Tuesday, November 29, 2011

UK Government calls for more investment in offshore wind

The Ormonde Offshore Wind Farm under construction in the Irish Sea, 10km off Barrow-in-Furness, with 30 REpower 5M wind turbines.
David Cameron is backing a call to investment funds, pension funds and sovereign wealth funds to invest in large offshore wind projects.

But potential investors will need more confidence that the government is not going to keep shifting the regulatory goalposts.

At a conference in London today, Ministers are meeting potential investors in offshore wind projects to establish what can be done to increase investment in this area.

Prime Minister David Cameron, said: “I see offshore wind as a significant energy and industrial opportunity for the UK, and one that I am determined to seize.

He said he believes "the UK will remain the world’s most attractive offshore wind market for many years to come," citing "abundant natural advantages and a world-leading marine engineering base".

He underscored the Coalition Government's "strong support for the growth of renewable energy in order to help diversify and decarbonise our long term energy mix."

The UK needs around £200bn of investment in new energy infrastructure to help reduce dependence on imported fossil fuels and boost our energy security, and the Government is looking to the banks and pension funds to fund it, as well as the UK’s current major energy suppliers.

Charles Hendry, Minister of State for Energy, said: “We have invited potential investors to London today to make the case for offshore wind as a stable, long-term and lucrative investment opportunity."

Risk management

Hendry added that "if people are not seriously considering investing here then I want to know why.”

Some of the answers can be found in a survey of 284 senior-level renewable energy executives, by the Economist Intelligence Unit (EIU), sponsored by Swiss Re, and published today.

It finds that operators are nervous about putting their money into renewables, and wind especially, because they need to feel confident about the security of the regulatory landscape, cost-effective insurance and protection from the vagaries of the weather.

In particular, investors will be wanting to know today that any government support on offer will be guaranteed for a long period of time in order to provide the security their business plans require.

Recent sudden changes to levels of support such as tax breaks and subsidies have not given them confidence.

Overcoming financial risks is another challenge perceived by the executives, affecting 76% of the survey's respondents. Renewable energy projects are often capital-intensive and highly leveraged, and up to 70-80% financed through loans.

A change in the weather

62% of respondents also place political and regulatory risk as important, while weather related risk is even more important for wind power producers (66%).

The impact of weather is more pronounced on wind than any other renewable energy. Returns may deviate by 25% from expected in any given year, whereas solar radiation levels typically deviate by no more than 4% from normal levels.

Of course, the deviation may be up or down, and it is a feature of climate change itself that weather is becoming more unpredictable.

Hans Bünting, CFO of German firm RWE Innogy, says that although weather variations might smooth out over the long term, “the main risks coming from instability are on the shorter-term weather risks. It creates volatility of earnings year to year.”

The need for insurance

Most operators therefore turn to insurance to manage this risk, according to Agostino Galvagni, Chief Executive Officer Swiss Re Corporate Solutions. "Risk management measures such as insurance will be key to encourage further private sector investment," he emphasises.

The Economist survey says that at present only 60% of respondents regard themselves as being successful at transferring risks this way, indicating that learning is still taking place.

Insurance company Swiss Re regards this as crucial to managing the world's safe transition to a post-carbon, climate-friendly future. "New technologies and innovation in renewable energy will be the only possibilities left should a global policy regime to reduce carbon emission not materialise" at Durban, says Andreas Spiegel, Swiss Re's Senior Climate Change Adviser.

"This is why Swiss Re is investing a great deal of research to better understand how insurance can mobilise financing for renewable energy projects and identify the most cost-effective ways to reduce risks, such as construction and operational risks as well as risks related to the intermittent nature of renewable energy production."

Only 4% of wind power producers use weather-based financial derivatives to protect themselves, due to their expense and complexity, but this is slowly increasing. One obstacle is that many offerings are currently not appropriate for small-scale projects.

This highlights a need in the insurance industry for more underwriters and risk engineers with specialised insight into the renewable energy industry, who can reassure investors that their cash will be safe and provide cheaper policies.

This is particularly true if the UK Government wishes to interest the big pension fundholders in this non-traditional type of investment.

Spreading the risk

One general way to spread business risk for developers is to take a portfolio of equity investors into a project, or to enter a project as part of a consortium or joint venture with other renewable energy developers or financial partners.

A recent example is the joint venture between DONG Energy and Siemens Project Ventures to acquire a 50% stake of Lincs, a 270MW wind farm project situated five miles off the UK coast.

