Brazil is going backwards to Copenhagen

There is nothing more urgent in the world than a meaningful settlement at the talks on climate change in Copenhagen in December.

The perspective here in Brazil is that it would seem to be on the right side of the battle to save the planet's climate. In fact, the truth is a bit more murky.

38% of Brazil's energy is from renewable sources; of the rest, 60% is fossil fuel at 1% nuclear. According to the International Energy Agency this puts the country on one of the lowest per capita carbon dioxide emissions (111th in the world) and certainly one of the lowest in terms of unit of gross domestic product. However it is the world's 17th biggest greenhouse gas emitter (UN figures) because of the fires used to clear land for pasture in the Amazon rainforest.

Brazil has pioneered the world in the production of ethanol from sugarcane and mandated that biofuels are blended with petroleum to fuel cars with 20-25% of ethanol and most cars bought in Brazil can run on either ethanol or this blend. Renewables account for 45%. It produces a large amount of hydroelectric power, which itself has been blamed for displacing indigenous people, but the number of droughts is increasing. As a result Brazil is actually going backwards.

To compensate it is using more and more gas, oil and coal and is planning to build five more nuclear power stations. This is in a country which is blessed with a huge amount of solar power. According to the United Nations Environment Programme's data set most other industrialised and populated areas of the country receive an average of 4-5.5 kWh/m2/day, with some receiving much more, making it an ideal place for solar water heating and photovoltaic power. As most of the rain and the hydroelectric power is in the north west of the country far away from these areas there will be much fewer transmission and distribution costs associated with the use of solar power.

Brazil also has a huge potential capacity - 100Mt/yr - to use biochar to fertilise the soil and lock carbon from the growth of sugarcane back into the soil as a fertiliser. This after all is where biochar was first discovered -- in the Amazon. (source: Perera, K.K.C.K. et. al., 29 Biomass & Bioenergy 199, 204 (2005).)

But is Brazilian President Luiz Inacio Lula da Silva doing this? No, instead he is increasing state control over huge newly-discovered offshore oil reserves. Brazil is sitting on reserves bigger than any discovered in the Americas since 1976. He is following his friend Chavez in Venezuela by netting the government company Petroleo Brasileiro take control of these so-called 'Pre-Salt" reserves. This may help Brazil more than double oil production and turn the state-controlled company into one of the world’s biggest producers, according to Adriano Pires, head of the Brazilian Center for Infrastructure.

The pre-salt Tupi field alone holds an estimated 5 billion to 8 billion barrels of oil equivalent but it is over 200 miles off the coast and beneath over 7,000 meters of water, rock and a thick layer of salt. Companies are rubbing their hands in glee at the prospect of getting at this oil, but it will itself cost a huge amount of energy and environmental damage to retrieve it.

Brazil wants to develop and the revenue would be the engine of funding its infrastructure - and of course the corruption in the government that everybody here talks about.

In fact while I am here Lula has been in London trying to seek investment in his country, which he says will be the fifth largest economy in the world by 2019. The huge emerging middle class is greatly expanding its energy consumption as everyone wants the same standard of living as the developed world.

Ironically, accompanying Lula on his London trip is Jaime Lerner, the former mayor of what is supposed to be the greenest city in the world or at least of the developing world, Curitiba. I hope to go there in just over a week myself to see if the miracle that is proclaimed to have happened there is true. Lerner has been showing Boris Johnson, London's mayor, what the possibilities are.

It would be better if Lula were to leave the oil in the ground beneath the sea and to roll out throughout the whole of Brazil the types of reforms that have happened in Curitiba.

He should also halt deforestation of the Amazon rainforest. 20% of it has already gone. In 2000-2005 deforestation in the Amazon, which is shared by eight countries, denuded an area nearly the size of Venezuela. Less well-known is deforestation in the Cerado biomass, which Environment Minister Carlos Minc says generates the same amount of greenhouse gases as Amazonian deforestation.

