh per year, although only about 200 TWh of this is likely to be commercially exploitable.³⁴ In the EU, the technical available tidal resource has been estimated at 105 TWh per year. In spite of this, the TERES study foresees no significant additional implementation of tidal power before the year 2020. The principal reason for this is that the economic cost remains prohibitive, particularly in a liberalised energy market. As with many renewable energy technologies, tidal schemes are heavily capital-intensive. The design life of tidal schemes is expected to be in excess of 120 years, but the long-term benefits of this are virtually invisible under the influence of commercial sector financing where effective discount rates can be well over 10%.

Sometimes the financial feasibility of tidal schemes can be improved if barrages can be designed to offer additional, non-energy related benefits, such as recreational facilities or a new bridge. Generally speaking however, it is now recognised that tidal schemes will require government financing if they are to be implemented. In progressively liberalised energy markets, such funding seems increasingly unlikely.

The UK is particularly well endowed with tidal resources. The technical resource is around 50 TWh per year - almost half of the total EU potential. Ninety per cent of this resource is located at 8 larger sites (Severn, Dee, Mersey, Morecambe Bay, Solway Firth, Humber, Wash and Thames) with around ten per cent located at 34 smaller sites. The largest of the sites is the Severn Estuary where a proposed barrage has been the subject of extensive feasibility studies for more than a decade. With an installed capacity of 8,640 MW, the proposed barrage would generate an annual output of 17 TWh, equivalent to 5% of UK electricity demand. The cost of the electricity has been estimated at around 8 p/kWh using an 8% discount rate, rising to almost 18 p/kWh using a 15% discount rate. Electricity at a similar cost could be obtained from the (700 MW) Mersey barrage. The best of the smaller sites is believed to be the Wyre barrage with a projected capacity of 62.6 MW, producing electricity at 7.5 p/kWh (13.5 p/kWh using the higher discount rate).

The ETSU study envisaged a maximum practicable contribution of 1.6 TWh per year from some of the smaller tidal schemes by 2005, with more significant contributions coming on line by 2025.³⁵ However, the previous government's position on tidal power was uncompromising: the closure of the Tidal Programme was announced in July 1993 and Energy Paper 62 published in 1994 foresaw no deployment of tidal power under any scenario considered before 2025, mainly because of the high p/kWh costs compared to conventional electricity.³⁶

An alternative to the building of tidal barrages is to capture the energy of the tides by situating a turbine directly in the tidal stream, in much the same way as wind energy is generated. Several advantages may flow from this type of device, including lower environmental impacts, more constant output, the modular nature of the technology,³⁷ and a wider range of sites than for tidal barrage schemes. The European tidal stream resource has been estimated at around 23 TWh per year.³⁸ At the moment, however, the technology remains speculative and has not been included in short- or medium-term forecasts for renewable energy.

The UK once operated the most extensive, and indeed the most ambitious, wave energy research programme in the world. Wave energy is generated as a result of the interaction of the wind on the surface of the oceans. Some estimates suggest that the technical potential for wave power along the Atlantic coast of Europe could be as high as 600 TWh a year.³⁹ Wave-forms initiated in the middle of the Atlantic carry an average power density of between 30 and 50 kW/m. Ireland and the UK have wave power in the upper end of this range.

During the period between 1974 and 1985, over 200 wave energy converter designs were tested under the UK's wave energy programme. Eight large-scale (2 GW) offshore devices were taken to the design stage before the funding was dramatically cut in the mid-1980s. On the basis of the test designs, the government concluded (controversially) that large-scale offshore wave energy converters would not become economic for several decades, and decided to concentrate a substantially-reduced research effort on smaller shoreline devices. However, the programme spawned a quite remarkable range of wave energy devices which have formed the basis for almost all subsequent wave energy research and experimentation around the world.

The technologies themselves attempt to capture the energy generated by the motion of waves in three different directions - horizontal (surge devices), vertical (eg heaving devices) and rotational (pitching devices). Amongst the most well-known devices are:

A number of prototype shoreline devices have been developed. Amongst these is a 75 kW OWC device developed by Queen's University, Belfast and situated on the Isle of Islay. The device incorporates the revolutionary Wells turbine, which rotates in one direction irrespective of the direction of the air flow through it. There are also plans for a 12.5 MW scheme involving five Clam devices to be moored off South Uist.

