First Annual ‘Sustainable Insights’ Lecture
An Action Plan for Economic Growth and Security of Energy Supply
Wednesday 11 February 2009
I am honoured at the invitation to deliver the First Annual “Sustainable Insights” Lecture.
I wish to express my gratitude to my Board colleague, Mark Brown, and to Barclay’s Capital for acting as our hosts and for providing us with these splendid facilities.
The theme of the lecture is “The Role of Renewables in an Uncertain Climate – An Action Plan for Economic Growth and Security of Energy Supply”.
My focus will be on the creation of an offshore Supergrid in North Western Europe. My express purpose will be to elicit your support for the concept and to invite you to become a “Friend of the Supergrid”.
The time has come to garner all the support we can for this great venture from business and finance, from the policy community and academia, from energy practitioners and analysts, so that the construction of the supergrid can proceed apace. Many obstacles lie in its path. They must be overcome. That is why I seek your help. That’s why we have set up the friends of the Supergrid
Let me start with some background. The supergrid began life as a concept some seven years ago. It emerged from a number of propositions, each of which is simple in itself but, when combined with the others, adds up to a dramatic vision of the energy future we could create here in Britain and in the wider Europe.
I started with some facts about wind. I like facts. They have a logic that cannot be disputed.
Wind is abundant in these latitudes, especially in the seas around this island and North Western Europe. It is a free fuel. It is clean and, because it is indigenous, it can provide the answer to energy security.
The next fundamental fact I addressed is the correlation between wind and weather. The availability of wind is a function of atmospheric pressure. As weather patterns move the wind moves with them. I reflected on the fact that while wind may blow intermittently at any given point it is always blowing somewhere.
It occurred to me that if we would construct wind farms in the seas around Europe and join them together into one interconnected system that we would always have access to wind power. The key to capturing the wind as a dependable source of power clearly lay in creating a Supergrid that stretched from the Baltic to the North Sea and out into the Atlantic and could collect the electricity generated at sea, bring it ashore and deliver it into the various national grids
That is why I began the search for a technology which would make interconnection possible on a scale never previously envisioned. When I found the answer, the picture was complete and I then brought these simple propositions together into what I christened “The supergrid”.
The concept began life as a 10 GW demonstration project in the North Sea that would connect wind-powered generation in British, German and Dutch waters and then transmit that power into each of these three markets.
I am happy to say that the supergrid concept got immediate support from the then Prime Minister, Tony Blair, whom I personally met in No. 10, and continues to receive the support of the government and opposition. Commissioner Piebalgs was an early supporter and the Commission has now advanced a policy for harnessing off-shore wind as one of the primary means of liberating us from dependence on carbon based fuels. The supergrid is put forward as the means of achieving our strategic energy objectives.
The 2020 Imperative
In short, ladies and gentlemen, this country and its European neighbours are embarking on a revolution that will transform the way energy is generated, supplied and consumed. By 2020 some 20% of Europe’s energy must come from renewable sources.
Most of that renewable energy will come from onshore wind, but a significant portion will come from offshore wind, particularly in the UK, where this country is already a global leader in offshore wind development. And a growing proportion will be transmitted by the supergrid.
My original demonstration project of 10 GW has now been expanded by the Commission and the various national authorities into a target in excess of 100 GW as set out in the Adamowitsch Report. The supergrid has moved from being a concept to a concrete proposal. The next stage is to ensure that it becomes a plan for implementation.
Our task is to fashion a framework in which we – regulators, developers, generators, operators and consumers – will all work together.
Ladies and gentlemen, that is the background to this lecture this afternoon and to the launch of
“Friends of the supergrid”.
Having given you the background now let me give you the vision of what lies ahead.
A Transformational Concept
The vision is based on a simple, but profound, proposition. Electricity is the foundation upon which contemporary civilization rests. It defines the way we live, determines our standard of living and underpins our quality of life. Without electrical power, life as we know it would be unlivable. It is what separates us from the pre-industrial age.
Quite literally, electricity is the life blood of the modern economy.
And the Supergrid will be the beating heart of the European economy.
When operational, the supergrid will transform the way we source energy, generate power, distribute electricity and manage markets. It is a transformational concept whose time has come.
Its time has come because there is a political imperative to source clean energy, to ensure security of supply and to restore our global competitiveness. Its time has come because we now have the technologies to hand which can meet each of these three objectives.
Its time has come because it is the only available guarantee that our children will enjoy low cost, low carbon and low risk energy supplies.