Lula has promised to reduce deforestation by 80% by 2020. But the government is under pressure to release more land to the farmers, and was widely criticised in June when Lula legalised in the stealing of 60,000,000 ha of Amazon rainforest by farmers that had been taken illegally.

However some states are going it alone, just as they are in North America. Here in São Paulo a month ago it became the first Brazilian state to approve a statewide climate change policy that calls for a 20% reduction in emissions from 2005 levels by 2020. The head of the São Paulo Forum on climate change and biodiversity, Fabio Feldmann, has criticised Lula for his exploration programme of the pre-Salt oil reservoirs.

Brazil is going to Copenhagen with a flawed plan and an unclean conscience. Mind you, so is everybody else.

Even the military want a deal at Copenhagen

A group of serving and retired military officers from Africa, Asia, Europe, Latin America and the US released a statement today calling on all governments to “work for an ambitious and equitable international agreement” at the global climate talks in Copenhagen in December.

The statement, presented at a meeting today at Brookings in Washington, and issued simultaneously in Brussels, Dhaka, Georgetown, London, New Delhi and The Hague, says that “incremental, and at times, abrupt, climate change is resulting in an unprecedented scale of human misery, loss of biodiversity and damage to infrastructure with consequential security implications that need to be addressed urgently.”

The officers are part of an international initiative on Climate Change and the Military led by the Institute for Environmental Security (IES) in The Hague and 10 other think tanks from Asia, Europe and North America.

IES Vice-Chair, Tom Spencer, former President of the European Parliament's Committee on Foreign Affairs, Human Rights and Defence Policy, said the aim of the statement was to stress that “climate change creates a common security problem that requires global and comprehensive co-operation.”

Quoting from the statement, Air Marshal (ret) AK Singh of India, Chairman of the project’s Military Advisory Council and Project Director, Climate Change & Security, Centre for Air Power Studies, New Delhi warned that “failure to recognise the conflict and instability implications of climate change, and to invest in a range of preventative and adaptive actions will be very costly in terms of destabilising nations, causing human suffering, retarding development and providing the required military response.”

Maj Gen (ret) Joseph Singh, Former Chief of Staff, Guyana Defence Force, added that, “Based on the fact that we have been involved in disaster relief operations, we know the trauma, the human misery, the damage to infrastructure. So that hands on experience gives us the confidence that we have some knowledge and expertise that we can share and work in a collaborated way with decision-makers to anticipate, to pre-empt and to be involved in contingency planning.”

Asked to illustrate an experience from his region, U.S. Brig Gen (ret) Wendell C. King replied, “The hurricane Katrina that hit New Orleans.” He added that America’s ability to respond was severely stressed and if such a technologically capable nation such as the USA thus struggled, the picture was not too rosy for nations not having adequate capabilities.

At its first meeting in Brussels earlier this month the group of officers were especially concerned about the rapid increase in glacial melt in the Himalayas, which will result in increased flooding followed by devastating water shortages throughout the region.

Maj Gen (ret) Muniruzzaman, President of the Bangladesh Institute of Peace and Security Studies, said that the affects of climate change could lead to the migration of millions of people in places like Bangladesh where the impact of climate change would cause an estimated annual loss to the economy of $ 1 billion of GDP by 2010 and $ 5 billion by 2070.

Water scarcity will have severe adverse impact on human access to fresh water, food production, fisheries and wildlife, river transports, hydropower and human health according to a report by his institute.

The joint statement calls on all governments to ensure that the security implications of climate change are integrated into their respective military strategies and also calls upon the military to be part of the solution by reducing its own carbon “bootprint”.

> Institute for Environmental Security (IES)

Don't use the European Trading Scheme as a model for Copenhagen

The EU Emissions Trading Scheme (ETS) is important because the scheme covers half of all EU carbon emissions produced by power companies and industry.

If the Emissions Trading Scheme (ETS) is not helping to cut these, the EU as a whole will not meet its targets.

The first phase of the EU’s Emissions Trading Scheme (ETS), from 2005 to 2007 was a failure.