Little prospect for commercial development of wave power is envisaged in most short- to medium-term forecasts. Costs are still too high, and the technology remains uncertain. The World Energy Council's most favourable scenario includes a contribution of around 5 TWh by the year 2010. ETSU has estimated the European resource at between 116 and 179 TWh per year,⁴⁰ but the TERES report foresees a maximum contribution of 1 TWh per year by 2010. The UK has the best technical potential for wave energy in Europe, with an estimated potential of 43-64 TWh per year, or 15%-20% of current electricity generation. But the accessible resource for shoreline devices is estimated by ETSU at 0.4 TWh per year with only 0.03 TWh per year from offshore devices.

No other renewable energy development has generated the controversy generated by the UK's unique wave energy programme. Accusations of blind optimism on the part of developers and institutional bias (and worse) on the part of the reviewers were rife in the aftermath of the dramatic funding cuts of the mid-1980s.⁴¹ The 2 GW design specification (bigger than a conventional nuclear power station) has been widely criticised as unrealistic. In 1990, the government finally admitted that the critical 1982 assessment of the wave energy programme had contained substantive errors.⁴² But the task of developing energy capture devices, robust enough to operate in one of the harshest environments in nature, is not to be underestimated. The first near-shore OWC device, a privately developed 2 MW device called the ART OSPREY, was damaged at launch and sank in heavy seas in 1995. A second prototype is due to be launched this year.

In summary, the wave energy resource in the UK is among the best in the world, a wide variety of devices could generate power at costs which have been estimated at between 4 and 20 p/kWh.⁴³ A number of smaller shoreline devices now have several years of operating experience. To date, the UK government's approach to wave power has been criticised for resting on all-or-nothing assessments of the technology against current commercial conditions, and neglecting wider and longer-term considerations such as:⁴⁴

The successful further development of this technology requires a committed, and consistent research and demonstration effort which is unlikely to proceed without government support.

In most tropical or subtropical areas there is a temperature difference of some 20^oC between water at a depth of around 1,000m and that on the surface. Exploiting this temperature difference for energy conversion was first proposed by French physicist d'Arsonval in 1881. Although the efficiency of conversion is very low, the resource itself is huge. In principle, therefore, ocean thermal energy conversion (OTEC) could provide a significant electricity output. A test-scale plant was developed in Cuba as early as the 1930s. A more sustained research effort was instigated as a result of oil price rises in the 1970s, and the first modern device was pioneered off Hawaii in 1979, producing net power of 15 kW.

The devices themselves can be ship-based or shore-based and are categorised as either open cycle - in which the working fluid is provided by sea water itself - or closed cycle in which warm surface water is used to evaporate a working fluid such as ammonia or Freon. The generation cycle is similar to that of a conventional thermal power station except that the operating temperature is much lower. Once auxiliary power for pumping is taken into account, the net efficiency of OTEC plant is usually 3-4% at most.

Two UK firms have designed OTEC plants, one a 10 MW device for operation in the Caribbean, the other a 500 kW closed cycle land-based plant for operation in Hawaii. Operating costs are low, but the capital costs of the devices are very high leading to generation costs of around 7 or 8 p/kWh. This is not currently competitive with conventional coal or gas-fired generation, but could be competitive with diesel generation in areas isolated from a mains electricity supply. The OECD has estimated that costs could fall by two-thirds in the long term.⁴⁵ A potentially significant advantage of the technology is the ability to produce de-salinated water as a by-product. Nevertheless, it is unlikely that ocean thermal energy will provide power to the UK grid in the foreseeable future, simply because of the distance from the source of generation. The EU envisages no contribution from OTEC in their short- or medium-term predictions for renewable energy.

