11 FEBRUARY 2004

Mr Alan Moore, Mr Chris Shears, Mr Rob Hastings and Mr Alan Mortimer

  Q220  Lord Flowers: You refer in paragraph 2.2, Nature of Grid Codes, to the desirability of a fundamental review of the grid industry being more appropriate instead of just tinkering. How serious is the problem and is there any sign of such a review taking place?

  Mr Moore: Perhaps I could answer that because it is an issue that is being addressed through the Distributed Generation Co-ordination Group, which is a joint DTI/Ofgem group. It is being taken very seriously. There is a great deal of work. At the last count there were about 51 different projects working in this area. If I deal, firstly, with the distribution systems. At its simplest, and this is not just wind, this is distributed generation in general, small scale generation which is expected to be a large part of the future, the distribution systems were originally designed to take electricity radially outwards from the bulk transmission system and deliver it to the consumer, but if you put generation on to that distribution system electricity is perhaps, flowing both ways, as I am sure you know. You need to think about how you control that system. Now the technology exists, and it is already being used on the transmission system where it is an everyday occurrence, but what are missing at the moment are the commercial and financial incentives to the Distribution Network Operators to take this seriously and make it happen. There is a great deal of work going on, as I say, within DTI and various working groups within Ofgem to ensure that those incentives are built into the Distribution Price Control Review which is taking place next year, 2005. I am repeatedly assured, and I repeatedly ask the question of both Ofgem and DTI, that that Distribution Price Control Review will contain the commercial incentives to get the attention of the DNOs to invest in those changes to the distribution systems. If I move to the transmission system, the bulk transmission system, then that is going to be important for large scale offshore generation and there is work going on in terms of extending the transmission system out to sea. There is talk about a hub in such areas as the outer Wash where you could extend the transmission system out to a substation, perhaps 20 kilometres out to sea, and then a number of different offshore wind farm developments could connect into that radially. There is an issue about who pays for that transmission link and do you treat it as part of the developers' costs or as an extension of the National Grid which in other circumstances would be paid for by all users of the National Grid. There is a lot of work going on on that. Also there is work going on in the Scottish context about how we get the large quantities of wind power that we would like to see from Scotland down into the South where the consumers are but, yes, once again, there are working groups within the Government and within Ofgem looking at that on an urgent timescale.

  Q221  Lord Flowers: Thank you for that. The other question I wanted to ask you is that we have been told that one of the problems with wind turbines is they have a habit of tripping when the network voltage drops in quite a short period. What steps are manufacturers taking to respond to these concerns?

  Mr Moore: I think that there were a number of issues. As I say, we were responsible for building North Hoyle, a large offshore wind farm, and slightly to our surprise half way through the process of building that wind farm we were asked to comply with changes to the Grid Code in terms of how we connect and the services we could provide for that. There was a great deal of discussion, as you might imagine, between us (and Powergen who were in a similar position with their offshore wind farm) and National Grid on how we could accommodate that. My reading of the situation was that National Grid were anticipating a large influx of large wind farms and were effectively getting the changed rules in early. I believe we have been successful in persuading them that we can see a time when the penetration of wind has got to a point where they need to get serious about these things. When we are generating less than one per cent of electricity the problem is relatively minor and, therefore, the Grid Code changes will be phased in with time working in conjunction with the wind turbine manufacturers to allow them to change the technology, if you like, meeting half way and eventually complying with the genuine requirements of the grid. The manufacturers are confident that they can do it, in fact in all but the single issue that you raise there the technology already exists and they are confident that they can solve the problem which you raise.

  Q222  Lord Flowers: Can I lead on from that to my standard question. If there was a duty of supply in the electricity industry as a whole, how would it impact on you?

  Mr Moore: You mean a duty of supply as there was under the CEGB?

  Q223  Lord Flowers: I want it to be guaranteed I have a supply of need within reason.

  Mr Moore: I think it comes back to this question of how much reserve you need to accommodate the inherent intermittency of wind power. Dave Milborrow's paper and other papers which are endorsed by the system operator, National Grid, make it clear that for quite high penetrations of wind the system can be managed perfectly well in order to guarantee to you the customer, as best they can, that the security of supply can be ensured: that we will not be compromising the security standards that have been in the industry for as long as I have been in the industry, which is a long time.

  Q224  Lord Flowers: You are pushing it back on to the suppliers.

  Mr Moore: I think the solution lies with the network operator and that is inevitable. As I said earlier, we are not the only intermittent supplier out there, almost every form of generation is intermittent to some extent. The cross Channel link falls over on a regular basis; the nuclear power stations seem to fall over on a regular basis and the system accommodates that.

  Q225  Lord Tombs: That is stretching it a bit, is it not?

  Mr Moore: I do not think it is.

  Q226  Lord Tombs: It is systematically intermittent. You are talking about Acts of God in other cases.

  Mr Moore: I think we are very much talking about Acts of God in our case.

  Q227  Lord Tombs: I think you have a good case. Don't exaggerate it.

  Mr Shears: Just one final point on that. It is not an on and off situation like it is with an interconnector. We are going to have wind farms all over the country so generation is going to be spread around. It is not like 5,000 megawatts of wind will suddenly disappear, it is not that sort of a problem.

  Q228  Lord Tombs: The ability to guarantee security of supply varies across the industry. It varies from a secure supply to one that could not accept such an obligation without purchasing standby power.

  Mr Moore: If they were only purchasing wind?

  Lord Tombs: It varies enormously.

  Q229  Chairman: In that connection, it looks to me as if ScottishPower have essentially a vertically integrated system by which they have both conventional and wind and presumably with the company playing one off against the other?

  Mr Mortimer: The grid operator is responsible for that but you have flagged up certainly the value of flexible plant and the need to retain that. The backdrop against that is the fact that the variability of wind is very often overplayed and when you look at the diversity of plants and the fact that there are many of them, as Alan has said, you do not on an hour by hour basis get very large changes in output. It is in the short term that these changes in output,are the most difficult thing for operators to deal with and it is not anything like as large a problem as it is sometimes made out to be.

  Q230  Baroness Platt of Writtle: In paragraph 15 of David Milborrow's paper it says as you are dealing with larger amounts of power the back up seems to reduce. Is there a reason for that?

  Mr Moore: I do not think it reduces, the percentage increases. As I say, David Milborrow's paper says that the amount of reserve you need for 10 per cent of electricity is about 750 megawatts and 20 per cent electricity is in the range of 2,000 to 3,000 megawatts.

  Q231  Chairman: Thank you very much indeed. I am sorry we kept you rather a long time but we are grateful to you for coming to talk to us. We may have questions that we have not been able to pursue today but we would like to send to you in writing afterwards. Thank you very much indeed.

  Mr Moore: Thank you for the opportunity.