Huge over-allocation of permits led to a collapse in the price of carbon from €33 to €8 per tonne, meaning that the system did not reduce emissions at all.

In 2007 energy suppliers' 1.8% cut in carbon dioxide emissions was just higher than the UK's average of 1.7% down on 2006.

The residential sector and business sector both achieved better emissions cuts than the power sector in 2007, 4.6% and 2.6% respectively.

Meanwhile, there were increases in emissions from the transport sector (up 1%) and from industry (up 9.5%). [source:NewEnergyFinance/DECC]

The reason why the recession hasn't hurt big companies signd up to the ETS (according to International pro-business NGO The Climate Group) is because allocation of free permits to energy-intensive participants has helped them to ride out the recession, passing any price increases on to consumers.

Companies mentioned by The Climate Group include Centrica, Johnson & Johnson, Tesco, cement producer Lafarge, a British glass manufacturer, a German engineering firm, a global steel maker, a global aluminum firm and a financial services company. Fluctuations in energy prices and the economic downturn had more substantial effects on businesses than the price of carbon.

The only way that the ETS can work is if all of the permits to pollute are auctioned off and industry pays the price for abusing the atmosphere - which actually belongs to every single global citizen, as well as every other living organism.

Sandbag, another NGO, has used the large amount of information generated by participants in the scheme to create a Google map.

You can search it by country or year, sector, company, plant name, permits allocated, used and surrendered, and so on. London, for example, contains 44 registered emitters.

It has issued a report which highlights the harms that overallocation of permits has caused: "industry is likely to have nearly 400,000,000 tons worth of surplus permits across the period 2008-2012" they say. As a result they weren't out to reduce their emissions and instead will be old to sell their surplus for windfall profits of over Euros5 billion. There may also be an estimated surplus in the New Entrance Preserve of over 300 million permits by 2012.

All of this is because the caps were set too high and there is no way in the market to bring down the supply permits.

Sandbank concludes by saying that there could be 1.6 billion surplus permits and credits available during phase 2 of the scheme. this will permit European companies "to stand still on cutting domestic emissions further next seven years".

Sandbag recommends that the next phase of the emissions trading scheme should be immediately increased to deliver at least a 30% reduction in emissions by 2020 rising to 40% if a deal is reached at Copenhagen.

They should also take steps to effectively tighten caps in phase 2 of the scheme.

The scheme undoubtably has great potential to cut carbon emissions using the market and uncover the most cost-effective abatement opportunities.

The Low Carbon Kid says that it just needs designing so that it isn't one of the greatest rip-offs of all time (banking bonuses excluded), that's all.

And if any deal being pushed for by American industry wants to follow the current ETS model you know why. It will benefit their pockets and it won't make the slightest dent in carbon emissions.

What's the solution? Oliver Tickell has researched and developed it in his book and website Kyoto 2.

The Tories' mad energy policy

With the relief that EON decided not to build its coal-fired power station at Kingsnorth last week, it is with dismay that we also heard the Tories policy which is to initiate the building of 5 GW coal power stations as soon as they take office.

Labour may not be much good, but the Tories would be a disaster for energy policy. Railroading big business interests through planning to an even greater extent than Labour, under the pretext of environmentalism.

There's perhaps one good policy and that is the right for every community hosting wind farms to keep for 6 years the business rates generated.

It is the fact that local communities have felt ripped off by big developers not caring about their interests that has held back wind farms in this country.

But a real revolution would be for community owned wind farms to be massively supported as they have been in Denmark for many years, as a result of which there has not been the level of public antipathy towards wind farms that there has been here.

It is the stop-start nature of British energy policy under the NFFO policy that has created this antipathy because only the big developers could stay the field and community developers were squeezed out.

The other Tory policies are to give every household in the country £6,500 to upgrade the energy efficiency of homes; and publication of the planning guidance needed for new nuclear power stations.