For completeness, it is worth mentioning that it is possible theoretically to generate electricity from the difference in osmotic pressure between fresh water and salt water. Allowing fresh water to flow through a semi-permeable membrane into a reservoir of salt water would raise the level of the reservoir by 240m. Electricity could then be generated by allowing the water to flow back to the sea through a turbine. The World Energy Council estimates a theoretical potential of 2.6 TW from this source. However, the capital costs are high, and the technology has the disadvantage - in contrast to the OTEC technology - of consuming fresh water.

The direct solar resource is massive. Table 1 indicates that the global resource base is some 10,000 times higher than the average global power demand. However, this considerable resource arrives at the surface of the earth as a relatively diffuse flow "like a very fine rain... a microscopic mist".⁴⁶ The annual average insolation rate in equatorial Africa is only 250-300 W/m². In the UK, this "microscopic mist" is even finer: the average insolation rate in summer is about 200 W/m², and in winter falls to 20 W/m² in the south of England, and less than half of this in the north of Scotland. This is equivalent to an average insolation rate of around 2.5 kWh/m² per day.⁴⁷

To put this in perspective, if this energy could be converted to a useful form at an average efficiency of 5%, say, then the entire electricity needs of the UK could be supplied using less than 3% of the total land area. In practice, there are technologies which can convert direct solar radiation at higher efficiencies than this, and it has been estimated that the UK electricity demand could be met by integrating these technologies into existing building structures without the need for additional land area. The problem of using direct solar radiation for human purposes, therefore, is simply one of capturing it and converting it efficiently enough to warrant the material and economic investment in the conversion devices.

There are a number of different kinds of technologies for achieving this. These fall broadly into the following categories:

The following sections summarise the main developments and prospects for each of these technology types.

The idea behind passive solar design is to maximise the free "solar gain" from incident sunlight to reduce the need for additional heating and cooling energy requirements within buildings. Techniques of solar architecture have been used by different cultures for centuries. Islamic architecture, for example, has traditionally used the sun to induce convection currents which keep buildings cool even in hot climates.

The main principles of passive solar heating are to orientate glazed surfaces towards the sun, to site buildings in such a way as to provide protection from prevailing winds, and to avoid the heat loss that comes from windows which are in the shade. For passive solar cooling, the basic idea is to use solar heat to induce convection currents that cool living spaces. Passive solar lighting consists of increasing the availability of natural light - again through the appropriate use of glazing - and reducing the need for artificial lighting. More complex passive solar designs include the installation of glass atria, conservatories, and solar walls, and the use of roof space collectors. Passive solar is most effective when it is incorporated into the buildings at the design stage, in conjunction with a range of energy conservation measures. Nevertheless, it can also be cost-effective to retrofit certain passive solar design features, such as glass conservatories. Recent developments in passive solar design include the use of high performance glazing, which transmits light but has good insulation properties. This allows for a kind of enhanced greenhouse effect, trapping solar heat within the building.

Clearly, the existing building stock already utilises some passive solar heating potential, although it is extremely difficult to provide an accurate estimate of the extent of this. The potential for further implementation is also difficult to estimate, in part because it is linked so closely to other energy conservation measures. However, most of the technologies are fully mature, and are often commercially competitive with conventional energy supply. The EU White Paper (see Section 3.2 below) envisages an additional contribution from passive solar in the EU equivalent to 35 mtoe by the year 2010, representing 2% of the gross inland energy consumption, but most of this is expected to come from Southern European countries.

ETSU is cautious about the potential for passive solar design in the UK.⁴⁸ Acknowledging that the technology is generally mature and readily applicable, the report points to a number of failures in implementing passive solar, a misunderstanding of passive solar design concepts, and a lack of experience in implementing passive solar in mass market housing schemes. Their estimates suggest that the contribution from passive solar in the UK may be relatively limited in the short to medium term, and at best might provide around 0.12 mtoe by the year 2010.

Active solar technologies generate heat, usually in the form of hot water or steam, which can be used for space heating, domestic hot water requirements, or electricity generation.