Another way for investors and operators to reduce business risk is to buy into renewable energy developments at a later stage, once the riskier early stages of development are complete, and the renewable power assets are fully permitted or operational.

Potential investors can seek expert advice on potential investments from either government agencies, like the Carbon Trust, or external consultants, as do just over one-half of developers.

There is no shortage of these consultants, who, in the words of one of them, are there to "deliver the insurance and risk management services our clients require to capitalise on the opportunities the flourishing renewable/cleantech power sector presents”.

In the Economist survey, most operators feel they are successful in managing the various aspects of risk management: 70% say their companies are either “highly successful” or “somewhat successful” in identifying risks.

61% say they are similarly competent in assessing the scale and scope of risk.

However, investors might worry that they could end up with some of the 39% who aren't, and Charles Hendry could finish today wondering how he can help them to improve their confidence.

High energy users to get support to cut bills by up to 10%

Amongst the Christmas presents the Chancellor George Osborne is expected to give to the British economy today in his Autumn Statement, is one high on the wish list of energy-intensive businesses: relief on their carbon taxes.

But critics say that many of the have already been given a free ride, and have plenty of opportunity to reduce their energy costs.

It's expected that the combined effect of the compensations offered by Osborne will be to reduce energy bills for such firms by 5-10%.

The rebate will be worth a total of about £212 million for the period 2012-2016 to those affected by the EU Emissions Trading Scheme (EU-ETS) tax and the Climate Change Levy (CCL), and £250 million in the form of rebates and compensation for those affected by the upcoming carbon price floor.

High energy users, backed by free-market Conservatives, have been complaining that these taxes harm their international competitiveness, citing the fact that their German competitors, for instance, benefit from carbon tax rebates worth more than €5 billion a year, paying only €0.5 of a €35 tax.

For example, medium-sized cement manufacturer CEMEX faces an alleged £20 million bill for complying with carbon legislation, and the multinational Tata Steel has claimed that the tax proposals are making it think twice about a £1.2 billion investment in the UK.

Critics argue that a rebate will reduce the incentive on firms to save energy, saying that the Climate Change Agreements (CCA), which thousands of such firms have signed up to and which entitle them to reductions on the Levy in return for saving energy, are creating real savings in energy bills and carbon emissions.

The Department for Business will consult on the proposals soon.

Carbon price controversy

The EU-ETS sets a cap on companies’ carbon emissions. If they want to emit more, they must buy credits that each represent one tonne of CO2.

The Treasury's planned compensation for the effect of the EU-ETS on big emitters will total £12 million in 2012/13 and £50 million in each of the following tax years.

The new carbon price floor, to be introduced in 2013, will artificially increase the price of these credits from that set by the market to that set by the government; the Treasury's proposal is for this to be almost double the current, lowest-ever, market price: £16 per tonne of CO2 in 18 months' time, rising to £30 per tonne by 2020.

The effect of the price floor is therefore likely to be keenly felt, since the price of carbon is rock bottom now.

The compensation amount suggested to cushion this effect is £40 million in 2013 and £60 million in 2014.

The purpose of the price floor is to provide funding for investment in green technology; whereas the CCL revenue disappears into the Treasury's general accounts. (The Labour government had originally intended the CCL also to fund green investment, but Osborne grabbed it to pay off the defecit.)

The Treasury has also signalled that the discount on the CCL for those signed up to the CCA will rise to 90% from April 1, 2013, instead of the 80% already scheduled. This follows Osborne's reduction of it from 80% (set by Labour) to 65% earlier this year - another U-turn by Osborne.

This change will cost the taxpayer £40m over 2013-2015.

Furthermore, the energy-guzzling industries, which include the glass, paper, cement, chemicals, oil, metals, plastics and food sectors, will also receive protection from any price changes resulting from the measures to reform the electricity market currently being discussed.

"(The measures) will help make sure energy intensive industries are internationally competitive, but the government remains committed to the green agenda and to cutting carbon emissions by 80 percent by 2050," a Treasury source said.

Greenpeace was quick to criticise the proposals. “Energy intensive users already received a huge windfall when they were handed free pollution permits under the emissions trading scheme," said Doug Parr, its policy director.

"Now is not the time for George Osborne to be caving in to the special pleading of vested interests.”