The first is limited: some homes will cost more to upgrade than others, and the financial support should be in the form of loans that are paid back on the property from the energy savings created.

Housing authorities also need support to do a mass roll out of renovations of particular districts and streets at the same time which is more cost effective.

It is my argument that we can do without nuclear power because it is not cost efficient and the timescale is too great. The figures produced by the nuclear industry cannot be trusted. Taxpayers will end up supporting the industry to an extent that we can afford even less now than we could before.

"Clean coal" relies on carbon sequestration which is an unproven technology that will be incredibly expensive to implement.

EON gave as their reason for not going ahead with Kingsnorth a reduction in electricity demand. If electricity demand is further reduced by a mass roll-out of energy efficiency making everybody's bills cheaper (hooray!), then why would we need to build all these power stations anyway?

The catch 23 of electric cars

Ah - is it so that we can have an electric cars? But that's robbing Peter to pay Paul! - it's a more efficient use of fossil fuels to burn them directly in a car than it is to burn it in a power station and use the electricity to drive a car.

Why? The output from a coal-fired power station fitted with carbon sequestration is around 10% less in efficiency than one without - so you will only get 20-25% of the original energy in the fossil fuel from such a power station at the plug in your wall.

By the time you have factored in the conversion factors inside the engine of the car converting that electrical energy back into motor energy, you will be lucky to get 10%. Whereas around 50% off the energy in petrol or diesel goes straight into transmission.

The only way of implementing electric cars that makes any sense is if they are fuelled from renewable electricity generated locally to the charging point to minimise transmission losses. That means building more solar, tidal and wind.

Heat pumps - should you believe the hype?

It is not at all clear to the Low Carbon Kid why heat pumps are described as renewable energy technologies. Since they use electricity, they are not. It is especially clear that air source heat pumps, unless powered by renewable electricity, and unless replacing electric heating, should not be used at all.

Read on to find out why... this is an extract from my forthcoming book The Expert Guide To Sustainable Home Refurbishment, to be published by Earthscan next summer.

How heat pumps work

Heat pumps can take heat from the ground, air or a nearby body of water if it’s available. All of them basically work like a fridge backwards.

For example, typically, in an air-source heat pump, air flows over two refrigerant-filled heat exchangers, similar to those in a fridge, one outdoor and one indoor. In the heating mode, liquid refrigerant within the outside coil extracts heat from the outside air, making the refrigerant evaporate into a gas. It then is pumped to the indoor coil, which reverses the process. The refrigerant condenses back into a liquid and returns to begin the cycle again. As the volume of air outside is much greater, the amount of heat in it, when transferred to a smaller volume, results in a higher temperature.

Ground source heat pumps work the same way, but the element containing the coolant is buried in the ground, and so takes the heat from there.

Judging efficiency

Heat pumps are judged by their coefficient of performance (CoP). This is the ratio of the amount of heat produced divided by the electricity consumption of the pump. So for example a heat pump with a CoP of 3 (or 3:1) will produce three times as much heat energy as the electrical energy it consumes. The higher the CoP the better the performance.

You can maximise the CoP by choosing a heating system requiring a lower final water temperature - radiant heating like underfloor or skirting board heating rather than domestic hot water and radiators - and by choosing a heat source with a high average temperature (e.g. the ground rather than air).

The final efficiency will be significantly better for underfloor heating covered by solid screed (tiled etc.) finishes than timber, and/or carpets.

Benefits of heat pumps

Other benefits of heat pumps over conventional boilers include:

• no combustion or explosive gases in the building

• no need for flues or ventilation

• no local pollution (although noise from the outside fan may be a problem if air-source)

• long life expectancy

• low maintenance costs

• the payback period can be as short as 4-5 years and save up to 75% of conventional heating costs.

Ground source heat pumps

These require a network of underground coils or loops to extract heat from the ground. A hole must be dug and the collecting coil buried - usually a closed circuit loop of 20-40mm high-density polyethylene piping filled with a mixture of water and glycol anti-freeze. Holes take two forms: the commonest is a series of horizontal trenches (wet ground is better than dry); or one or more boreholes. The system also includes a heat exchanger, pump and delivery pipes passing under an exterior wall (typically a French window or other door) to the destination.