Low temperature devices generally fall into two types: flat plate collectors and evacuated tube collectors. The flat plate collector has a blackened surface to absorb heat. Beneath this surface, pipes carry a fluid that is used to transfer the heat, usually via a heat exchanger, to the space heating or hot water system. Sometimes, the exchange fluid can be provided by domestic tap water, but this is less common in the UK where there is a high risk of freezing during the winter. The evacuated tube collector works on a very similar principle, except that each pipe (and its absorbing fluid) passes through an evacuated tube to reduce heat loss. Often the absorbing fluid is a volatile liquid, which evaporates on heating and condenses in a heat exchanger connected to the hot water system.

High temperature devices employ mirrors to concentrate the solar radiation onto a centralised collector. The heat generated in the collector is sufficient to raise steam, which is then used to generate electricity in conventional steam turbines. Again, there are a number of devices based on the same principles. The most common of these is the parabolic trough system, which was pioneered at utility scale in the Mojave desert during the 1980s by a company called Luz International. Supported initially by US state and federal tax credits, 9 commercial power plants were constructed before a combination of circumstances forced Luz to file for bankruptcy in 1992. A fall in oil prices, combined with sudden reductions in tax credits, hit both the immediate economics of the company and investor confidence in the future viability of the technology. In spite of this, the nine plants today generate over 350 MW of electrical power for commercial use. The other main types of solar thermal electricity generation are the parabolic dish system and the central receiver system. The two main obstacles to deployment of such systems in the UK are the (relatively) lower insolation rates, and the requirement for land area imposed by the collection system.

By contrast, there is already considerable interest in manufacturing and installing low-temperature solar collectors in the UK. By the early 1990s, there were about thirty UK firms manufacturing active solar systems. Between them they produced 36,000 m² of solar collectors a year, with a total sales value of £7.5 million. Two-thirds of these were exported. Of those sold in the UK, around 70% were installed for domestic water heating, with most of the remainder used to heat swimming pools. The total installed capacity in the UK provides only about 3 thousand tonnes of oil equivalent in heat.⁴⁹

Unusually amongst the renewable energy technologies, ETSU predicts that the use of active solar for domestic heating will fall away to zero by 2015 under every scenario except one involving "heightened environmental concern". The reasons for this are that the technology is already mature, so that the potential for cost reductions is limited. But the cost of solar panels in the UK remains relatively high, and domestic heating alternatives are expected to become cheaper. Under the "heightened environmental concern" scenario, a limited uptake is envisaged, leading to total installed capacity to deliver just over 200 thousand tonnes of oil equivalent by 2025, still negligible in comparison to total primary energy supply.

In Europe as a whole the market is far from stagnant. By 1994, the European market had reached 500,000m² per year. German manufacturers dominated the market with sales of 180,000m². The market is still growing at around 18% per annum, prompted in part by subsidies in Austria, Denmark and Germany. The installed capacity is currently about 5 million m², and the target for implementation by 2005 - which is met under the TERES "best practice" scenario - is 30 million m².⁵⁰

These considerations point directly at an issue to which we shall return several times in this paper. A combination of poorer resources (insolation rates) and fewer incentives for development has led to markedly lower levels of technology implementation in the UK than in some other European countries. This can only be expected to have a negative impact on UK manufacturers. A significant domestic market would not only provide a testing ground for technological innovation, but is also more accessible and incurs lower transaction costs than the export market. In the meantime, certain foreign manufacturers (most notably in Germany and Denmark) receive considerable support for the accelerated development of their own domestic markets. Based on this experience, these countries - which are sometimes but not always characterised by higher quality solar resources - are already beginning to dominate the wider European market and are establishing increasingly strong positions in the global markets.

Short-sightedness, and the failure to provide appropriate incentives for development, could have a devastating impact on UK manufacturers in a rapidly expanding global market, and by extension, unhappy repercussions on the balance of trade.

Originally developed for space applications, solar photovoltaic systems (PVs) convert sunlight directly into electricity using the photoelectric effect - through which light causes matter to emit electrons. Individual cells are usually based on wafer-thin layers of semi-conductor silicon with different electronic properties. When light falls on the cell, a potential difference is created between the top and bottom of the cell. Appropriately arranged contacts can then be used to collect an electric current from the cell. Individual cells are usually grouped together and incorporated into "modules" encapsulated in glass or plastic. The modules in their turn are arranged together to form a PV panel or array which is used to deliver either DC or AC power directly to a load, or via a charge controller and battery system. A complete PV system therefore requires a number of components in addition to the modules themselves. These components are often referred to as the "balance-of-system" components, and of course incur an additional balance-of-system cost over and above the cost of the modules themselves.

