Utility Week

UTILITY Week 26th February 2016

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10 | 26th February - 3rd march 2016 | utILIty WeeK Interview He says: "I think it would have been a better approach to say at the same time what we're not doing and what we are doing. If they thought it was easier to make the 'not doing' decisions first, they could have waited on those and come out with a whole package." Bell says there has been "silence" from the Department of Energy and Climate Change (Decc) on some policy issues, but one area where the government hasn't been quiet – to his obvious disappointment – is on CCS. The £1 billion competition to help CCS technol- ogy was scrapped in November in an announcement to the stock exchange. The CCC chief executive makes it clear that CCS is vital if the government is to press ahead with its efforts to meet the UK's binding climate change target, under which it must cut emissions by at least 80 per cent from 1990 levels by 2050, and in an affordable way. "We've been very clear that, with the 2050 target in mind, it is much less expensive to meet if we're able to develop successfully CCS. The government needs to come up with a very credible plan on how it's going to push forward with CCS." Without such a plan, Bell says that investment in the power sector – at least on the more conventional genera- tion front – could suffer. Gas is being pushed by the gov- ernment as the bridging fuel in the transition towards a low-carbon economy, although no new combined cycle gas turbine power stations have been built in the UK in the past six years. "Between now and the early 2030s, gas could have an increasing and significant role," he says, acknowledging what is widely expected to happen as coal-fired power stations leave the energy system. "However, from some point in the 2040s, if you're going to hit the 80 per cent target and don't have CCS, then gas has to be virtually off the system," Bell adds. "That would imply that during the course of the 2030s gas has to play a declining role – but there is a big 'if ' there as that depends on CCS. "We have a 15 to 20-year time horizon with reason- able certainty for the role of gas, then we have an uncer- tain period – is that enough for investors to decide to go ahead with their projects? "There is a way of clarifying that uncertainty, and that is for the government to be clear on CCS." While the future looks bleak for CCS, and increasingly uncertain for gas, new nuclear appeared to be edging forward when EDF reinforced its confidence in its new nuclear power station, Hinkley Point C. Despite the imminent progress of the project, hailed as vital in securing a low-carbon future for the UK, Bell comes across as almost uninterested in nuclear. He con- siders it less important to the economics of an afford- able, low-carbon electricity supply than CCS. "We don't have a position on nuclear that is any dif- ferent from any other low-carbon technology in the sense that if it can produce at a cost that is competitive, then it can come through and be part of the energy mix," he says, slightly dismissively. Bell goes on to say the technology has "historically struggled" to deliver on time and at a cost-competitive price, something the agreed strike price for Hinkley Point C of £92.50/MWh – compared with the current price of around £36/MWh – and delays for similar reac- tor designs in Flamanville and Olkiluoto would appear to back up. "If nuclear did not deliver there is an alternative and credible way of hitting that 100g target," he adds. The decarbonisation drive is intended to mitigate and limit the worst effects of man- made climate change. Those include more frequent extreme weather, such as that seen during the storms Desmond and Gertrude. "We are certainly seeing emerging evidence sug- gesting that intense rainfall will be made 50-75 per cent more likely by a 1°C change above pre-industrial levels – which is basically where we are now." The higher levels and intensity of rainfall the UK can expect in coming decades will place greater challenges on UK utilities. Bell first discusses the impact the extra rainfall will have on the power sector – with substation flooding being the most significant of the potential impacts. He says Ofgem and companies in the sector have started to respond to the risk, but a reassessment of what consti- tutes a one in 100-year event – and the kind of protection assets require – is set to happen once the data gathered last winter has been analysed. The water companies have also been affected by the winter floods – with Yorkshire Water facing a bill of around £55 million. Again, says Bell, the regulator has started to adapt to the changing climate by focusing on resilience, but adds that more has to be done and differ- ent ways of thinking should be explored. Bell advocates catchment area management, say- ing it will help improve the resilience not only of utility networks but also of urban environments. Improving absorption and changing land management to slow and limit surface run-off is something he says should be an increasing focus. "Thinking about how we design urban environments, and developing sustainable drainage should a big part of the future." Bell goes on to say that if water companies do not offer new developments an automatic right to connect to the sewerage networks "you begin to think differently about how you're going to handle the volumes of water that are being generated". He says these small steps will help improve the resil- ience of the urban environment, but further work – namely abstraction reform – must happen to ensure the limited water supplies in the UK are used sustainably. Bell says the government's forthcoming abstrac- tion reform should include water trading. "I think we're unquestionably going to have to use water more effi- ciently as we go forward, and one of the ways of doing that is to ensure trading happens, particularly that water is valued appropriately so it can go to the sectors and geographies where it is of most use." The key to tackling and mitigating the worst impacts of global climate change is global action. And that is why Bell is obviously pleased about the success and the ambi- tion shown at the COP21 talks in Paris last November. He says the "strong" commitments made – not only to limiting warming to 1.5°C but also to having state- by-state accountability for the review mechanisms – is "more ambitious that we anticipated going into it and provides a good framework for the world". This brings Bell back to where we started: "There is no question I joined at a really good time." Not, however, because it gave him time to get his feet under the table, but because "everything is now happening and we're really starting to understand where technology can take us when addressing climate change". "The government's been clear about what it's not going to do and less clear about what it will do."

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