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Energy: Renewables (EUC Report)

My Lords, I should declare my interests in this matter. I have obviously been a member of European Union Sub-Committee B and therefore a participant in the construction of this report. In an earlier life, I was chairman of North Sea Assets plc and of British Underwater Engineering which played a very large part in the supply chain for the development of the North Sea. I should correct one impression given by my noble friend Lord Freeman: I am deeply pessimistic about the levels of investment in this round similar to those which were made to support the North Sea. The North Sea development was a disaster for the investors, for the principal reason that we did the job too quickly. As a result, the dockyards of Leith and Aberdeen are today full of ships that have not sailed for 25 years, the cost of which has never been fully paid back to the investors. I think that there will be a completely different structure when it comes to getting the finance for this: people will not invest in the individual ships, which are very short for what we need now. Some form of corporate entity will have to be created to give some form of equity participation in the eventual proceeds of the energy created. Without that, I do not think that anyone will have any chance of a fair payback. That is a very important point which is not in the report as such. My primary concern today is about the supply chain, which is in a dire state. Before doing so, let me say that 10 days ago I attended the 8th meeting of the European renewable energy conference in Budapest, which came up with one or two surprising outcomes. My noble friend Lord Freeman referred to the fact that geothermal energy is a big issue for the future, and it may be. It was brilliantly presented in Budapest by a very attractive 28 year-old Hungarian physicist, who has just got the Nobel Prize. And she has got four children already—one wonders what she does in her spare time. Geothermal is capable of heating the entire world twice over with the resources taken out for one year. In so doing, the earth would replenish the entire removal of geothermal within six months; it is therefore eternally renewable. However, I understand that there is a big problem with sulphur generation and that it will not be usable—cleanly usable—until the sulphur problem has been eradicated, but I am assured that in time it will be. We need to bear this in mind for the future. A minority view among committee members was that we might be getting pushed by the 15 per cent target by 2020 into an enormous expenditure of uncertain outcome to buy something which may not represent value for money by 2020 in comparison with what else is available at that time. However, we must take it as a given that 15 per cent by 2020 is the target that must be achieved, and everything I say from now on is therefore in that context. We have to recognise that we may have to try to turn what we have got by 2020 into an even bigger opportunity and become the powerhouse for the whole of Europe by adding our wave capacity on to our wind capacity, in which case an enormous income could be generated to this country’s benefit in years to come. The other factor which came late to the Budapest proceedings I undertook to relay to the Government, and I have not had a chance to do so until now. I was approached outside the conference by one of the commissioners from Brussels, who asked me what my reaction would be to the creation of a North Sea association. I asked him to explain this. He said that such an association might be sponsored by Brussels to require every country which bordered on to the North Sea to give up the sovereignty of its shoreline in order to gather together the entire wind resources. We take the intermittent point, but it is not intermittent for the North Sea as a whole. Overall, the wind is blowing somewhere in the North Sea every day at the necessary level for generation. If there was one central control over the whole North Sea, the theory goes, there would be enough to provide fuel for the whole of Europe. That is what is in the mind of those in Brussels. There would also be a plan to build an artificial island somewhere in the region of the Dogger Bank to act as a massive substation for the gathering and transmission of all the created fuel into whichever country paid. Each country’s generation would cease to be its property and would have to go into a central pot. We would then have to buy back from the central pot what we needed for our own purposes. This sounds like a thoroughly bad idea to me. When he asked for my reaction, I said that it was not for me to comment, but I reminded him that when Shakespeare wrote that ours was a fortress built by nature bound in by the triumphant seas, I did not think that he had it in mind to give away 800 miles of our battlements to him. The Government should monitor closely what Brussels has in mind, because I suspect that there is a subplot to this: it does not like the plans that have come in from everybody; it is disappointed by the outcome; it has seen that the North Sea in isolation, if centrally controlled, can do the job for the whole of Europe; and there may be some attempt to strong-arm a grab on the all the resources that it needs. The supply chain, which is the critical factor, is seriously limited by the fact that it first of all requires a variety of types of vessel of which hardly any exist in this country. Your Lordships should understand what is involved in a turbine. They cost about £2.5 million each and weigh 570 tonnes. They variously stand between 70 and 100 feet above the sea level, with 500 tonnes of the construction out of sight below the surface of the water. The other 65 or 70 tonnes sticking up on the top are the bit that you see. I am not as optimistic as the noble Lord, Lord Freeman, about there being plenty of turbines available in the world. I think that there are only three manufacturers of turbines at present: REpower, Suzlon and Siemens. Without doubt, Siemens’ turbines are the state of the art. It is encouraging to hear that Siemens has in construction in this country a factory into which it intends to bring the manufacture of a certain number of the turbine gearboxes, which are critical. The Government should look towards developing the warmest and closest possible relationship with Siemens, with a view to trying to secure from it as much of this forward product as they can. They will need at least 3,000 turbines for the scheme to work, and they should see to it that they are being delivered. There is a two-year waiting list to get a single turbine at the