A number of different cell technologies are now in use. By far the most common technology is wafer-based crystalline silicon, which now accounts for about half of European PV production.⁵¹ Thin-film technologies tend to have lower conversion efficiencies than crystalline cells, but also use much lower quantities of material deposited in very thin films on a glass substrate. The most common thin-film technology is amorphous silicon, which accounts for about 25% of European production. Emerging thin-film technologies include copper indium diselenide and cadmium telluride cells. Concentrator cells use lenses or mirrors to concentrate incident sunlight onto a small solar cell, in much the same way as mirrors are used to concentrate sunlight for solar thermal towers. The use of concentration devices imposes an additional capital cost, but leads to higher conversion efficiencies. Multi-junction concentrator cells - built up from several different layers each collecting a different part of the solar spectrum - have achieved conversion efficiencies as high as 37%.

Table 2 illustrates that there is typically a trade-off in cell technology between reduced module costs and higher efficiency. The more efficient cells require greater material inputs and, sometimes, more complex manufacturing processes. The less efficient cells offer advantages in terms of reduced manufacturing and material input costs. Which of these effects dominates in terms of the electricity generation cost depends on a number of additional factors including the balance-of-system costs and the incident insolation level. Table 2 also shows the reductions in module cost which are expected for higher annual production outputs. At a production scale of 100 MWp⁵² per annum, module costs could be a factor of three or four lower than for prototype production facilities. Production at this scale is still in the future: in 1995, total world shipments of PVs amounted to 72 MWp.⁵³ Nevertheless, economies of scale are one of the factors that have led to rapidly diminishing PV module costs over the last fifteen years.

Assessing the environmental impacts - and benefits - of PVs is a complex task.⁵⁴ Silicon itself is the second most abundant material in the earth's crust, but the production of semi-conductor grade silicon is a relatively energy-intensive process, typically incurring emissions of sulphur dioxide, nitrogen oxides, carbon dioxide and other energy-related pollutants. These emissions are an order of magnitude lower, per delivered kWh, than emissions from conventional power stations. Furthermore, amorphous silicon technology avoids the need for certain energy-intensive processes associated with crystalline silicon, and may therefore result in lower emissions of energy-related pollutants. On the other hand, the process of depositing thin films on a substrate involves the explosive and highly poisonous gas silane (SiH₄), presenting significant environmental and health hazards in production. Different cell technologies attempt to enhance performance efficiency by using exotic materials such as cadmium telluride. But some of these materials are extremely toxic in themselves and present dangers during use and potentially at the end of life of the modules.

Photovoltaic technology generates electricity on a completely different physical basis than either conventional generation or other kinds of renewable energy generation. It therefore presents a unique set of technical, economic, environmental, and institutional issues - both benefits and potential problems. It is also attracting increasing attention - not just among technological enthusiasts but also from large industrial interests, and from policy-makers.

At the moment, PVs are mainly being used in relatively small-scale niche applications, in consumer products (calculators, watches, etc), and in stand-alone applications remote from the grid (such as isolated communities in developing countries). In the UK, many hundreds of small systems provide power for meteorological stations, energy and water utility control devices, estuary buoys and markers, caravans and so on. But the total power output from these systems remains negligible in terms of overall electricity demand. The commercial market in the UK is always likely to lag behind other countries with better solar insolation rates. Even in Europe however, the installed capacity amounts to only 70 MWp, delivering less than 0.1 TWh per year or 0.003% of annual European electricity consumption.

In the light of these really rather modest contributions from PV technology, it is worth highlighting some of the factors which might be taken to indicate a more extensive role for PVs, if not in the next decade, then certainly within a couple of decades.