I believe that several companies, such as Rio Tinto, are blaming carbon taxes simply because they want any burden reduced, whereas in fact it is the general reduction in demand for commodities and the higher price of fossil fuels that is the main cause of any economic woes. 

Monday, November 28, 2011

The voice of the poor needs to be heard at Durban

Through the clamour from business and political leaders, it's the voices of the world's poor to which we should now listen.

They are coming from Burundi, from Rwanda, from Uganda, Kenya, Tanzania and Zambia, from Zimbabwe and South Africa.

They are coming from all over Africa, and everyone whom they pass cheers them on and wishes them good luck, their hearts full of hope.

They are the Trans-African Caravan of Hope, and they are on a 17-day journey through ten nations, expecting to arrive in Durban tomorrow, along with the high-flying negotiators from 200 countries.

They are carrying messages from women farmers, from young people, from overwhelmingly poor people, which they hope will reach the ears of the negotiators from the rich nations.

Amongst them is 15 year-old Ashleigh Chimhenge of Townsend High School in Bulawayo. She is marching because she wants to "create awareness of the effects of climate change in my community″.

A woman I know from my home in Lobengula in Bulawayo died recently due to the heat wave," she says, attributing it to climate change.

The marchers may be poor and relatively uneducated, but they are not stupid.

They know that if the average global temperatures rise beyond three degrees, as the recent World Energy Council forecast estimated to be likely if all the fossil fuel burning power stations currently planned are actually built, then their lands will become unfarmable.

Their crops will fail, floods or droughts will wash or burn away their hope.

Ashleigh knows this first hand, having seen droughts and poor rains in the Matabeleland Provinces among other provinces in Zimbabwe. She fears that soon, she or her children will have no choice but to leave her homelands or die.

If you are at the blunt end, the bottom, or the coalface if you like, of the world's economic system, then this is the stark reality.

It's the rich who pollute the most and the poor who suffer the most.

The caravan is organised by the Pan African Climate Justice Alliance (PACJA), a coalition of 300 civil society organiastions in 45 African countries.

The noises coming from the rich countries are causing alarm in Africa, in particular the talk that there will be no legally binding deal and no successor to the Kyoto Protocol.

Therefore the PACJA is trying to get Europe and the United States to listen to what they have to say about the dangers of continued procrastination against climate action.

Africa is already experiencing the effects of climate change. There are predictions of a reduction in crop yields by as much as 50%, the spread of disease, and increasing water stress for 75-250 million in some countries by 2020.

If such threats were being made in Europe or the USA, then Africans know that a far greater sense of urgency would prevail.

What will happen when the caravan reaches the Inkosi Albert Luthuli International Conference Centre in Durban, South Africa? Will they even be allowed within a mile of the halls? Or will they be kept well out of earshot of the delegates in suits?

At COP15 and COP16 there were attempts to split the African position on negotiations, and overt bullying of negotiators from poorer countries by those from the UK and the USA, in order to secure a deal that they could sell back home.

A report compiled by the World Development Movement, which campaigns on half of poor countries in the UK, contains testimonies from these negotiators that reveal how countries such as the UK bribed poor countries into signing up to the Copenhagen and Cancun agreements against their interests by making funding conditional on their acquiescence.

A variety of tactics and tricks, from speaking only in English, to back-room manipulation and intimidation, including outright deception and linking agreement to trade deals and aid, are catalogued, at COP15 and COP16.

At COP15, Ed Miliband, then the UK’s climate change minister, told negotiators they must accept the Copenhagen Accord, otherwise the UK would not “operationalise the funds”.

If this would happen in FIFA the whole world would be scandalised!” claimed one developing country negotiator.

Another interviewee told the report's author that developing country negotiators who are outspoken "are taken out of delegations for one reason or another, or booted upstairs, or suddenly are transferred, or lose their jobs, as a result of external pressures, usually in the form of some kind of bribe (not necessarily money), or exchange".

In Denmark, the ‘Copenhagen Accord’ was negotiated by just 26 countries and then presented to a furious plenary.

Such insights into the murky corners of these high pressure talks illustrate the lengths to which parties will go when the stakes are so high.

But it is because they could hardly be any higher that it is the voice of the most vulnerable to which we must pay the most attention.

Ferrial Adam, the climate change and energy campaigner for Greenpeace Africa, speaking to a group of Randfontein community workers this week, said, "What was established in Cancun in terms of outcomes, we need more of that. Political pledges are not enough. We need ambitious targets so that we can hold countries accountable… Small steps will not get us there."