We have long known that the wind and the sun are infinite sources of energy but up to quite recently that energy was technologically and commercially inaccessible, except for small scale use. But now, new technologies are making it possible to harness wind and solar power on an industrial scale, thereby transforming the way we generate and transmit electricity. These renewables have become mainstream sources of power.
Importance of Scale
This is particularly true of offshore wind, which stands on the verge of take-off as a new power sector.
For success in business, scale is always essential and, in terms of wind, the achievement of scale must begin with both the size of the individual turbine and the number of turbines that can be deployed together to optimize output. Turbine size has grown over two decades from 0.2 of a megawatt to the current 3 to 5MW range. These will be replaced in the coming years by a 6 to 7.5 MW model with a blade span of over 126 meters.
The expectation is that this, in turn, will be supplanted by a 10 MW unit some seven or eight years from now, a giant of a turbine whose span at 160 meters will be two thirds of the height of One Canada Square here at Canary Wharf, the equivalent of an office block 33 stories high.
When mounted on its tower, the tip of the turbine blade could reach as high as a 40 storey building.
Scale will come also from simplifying the mechanics and electronics of the turbine and then combining large clusters into what are, effectively speaking, wind-fired power stations. That is why I no longer speak of wind farms when talking about the future of offshore wind or of the supergrid. I talk only of wind-fired power stations, each with a standard size of 500 MW.
These stations are the modules on which the supergrid will be built.
The efficiencies of scale resulting from larger turbines configured in 500 MW modules will reduce unit production costs over time in accordance with the cost curve common to all industries growing to maturity.
It also means that here in the UK we will take the lessons of Round 2 with us into deep water for Round 3. All that we learn from building 500 MW power stations in the current round will be directly transferable to the next.
The HVDC Breakthrough
The Supergrid’s time has also come because a technological breakthrough by Siemens and ABB who have revolutionized our ability to link the generation and consumption of electricity irrespective of distance and without the power losses that are inherent in AC transmission systems.
As a result of High Voltage Direct Current technology, it is now technically possible to transmit electricity efficiently and cheaply from remote locations at sea or in the desert to the great urban agglomerations in which most of us live and work.
The full significance of a switchable HVDC innovation has not yet been appreciated by policy makers or by the business community. It is clear that a network incorporating a HVDC grid with the redundancy and reliability of the ubiquitous AC grids is now a reality and that the limits of what is technologically possible have been greatly expanded. Hence, we have the potential to transform the energy economy and to bring about major changes in society.
That is why I have incorporated this new HVDC technology into the design of the Supergrid as a fundamental and indispensable building block. It is a breakthrough in technology which will do for the energy sector what the coming of passenger railways did for 19th century trade – it will open up markets for our electricity across vast distances which were previously inaccessible to AC transmission.
Definition of supergrid
When these three elements are brought together – advances in turbine technology, the concept of the wind-fired power station and the potential of HVDC – then we can define the supergrid as follows:-
An electricity transmission system, mainly based on direct current, designed to facilitate large scale sustainable power generation in remote areas for transmission to centres of consumption, one of whose fundamental attributes will be the enhancement of the market in electricity.
There can of course be many forms of Supergrid. I am concerned here this afternoon with an Offshore Supergrid based on the seas around this island and North Western Europe. But in Europe there will be other supergrids, such as a Solar Supergrid in the Mediterranean. Undoubtedly all these regional grids will eventually be linked into one megagrid.
But we must start with what we have and where we are. Hence, my focus on offshore and the ambition to start building in the North Sea.
In order to realise this ambition, the principal task ahead is to slash investment costs through a whole series of innovations, beginning with the turbine itself and starting with voltage source technology. The turbine of the future will simply be a voltage source and its defining characteristics will be simplicity and reliability. Primarily, it will be a collector of energy and, consequently, Operation and Maintenance costs will be minimized and reliability maximized.
Because the new turbine will simply be a voltage source we can incorporate the right number of such voltage sources into a standard power station. The size of the offshore wind fired power station has a commercial rationale behind it because it is a trade off between the need to achieve scale and the timescale needed to construct a standard unit offshore. Ideally it would be desirable to build the wind fired power station in a single season. This would minimize the dead time from when capital begins to be deployed to when commercial operations begin.
There will be great scope for innovation in circuit breakers, links, ever higher voltages, cable insulation, the design of the DC substations and of the of DC system configuration.