Care must be taken that the coil makes good contact with the ground. As the depth increases the maximum and minimum soil temperatures begin to lag the surface temperature. At a depth of about 1.5m the lag is about one month. Below 10m the ground temperature remains effectively constant at around the annual average air temperature. Sizing is complex and specialised software is required, available, amongst other places, via the website of The International Ground Source Heat Pump Association (IGSHPA).

Ground-source heat pumps are more expensive but the payback is reduced, financially and carbon-wise, if a hole is being dug anyway, for example for foundations. However they have a long life expectancy (typically 20-25 years and up to 50 years for the ground coil) and are a great idea if the opportunity’s there.

One where the ground is well above freezing (ten degrees) outputting to radiant heating (underfloor or skirting) would be ideal, especially if it is replacing electric heating. It will yield significant carbon savings.

But if it is replacing a modern gas-condensing boiler, which can have over 95% efficiency, the carbon savings are much less.

Air-source heat pumps

Like air-conditioners, they suck in outside air, the units being placed a distance from the dwelling to reduce noise. Despite their reduced efficiency, an advantage of air-source heat pumps over the ground-source variety is their lower installation cost. They are thus more appropriate for renovation projects than ground-source models.

Air-source heat pumps extract heat from the outside air, even in the coldest months. However, the colder it is, the less efficient they become and the more warmth you need.

In mild weather, the COP may be around 4, but at temperatures below around 8°C (17°F) an air-source heat pump can achieve a COP of 2.5 - below the magic 3 level at which carbon savings are realised.

The average COP over seasonal variation is typically 2.5-2.8, but obviously this depends how cold it gets in the winter. As soon as it drops below freezing, the CoP plummets. Of course, it will never reach 1, but it will be much less carbon-efficient than gas or biomass.

Further questions have been raised about the power used by the pump to de-ice itself. Professor David Strong, chief executive of Inbuilt, has observed that “ice build-up on the evaporator of an air-source heat pump is a serious problem, with icing typically occurring whenever outdoor air temperatures fall below about 5°C (this can be as high as 7°C with some systems). In these situations COPs fall to less than one (i.e. worse than direct acting electric heating).”

The de-icing process means that the outdoor heat exchanger becomes the condenser, hot refrigerant being used to melt the ice. But electricity continues to be used by the compressor and pulls heat from inside the building - not you want in cold weather. Some systems use hot gas bypass or direct acting electric elements. Professor Strong has called for an objective assessment of the technology's effectiveness. One is being conducted by the Fraunhofer Institute, and preliminary results show average annual CoP was 2.99. For ground source it was 3.72, significantly better.

Are they noisy? The exterior pump - around 1.2m x 0.7m x 1m tall - generates around 50dB at full fan speed at one metre distance. This is similar to that of an air conditioning unit. The heat exchanger unit, inside - fridge-sized, around 1.8m tall - is about 42dB at one metre distance, similar to a large refrigerator.

Whole house passive stack ventilation with incoming air pre-warmed using a heat pump

Heat pumps can transfer their heat to air or water. If to air, it is directed through vents in the ground floor. The air is drawn through and up the building by pressure differences (heat rises). An advantage of air destination heat pumps is that air into which the heat is passed usually needs a lower temperature than water heating for the same level of comfort, resulting in a higher CoP and increased heat output.

Borderline efficiency

Once the COP descends to 3 or less, if the electricity supplying it is not from a renewable source, and if it is replacing electrical heating, then there is no carbon saving from using the heat pump, since generation and distribution inefficiencies account for two thirds of the energy in the original carbon fuel.

Most of the time air source heat pumps will not achieve a CoP which saves carbon emissions - it will happen only if the air is at or above zero degrees and the target temperature is 35 degrees. A ground source heat pump will perform better.