The caravan is taking many steps to reach Durban. They have courage and faith, which they hope is shared by the leaders of the world.

From tomorrow, Ashleigh and many others will be waiting and hoping for the outcome at COP17 which they, and the world, desperately need.

Friday, November 25, 2011

UK seeks legally binding climate agreement by 2015

The UK would like to see a legally binding "Treaty framework" on measures to combat global climate change "covering everyone now", but hopes it will be complete by 2015, Chris Huhne said yesterday.

However, at the same time, carbon prices reached a new all-time low in Europe, raising fresh doubts over the ability of the markets to finance the technical solutions needed to fight climate chaos.

Speaking to Imperial College's Grantham Institute, with the COP17 United Nations Climate Change Conference in Durban just a few days away, the Energy Secretary called climate change "the biggest market failure the world has ever seen".

He said that at Durban, "we need major economies to commit to a global legally binding framework – building on what Kyoto started, but going much broader.

"And we need negotiations on this new agreement to complete as soon as possible, and by 2015 at the latest."

Expressing hope that this can be achieved despite major differences among nations, he emphasised that the UK has always backed a legally binding agreement under the United Nations, because "no pressing international problem has been solved without one".

He cited a recent survey which found that 83% of business leaders want such an agreement.

Mr. Huhne said he remains hopeful that a deal can be reached because "compared to world trade agreements, or non-proliferation talks, we are actually making good progress".

A successful deal, he said, would "move to a system that reflects the genuine diversity of responsibility and capacity", which recognises current sticking points such as mis-definitions of what makes a ″developing″ or ″developed″ nation by labelling richer Singapore as "developing" yet poorer Bulgaria "developed".

He said that the UK would also push for Europe to agree to a 30% cut in emissions by 2020 "early next year".

"We already have the solutions" - UNEP

On Wednesday the United Nations Environment Program (UNEP) warned that greenhouse gas emissions in 2020 could rise more than had been forecasted, to between 6 billion and 11 billion tons above what is needed to limit global warming to within the 2 degrees Celsius limit that is considered ″safe″.

"To stay within the 2 degree limit, global emissions will have to peak soon (and) total greenhouse gas emissions in 2050 must be about 46% lower than their 1990 level, or about 53% lower than their 2005 level," its report, Bridging the Gap says.

It emphasises that renewable energy and energy efficiency technologies are the way out of the problem. "The world already has the solutions to avert damaging climate change" it says.

Half of these measures, that are described in the report, "can deliver net cost savings over their lifetime; for example, from reduced fuel consumption or the use of recovered gas".

It continues, "Other measures to cut short-lived climate forcers would incur higher costs over a short-term basis, but can achieve major savings in other areas, such as the health improvements and reduced damage to ecosystems and crops associated with cleaner air".

Carbon price fall

But the prospect of delivering these, at least in Europe, took a blow yesterday when the value of carbon permits fell to their lowest level since 2007, partly as a function of reduced industrial production due to the Eurozone's sovereign-debt crisis.

The December 2011 energy contract fell 13.8% in two days, the biggest price decline in five months, on a fall in industrial orders of 6.4% in September, itself the biggest drop in almost three years.

This has reduced energy demand from Europe's 11,000 factories and their supply by fossil-fuel-burning power stations, which have to buy carbon allowances and credits in order to meet demand.

This has added to an existing oversupply of carbon permits in Europe thereby reducing the price further. The reduced demand for energy is also suppressing its projected future price.

In turn, this is affecting the business plans of renewable energy developers like SSE, who hope to double their renewable electricity capacity by 2015 by spending £1bn on new wind farms and hydro-electric plants.

The worry is that this may make companies and utilities continue to favour cheaper, more-polluting forms of energy, such as coal and gas.

The market is bracing itself for further falls in the carbon price as 300 million further carbon permits from the EU's post-2012 new entrants' reserve will be put on sale at the end of this month.

Speculators are wondering just how low the price can go.

UK measures

In more positive news, earlier yesterday, DECC had indicated that Tuesday's Autumn Budget Statement. by the Chancellor George Osborne, will contain £200m of new and additional Government funding to provide a ″special time-limited ‘introductory’ offer″ to increase the early take-up of the Green Deal energy efficiency scheme.

Furthermore, Energy Minister Charles Hendry issued a statement at the EU Energy Council, along with other coastal European countries, in support of the potential of the marine energy industry and asking for European-level leadership to maintain the region's competitive advantage.