Firstly, the potential resource is enormous. Even in a country such as the UK where the insolation rate is relatively poor, PVs could produce an output equivalent to current UK electricity generation from barely 2% of the land area. In fact, it has been calculated that this output could be achieved by integrating PV modules into roofs and walls, without any additional demand for land.⁵⁵

Integration of PVs into buildings is a relatively recent technological development but it provides a number of important technical, economic and environmental advantages over centralised PV electricity generation or even small-scale stand-alone systems. For instance, since electricity is delivered direct to the point of use, it avoids the losses associated with transmission, distribution and transformation of grid electricity. Furthermore, building-integrated PV panels replace other building materials such as roof tiles, and wall cladding. The avoided energy, environmental burdens, and cost of these substituted materials all represent additional benefits of PV. Even though the cost of stand-alone electricity generation from PVs in the UK can be as high as 60-80 p/kWh, it is already more economic to use PV cladding than to use polished stone cladding, and in this case the electricity can be regarded as a free resource.

An increasingly popular application of building-integrated PV technology is the solar roof tile. The availability of this easy-to-install, modular technology has prompted a number of ambitious, government-backed installation programmes. The first of these, and the biggest in the EU, was the German "thousand roofs" programme, which by 1995 had achieved its target of installing small (1-5 kWp) PV systems on the roofs of 1,000 domestic residences and small company properties. Last year, the US announced a programme to install 1 million solar roofs by the year 2010; and even more recently, the Indian government has announced an ambitious programme to install a million and a half solar roofs by the year 2002.

In the EU, there are a number of different targets for the implementation of PVs by 2010. The most ambitious of these, contained in what has become known as the Madrid Action Plan calls for the installation of 16,000 MWp by the year 2010.⁵⁶ The TERES study estimates that under existing policies only around 1,000 MWp will be installed by that date, although under a full set of "proposed policies" this could rise to almost 7,000 MWp. This represents a 100-fold increase over the current installed capacity, and a major opportunity for expansion by PV manufacturers.

Not surprisingly, targets and predictions like this have prompted a vigorous response from PV manufacturers. The Madrid Action Plan calls for an expansion of PV manufacturing capability in the EU from current levels (around 35 MWp per year) to 500 MWp per year. As we have already mentioned in the introduction, both Shell and BP last year announced their intentions to expand research and development efforts in PVs. Shell wants a 10% share of the global PV market by 2005. BP is looking for $1 billion turnover from PVs by 2010. Certain governments, most notably the German, have been quick to lend their support to domestic manufacturers, and for a very good reason. Shell predicts that the solar PV market will be worth $25 billion by 2025.

Set against these signs of massive expansion in PVs, it is worth remarking on a number of facts. Firstly, PV modules are still considerably more expensive than conventional electricity except in isolated locations removed from the grid. Secondly, in spite of rapidly falling module costs, the balance-of-system costs are likely to constrain further cost reductions at recent rates. Next, the cost of the German 1,000 roofs programme prompted one observer to write that it was "unlikely to be extended in the current financial climate".⁵⁷ Finally, even if the Madrid target of 16,000 MWp were achieved by 2010 - implying expansion at about 45% per year from 1995 levels - this would still only represent 1% of EU electricity supply.

In the UK, the predicted contribution from PVs in the ETSU study is considerably smaller even than this. Virtually no contribution at all is expected by 2010 except under the "heightened environmental concern" scenario, which sees a contribution amounting to less than 0.1 TWh per year or 0.03% of current electricity demand. On the other hand, this kind of prediction - carried out in 1994 - could quite simply be out of date in the light of events which have taken place in only the last twelve months. If that is the case, then to rely on such predictions could seriously jeopardise the UK's position in a rapidly expanding technology market which may one day be of vital importance to the energy sector.

There are a number of other solar-based technologies, none of which offer extensive potential at the present time, but should be mentioned here for the sake of completeness. These include:



		Homepage \| Contact RCEP \| About RCEP \| Reports \| Sitemap\| Search


	Commission's dateline \| The Commission's Reports \| Current Studies \| Recent Studies \| News Releases \| Members \| Meetings \| Links

Royal Commission on Environmental Pollution

STUDY ON ENERGY AND THE ENVIRONMENT