moment, so they do not have long to get it up and running. Another development that the Government should watch very closely is the floating turbine. A prototype is being tested in the Gulf of Locarno, called, somewhat promisingly, the multi-brit-ariba. It could be the answer to a quick fix. If it is made feasible, it will be ideally placed for manufacture on land before being shipped out and placed in position. All that will be needed is for it to be connected. However, the prototype has a nasty habit of severing the transmission lines for whatever it generates, therefore rather undoing its own good work. The creation of a turbine as an operational unit requires first of all that a foundation is sunk into the sea bed. The foundation comprises something resembling a huge Lego brick of reinforced steel, a number of which have to be piled, one on top of the other interlocking, to a height of at least 10 metres and sometimes 30 metres. It then has to be hammered into the sea bed to a minimum depth of 10 metres by an explosive piledriver. There is only one ship available in this country that can do this and it is called the ““Jumping Jack””, which has been used to construct pretty well every one of the wind farms that we have in this country. I am told that three more are in construction, but that that is it, and that they are all booked out until 2020. We must therefore find some more. I asked Anni Podimata, who chaired the conference in Budapest, whether the renewable energy arm of the European Union would assist by compiling a register of every piece of equipment available, and whether we could have a list of all the ships, what was available and which components were resourced. I received a discouraging reply. She said: ““No, we couldn’t possibly do that; it would be outside our brief; and, in any event, you haven’t got a problem with ships, because now that the billionaires are hit by the recession and can’t afford to buy any more yachts, you can go to the yacht builders and get them to build your ships for you””. I asked her whether she was a direct descendant of Marie Antoinette, because it sounded rather like the cake and the bread story to me—I do not expect to be invited back next year anyway. Driving the stack of foundation Lego bricks into the ground requires a hammer to hit it at the force of 44,000 pounds impact. The first impact will probably drive the pile about 1 metre into the ground. By the time you get to your 30th or 40th impact, you are lucky to get 2 centimetres out of it—so it is a long, slow process. Putting every turbine up takes an average of six weeks in each case and the total cost, including material, is £2.5 million. Turbines can be manufactured, laid out flat and taken out on a flat barge but, when they get to sea and to the place of construction, they have to be lifted to their full height, which means that you have to have a marine boom crane with a minimum carrying capacity of 65 tonnes, which is the actual weight of the final component that you have to put on top of the foundation. There are no such cranes available in this country. You might be able to make some if you follow the Venetian solution used in building the tidal barrier in Venice, by making large floating pontoons, covering them with a steel plate and then driving a crane onto them and securing it by bolting it down. But you would have a very dodgy centre of gravity and you would not want to be too near one of those when it is picking up 65 tonnes. The short answer to those problems is that you cannot use the stuff that is surplus from the North Sea, because that is a deep diving problem. You go down to a huge depth there. You put your divers down there for six weeks at a time in teams in three, with two days to put them down and two days to bring them back. You do not have a problem there in needing specialist diving vessels, because you will be diving down for only 20 metres maximum. That is easy—half-hour stints will cover all the work that is necessary. The difficulty with the other ships is that you do not have the piledriver, beyond ““Jumping Jack””, and you do not have the marine crane lifts. You will have to get them and you cannot really manufacture them in time to get through. The timetable that I have worked out for the whole exercise, to make 3,000 turbines effective down the east coast of Britain, would work on the basis that planning consents must all be achieved by 2013. If you do that, I have a fairly reliable estimate from professionals in the business that the whole 3,000 turbines needed to achieve the target could be erected in six years, with one year left up your sleeve before reaching the deadline. To do that, you have to get a turn-key operation done on it by some form of contractor, who you will have to cut in on some form of equity participation. I cannot see any other way around that problem. There are people who can do it. You have to go to somebody who either has the boats or can bring them back from other projects on which they are using similar boats around the world. You need four different types of boat. You need a basic diving support vessel, which does not have to have a moon pool; you can dive over the side at that depth—you do not have to have a hole in the middle of the boat. You need two cranes per installation and one piledriver on every installation. You might be able to make economies by doing three farms alongside each other at one time so you can rotate the ships between them and get maximum use of the ships. But you will also need remote control submarines, of which there is a plentiful supply in this country. There are places in Aberdeen and Yarmouth which are well stocked—you will not have a problem with those. At that point, you will be in a position to have the full kit, but you will not get the kit unless you have the turbines ordered well in advance and you have to have the planning consents. I have calculated that there are 13 agencies whose planning consents you will need. Rather than delay your Lordships this afternoon with them, I shall drop a note to the Minister with a list of the 13 agencies from which you need consent. They are all difficult ones; some of them have already objected to installations which they do not like, so they are used to arguing it out. If you get those consents, you have a reasonable chance to get through this. There is no alternative way of doing it. You have to make it work. You must get the planning consents by 2013, which means that the survey work on their location must be done in the next eight to 10 months or so. That is the first thing. The components have to be ordered now, as without them the whole thing is a failure. You will end up—