Amidst this, back at Imperial College yesterday, Mr. Huhne tried to remain upbeat. He reminded delegates of the financial measures already allocated by the UK to developing countries to tackle climate change:
  • giving more than half of its Fast Start finance, and much of its £1.5bn pledge
  • budgeting for climate finance beyond the Fast Start period
  • backing the Green Climate Fund
  • setting up the International Climate Fund, which will account for 7.5% of UK Official Development Assistance (ODA) by the April 2015
At the end of his speech, Mr. Huhne quoted a South African tribal saying: "the elephant’s trunk doesn’t weigh it down".

Translated, he said this means: "we must all carry our own burden".

He said this referred to all nations as they approach the Durban negotiating table.

Or perhaps he was referring to himself. The Energy Secretary certainly has his work cut out for him.

Huhne claims that the Green Deal will cut business energy bills

The Green Deal will "kickstart £14bn investment over the next decade, supporting at least 65,000 insulation and construction jobs by 2015", Energy Secretary Chris Huhne claimed yesterday as he launched consultations on key areas of climate and energy policy enshrined in the Energy Act 2011.

Speaking prior to the defeat by 71 votes of the Labour motion to block the Government's proposed changes to the solar Feed-In Tariff on Wednesday night, Mr. Huhne told Parliament that "rising world gas prices will push up bills for both gas and electricity, but our prices will be moderated by our policies."

The Energy Secretary was referring mostly to domestic energy prices, which he said would overall be 7% or £94 lower in 2020 than if these polices were not in place and we had to rely on fossil fuels.

However, the story is not the same for businesses.

While many businesses are able to access the advice of the Carbon Trust, who, for example, recently pointed out that simply by switching to more efficient variable motors and drives, a medium sized business with an electricity spend of £50,000 could save £5,000 per year, Mr Huhne acknowledged that some firms are not able to make significant efficiency savings due to the nature of the industrial processes they employ.

Additionally, many businesses pay energy prices that are closer to the wholesale level, and therefore price rises seem to have a harsher impact: the Government's own estimates are that by 2020, policies could add 19% to the average energy bill of medium-sized business energy consumers, whereas the figure for large energy intensive users could be anywhere between 2% and 20%.

It is partly so that Government policies on climate change do not impair their international competitiveness, Mr. Huhne said, that "the Government is committed, before the end of the year, to announcing a package of measures for those energy intensive industries".

He said this is also why he is working with Vince Cable's Business Department, and giving more powers to Ofgem, such as allowing it to extend the role of Elexon in regulating the wholesale market, in another consultation that has been announced this week.

Announcing the consultation on the Green Deal as well as making the Annual Energy Statement, Mr. Huhne underscored that businesses as well as homes will be able to take advantage of the deal.

The scheme will let them install energy saving technologies such as insulation at no upfront cost, with repayments made over time out of the energy savings.

Mr. Huhne also claimed that there will be at least a 3% increase in green exports plus future growth from policies like the Renewable Heat Incentive.

Exactly how the financing of the Green Deal will work has yet to be explored, but he promised that up to £150 in cashback could be available for those taking out a Green Deal as part of efforts to make the scheme as attractive as possible.

Mr. Huhne even said that a net saving on domestic energy bills will be possible as early as 2013. "This assumes a central gas price estimate of nearly 70p/therm in 2020," he said. "If the gas price were to be higher, householders will be even better off."

Help for the fuel poor

Mr. Huhne confirmed that the Energy Company Obligation, which is also being consulted on, will force energy companies to provide £1.3 billion a year to target Green Deal measures at those in fuel poverty and solid walled properties.
But to ensure that not only the big energy companies benefit from the financial benefits of the work, the ECO consultation specifies that up to 50% of it should be executed by other providers, such as local authorities and other Green Deal providers.

Mr. Huhne said that this would "help make ECO more cost effective for consumers, and get more competition into the market" so that "smaller providers aren’t crowded out".

Some far-seeing companies that have already been installing solar PV systems under the FITs scheme, and who know that they are going to have to offer energy efficiency measures in future as part of the proposed changes to the way the scheme is offered to households, are already considering how they can take advantage of this opportunity.

The plight of those on low incomes was highlighted today by two new pieces of research from the Rowntree Trust which show that those in deprived neighbourhoods contribute the least to climate change but are likely to be the worst affected by it.