This is because during the heating season (winter) the outside air temperature is often much lower than the ground temperature (at a depth at which heat is extracted by a ground-source heat pump).

Hot water and heating can be provided 365 days a year; the hot water can be at 55°C; but the CoP will be low, though not as low as 1 - that of a gas or immersion water heater. In other words, it will be more cost-efficient but not as carbon efficient.

Babcock picks up a bargain

The United Kingdom Atomic Energy Authority's commercial arm, UKAEA Ltd, has been snapped up by defence engineering contractor Babcock. UKAEA specialises in nuclear decommissioning, waste management and nuclear new build support services.

It was sold by Peter Mandelson for a mere £50 million. Yet the government has commitments to clean up Britain's massive nuclear waste legacy, the cost of which is estimated to be around £113.7 billion by the Nuclear Decommissioning Authority. Lord Mandelson claimed the deal "generates good value for taxpayers". Quite how this is so remains to be seen.

Last year the firm operating Sellafield nuclear site appealed for former workers to come forward if they remembered where they had deposited nuclear waste. Perhaps Babcock's first job will be to try and find it.

Windsave goes bust revealing the truth about micro wind power

The residential arm of Scottish micro wind generation company Windsave, which supplied roof-mounted wind turbines to former energy minister Brian Wilson, has gone into liquidation.

Hands up those who aren't surprised - even that it took so long.

In 2003 this Scottish company began promoting roof mounted domestic turbines using Photoshopped montages. Despite cries from practitioners in the field -- including this blogger - that the performance figures it was quoting didn’t make any sense - and in fact broke the laws of physics - Brian Wilson, the then UK energy minister, and another Scot, became convinced.

A PR exercise was mounted with his help that succeeded amongst other things in persuading DIY chain B&Q to retail them. In June 2006 their Plug’n’Save system won the title of “Best New Product” at the European Business Awards for the Environment. Hundreds of optimistic householders parted with their cash.

At the beginning of 2009 B&Q finally admitted that they didn’t work and withdrew them from sale in response to many disgruntled owners' angry complaints. They had been told they would be able to generate a good proportion of their electricity and recoup their costs in a few years. Some were lucky to generate a miserable few kilowatt-hours over the entire year.

Real data

The results of a substantial monitoring exercise of real micro-wind turbines in situ both on urban rooftops and free standing in rural areas was published in July 2009 by the Energy Saving Trust and confirmed what the technical experts and those unfortunate householders already knew: that wind speeds in urban areas coupled with the turbulence caused by nearby buildings mean that the speed of 5m/s required for contemporary turbines to operate efficiently is never reached in an urban situation.

To put it bluntly: domestic scale wind turbines only work in the countryside.

And there they work very well: the results of the field monitoring show that “a properly sited and positioned 6kW rated free standing pole mounted turbine with a similar annual performance would be expected to generate approximately 18,000 kWh per annum.” In today’s English money that is £2,340. It represents a very quick payback.

The success of a wind turbine is measured by its load factor and the higher the number the better. The performance of free standing turbines in the survey frequently exceeded the manufacturers’ quoted annual load factors of 17%; the average was 19%, and the best were 30%. By abysmal contrast, “No urban or suburban building mounted sites generated more than 200kWh or £26 per annum, corresponding to load factors of 3% or less.”

No wonder those B&Q customers were upset.

Where micro wind works

Turbines need an uninterrupted wind flow and the higher above the ground the more wind there is. This is why they are commonly mounted on 10m or 25m poles and in exposed places. The same survey by the Energy Saving Trust estimates that in the UK 1.9% of homes are situated in conditions like this and can make use of wind power. That is 455,650 households.

If they all installed 6kW wind turbines than the annual generation from them would be in the order of 3,459GWh. This is the amount of electricity used by twice that number of homes - approximately 870,000, or nearly 1% of the UK is electricity requirements and over 3% of its domestic demand. So they would need to be grid connected - and they could generate an income from their sales. This would then decrease the payback period, especially if feed-in tariffs are available. Without them, the payback period is something like six or seven years under these conditions.