Understanding the social impacts of UK climate policies reveals that wealthier households have the highest energy use and people in the 45–55 age group emit 50% more carbon than the under-25s.

In terms of climate change impacts, Yorkshire and Humberside are the most disadvantaged regions due to the combination of high social vulnerabilities and high likelihoods of flooding, but nearly a quarter of all London neighbourhoods are most likely to suffer and least likely to be able to cope with the effects of heat waves.

The Trust is therefore calling not only for more support to address fuel poverty, but also protection for these regions from the dangers associated with climate chaos, and help for those who have difficulty in obtaining insurance against damage caused by it.

The Energy Statement was welcomed by RenewableUK, especially the news that the current cost to the ordinary household of support for wind power is 18 pence per week, and that in 2020, the cost to consumers of support for large-scale renewables will be less than £2 per week, or 3.5% of an annual energy bill, "far less than opponents of renewables claim".

“The figures in the Government’s Annual Energy Statement demonstrate this simple truth – that green measures, far from being expensive, can actually save us money," said RenewableUK Chief Executive Maria McCaffery, "and we’ll have tens of thousands of new green-collar jobs, thanks to that investment”.

Garry Worthington, Head of Green Deal for Climate Energy, commented that he was “pleased to see the proposal to appoint a Green Deal oversight body and an ECO administrator", and hoped they would "promote and facilitate regional and local Green Deal schemes".

Other features of the deal proposed by the consultation are:
  • an accreditation framework for installers
  • provision for collection of finance repayments through the electricity bill and remittance to Green Deal providers or nominated finance providers
  • partnerships and localised delivery of the Green Deal and ECO to ensure that Green Deal finance and ECO support are seamlessly combined behind the scene
  • a consumer protection regime.

Wednesday, November 23, 2011

New way of supporting solar PV floated as protests mount against FIT cuts

Caught between protests over cuts to feed-in tariff support for domestic solar PV installations and the need to reduce the impact on householders' electricity bills, the Government is considering a “capacity trigger” system to reduce the amount of the help larger systems are given, and spread the support over more installations.

It's one idea that will be proposed in consultation documents which DECC is expected to publish before the end of the year, and it is known to have the support of both the Secretary of State, Chris Huhne, and energy minister Greg Barker.

In Germany, FITs for solar modules will be reduced by 15% next year, but the amount of the tariff is reduced depending on the generation capacity of each installation.

The tariff is calculated by adding an overall reduction of the tariff (9%) to an amount relative to what is installed. For example, an installation above 3,500 MW of new PV capacity would entail a 12% reduction, while 5,200 MW would entail a 15% reduction.

A parliamentary advisor to Mr Huhne, Duncan Hames, is quoted as saying: “It would be naive not to plan for future cost reductions in panels. We need tariffs that will mirror reality and we should look to what they have been able to do in Germany to have a smoother path on the way to solar competing with other industries.”

The idea comes from a report looking at how to design solar PV tariffs to maintain rapid growth while limiting costs to taxpayers, which was published this summer by investment advisors Deutsche Bank, and called The German Feed-in Tariff for PV: Managing Volume Success with Price Response.

Under Germany's new Renewable Energy Action Plan, which is now based on ideas in the report, solar PV will generate 41 TWh of electricity per year for as much as 7% of 2020 consumption.

Wind energy will contribute 100 TWh or nearly half of the 217 TWh of renewable generation expected by 2020. Solar PV will deliver nearly 20%.

Policymakers are looking at ways to limit the cost of solar PV development not only in absolute terms but also relative to other renewables.

Triggers for cost reduction can also be time-based or cost-based.

As PV systems have seen a 50% cost reduction in less than two years, it is important that in 25 years time, the lifetime of the guaranteed tariff, electricity bill payers are not contributing what could by then be a completely disproportionate amount.

The Renewable Energy Association, which has fought the reduction in the FITs in the UK, has indicated that a capacity trigger "could be helpful to us" as "it would mean that if the price of panels doesn’t come down as anticipated, the model would account for that.”

One criticism of this solution is that, per installed unit of capacity, the cost of installing many separate systems is greater than that of installing a smaller number of higher systems. Therefore the cash available will support less, not more, generation capacity.

Judicial review

Chris Huhne has come under prolonged criticism over the FITs policy shift. Lord Teverson, LibDem spokesman on energy in the House of Lords, has said he should have thought through the changes earlier and had not shown “good management” of the process.

Almost three times as much solar capacity than expected by DECC had been installed by October, in 100,000 separate installations with over 400 megawatts of capacity.

Yesterday, the solar industry, backed by hundreds of supporters, took their protest to Parliament.

At a meeting chaired by Seb Berry, Head of Public Affairs for Solarcentury, a panel including Shadow Energy and Climate Secretary Caroline Flint, Caroline Lucas, the Greens' MP, Alan Simpson, the ex-Labour MP who helped design the Feed-in Tariff, and Chairman of the Solar Trade Association (STA) Howard Johns, attacked the cuts.

Friends of the Earth announced they had issued a request for a judicial review on the Government consultation's December 12 deadline for solar PV installations at the current tariff rate.

The campaign body's Executive Director Andy Atkins said, "The solar industry has been one of the UK's brightest success stories in the last two years, helping homes and communities across the country free themselves from expensive fossil fuels.

"We believe these plans are illegal as well as ill-advised - so we are taking action to bring ministers to court."

One casualty of the cuts in FITs has been a 26-acre solar farm in Chewton Mendip that was being developed by Ecotricity, which it says would have generated enough power for 1500 homes.

Also abandoned is a £6 million scheme to fit solar panels on 1,000 council houses in Kirklees.

The tariff rate for large installations like this has been cut by 70%.

Tuesday, November 22, 2011

UK Government nuclear policy slammed by Science and Technology Committee

Government funding, R&D and its attitude to the industry nuclear are retarding the chances of a nuclear renaissance in Britain.

Moreover, the issue of the legacy of nuclear waste is not being addressed with sufficient rigour.

Even more surprising, the Department for Energy and Climate Change seems determined to relinquish any responsibility for funding, or helping to secure funding, to maintain nuclear R&D capabilities and associated expertise in the UK.

These are the extraordinary views of Parliament's Science and Technology Committee, which has just released a report on the nation's Nuclear Research and Development Capabilities.

The Committee, headed by Lord Krebs, was tasked with examining whether or not the Government is doing enough to maintain and develop UK nuclear research and development (R&D) capabilities to ensure that nuclear energy is a viable option for the future.

Its conclusion is: "they are not".

The Government's avowed policy is for 16 gigawatts of new nuclear capacity by 2025, possibly rising to up to 40% by 2050.

But Lord Krebs says, "We're setting out on this journey with no map, no driver, and no mechanic to fix the car if anything goes wrong".

The Lords do not consider that Britain is seen by the nuclear industry outside Britain as a serious player, as it has no way of maintaining the breadth of R&D capabilities and associated expertise needed to meet the UK's future energy policies.

This is because successive governments have let the situation slide due to the touchy political nature of the issue.

The result is that the expertise of nuclear scientists, engineers and regulators is being lost as they retire.

Lord Krebs says that the current approach is an "Argos catalogue" one, by which he means buying a new generation of ready-made nuclear power plants from overseas producers.

This means that the UK will lack the skilled staff necessary to regulate the new industry, deal with the legacy issues of waste disposal, or develop, let alone export, new technologies.

The report concludes that ministers don't even recognise that there is a problem. Lord Krebs labels this "complacent" and "lacking credibility".

For example, the Secretary of State for Energy told the Committee that he could envisage a future in which fossil fuels will dominate. This led the Committee to say, "This apparent inconsistency causes us to question whether the current policy framework is sufficient to encourage more secure, low-carbon sources such as nuclear energy and renewables".

The report criticises the confusion in Whitehall about which government department, BIS or DECC, is responsible for UK nuclear R&D capabilities and associated expertise.

This has "led to BIS and DECC tending to look to the other to tackle gaps in R&D capabilities and associated expertise".

They therefore recommend that "for the avoidance of doubt", DECC should be the lead department "in developing a national nuclear policy and R&D roadmap, outlining what R&D capabilities and associated expertise are necessary to support its policies".

This roadmap would detail the co-ordination of R&D and associated expertise, maintain a healthy research base to attract new people and skills, set up international collaboration partnerships, and provide industry with the clarity it needs to encourage them to invest in R&D and associated expertise in the UK.

It should then set up an independent Nuclear R&D Board, made up of experts drawn from the Government, industry and academia.

This board would advise, monitor and report to DECC on the development and implementation of the roadmap and the Government's nuclear strategy, as well as identifying R&D gaps and, where necessary, commission research to fill them.