In other words, it’s worth doing in these places and nowhere else. The annual average wind speed needs to be greater than 5 m/s and is preferably measured with an anemometer for 12 months before designing the system, but desktop evaluation can be made first to see if it’s worthwhile doing this by looking at figures from the Met Office. But because local conditions can vary enormously - for example due to thermal updraughts, local topography or sea breezes - there is nothing like real on-site measurement.

Windsave's directors are blaming the planning laws for the fact that they have gone bust. No, gentlemen, it's the laws of physics, something an energy minister ought to be aware of.

Can Britain follow Germany with feed-in tariffs?

The government plans to implement feed-in tariffs by April 2010 to incentivise renewable electricity installations up to a maximum capacity of 5 MW. The consultation document looks at how it could work and best practices from other countries.

It does a good job of setting out the options, but stops short of specific proposals. The following variables are considered:

A fixed tariff pays an overall amount per unit of electricity generated, independent of market price. A premium tariff is an amount paid on top of the market price. In a stepped tariff the amount varies according to type of technology, scale, and local conditions. A flat tariff takes no account of this.

Proposals by the working groups for the Renewable Energy Association, mentioned in the last issue, suggested that all renewable energy generators would be paid a fixed renewable tariff for all energy produced (a “generation tariff”), and an additional price for that exported to the grid, set at a level established between the supply company and the beneficiary and subject to market competition. This is Taken up in one of these consultation documents but not others, which argue on the whole for fixed, stepped tariffs.

At a domestic scale most individuals will use much of their generated electricity themselves, and their use may be unpredictable so they may still be cautious about investing in these technologies because the payback period will, even with these subsidies, be considerable without other grants for installation. The main document says that a generation tariff will be a fixed price, set at different levels for different technologies and installation sizes. "We expect to lower the tariff levels for new projects over the years, but any individual installation, once starting to receive a tariff at a certain level, will continue to receive the same generation tariff level throughout its entire support period under the FITs".

To give long-term certainty to investors, the consultation process to "require suppliers to purchase exports from FITs generators at a guaranteed minimum price". The tariff level will have to be sufficiently high to attract the level of uptake needed to meet targets. The report notes that "due to the fact that small generators provide only small amounts of electricity to the grid, they may have difficulty in securing the same wholesale price for exports that a large-scale generator can access, and may receive a much lower price".

Criticism has been made that the proposals are not being examined at the same time as those for renewable heat, which is to be introduced a year later. This is especially bizarre since the report does look at the electricity-only component of combined heat and power technologies.

FITs or RO?

The consultation proposes that from 1 April 2010 installations of 50kW and below eligible for FITs will only get the option of receiving FITs. However, those from 50kW to 5MW will be able to choose between the RO and FITs.

Deadline for responses: 15 October 2009. See the DECC consultation page

How it might work in practice

A house (it could be an office building) generates 2,500 kilowatt hours (kWh) per annum (e.g. from a solar PV panel). They use 1,500kWh of the electricity they generate. 1,000kWh is exported, because it is generated at times when the household does not use it. The household uses a total of 4,500kWh per annum. Therefore, it needs to import 3,000kWh from an electricity supplier.

If the tariff for generation is, for example, 30p/kWh, the householders will receive a FITs payment of £750 per annum (2500kWh x 30p) for the electricity they generate. They will also receive a payment for the electricity they export; assuming a price of 5p/kWh this would be £50 (1000kWh x 5p). They also derive a benefit from the 1,500kWh they generate and use on-site as that will offset 1,500kWh they would otherwise have had to buy from their electricity supplier. Assuming an import price of 10p/KWh this would be a saving of £150 (1500kWh x 10p).

If FITs were delivered by a "generation only" tariff, and generators were required to pay import rates for all electricity used (including that generated on-site) the household would receive much more: £950 per annum (2500kWh x 38p).