Funding gap

The National Nuclear Laboratory, which is supposed to help reduce the cost of clean-up and decommissioning, maintain the skill level and attract new people to the industry, is unique amongst similar bodies in other countries in that it receives no funding from central Government.

The Committee wants to see its remit extended to cover applied long-term R&D, under the direction of a nuclear R&D Board, in areas for which no body currently has responsibility, such as advanced fuel recycling and reprocessing and deep geological disposal.

The Coalition is split on nuclear power however, with the LibDems adamant that public money should not be spent on developing new civil nuclear capability.

The Lords therefore hope that funding for this "might come" from the nuclear industry or the reallocation of funding from elsewhere. It suggests taking 1% of the £2.8 billion allocated to DECC to decommissioning and clean up each year.

Nuclear waste

The Lords draw attention as well to the "urgent need to deal with the clean-up of legacy waste" and notes that no body has responsibility for R&D on deep geological disposal.

They lament the lack of a long-term research programme to deal with the UK's plutonium stockpile.

But they also think that the way in which the NDA is developing the framework to deal with the problem of waste from new build nuclear power stations is inadequate, and call on the Government to "clarify the NDA's responsibilities" in this regard, and urgently put forward a credible solution.

On nuclear safety, in the light of the unremitting bad news from Fukushima (unsafe levels of caesium have now been found in Japanese rice for the first time), the report says that the Office for Nuclear Regulation should immediately set up a new Nuclear Safety Advisory Committee.

The last one was disbanded in 2008, with responsibility transferred to the Health and Safety Executive.

The prognosis for nuclear

In the light of this and other recent developments, such as the decision of some companies to withdraw from nuclear newbuild in Britain, and the escalating expense of new nuclear, I myself will be very surprisd to see more than one or two new nuclear power stations built in this country.

I have never been convinced either by carbon capture and storage.

The way forward is, with increasing clarity, energy efficiency and renewables.

Were your gadgets manufactured with renewable energy?

Major brands are backing initiatives to promote renewable energy, with the spotlight particularly on IT companies.

Motorola, Lego and Deutsche Bank are just three of the major brands to sign up to a new scheme that backs wind power.

Many other companies, too, are finding competitive advantage in promoting the fact that they source green energy, while those which do not are experiencing a public backlash.

WindMade is a new label that you might start seeing on products, that will signify that they have been manufactured using electricity generated by wind turbines.

It is being launched by Danish turbine-manufacturer Vestas, through a non-profit organisation, also called WindMade.

Its mission is to accelerate the adoption of renewable energy by appealing to supporters to favour those products bearing the label when making purchases.

“Any company that uses at least 25% of wind energy can adopt the “WindMade” label, a company that recognises companies that focus on using wind as a renewable energy source,” Bragi Fjalldal of WindMade explained.

In support of its mission, Vestas' marketing chief, Morten Albæk, quotes the results of a survey the company has commissioned: "67 percent of 31,000 consumers globally have told us they would favour WindMade™ products, even at a premium,” he says.

Deutsche Bank's Group Sustainability Officer, Sabine Miltner, says that they have joined the scheme because “we believe clean growth is good economics”.

She says that Deutsche is “committed to leveraging our core business expertise towards a cleaner and more energy efficient global economy", and that the bank believes "in leading by example".

Deutsche Bank has increased its use of clean electricity from 7% to 65% over the last four years.

She says that the "market transparency" afforded by the label is important.

Other brands are recognising this too, as a means of gaining competitive advantage.

Unfriend coal

The highly visible campaign to get Facebook to "unfriend coal" has been remarkably successful.

Stimulated by the fact that the company chose to power its first two self-owned data centres primarily with coal, the Greenpeace-backed campaign was started a year ago.

It celebrated on 27 October when Facebook’s spokesperson Michael Kirkland announced that it has chosen a site for its new data centre in Luleå, Sweden, which "will be the first Facebook data centre powered primarily by renewable power. It's a really important consideration for us".

Facebook has yet to release more information on exactly how the centre will be powered.

Recent research by Justin Ma and Barath Raghavan from the University of California, Berkeley and the International Computer Science Institute, estimates that the internet consumes between 170 and 307 GW, or just under two percent of the entire world's electricity use.

Looking at the impact of the ubiquitous mobile phones and laptops they also estimated that a mobile requires 1GJ to manufacture and a laptop 4.5 GJ.

Yet the average smartphone is kept for just two years and the average laptop three years.

Greenpeace's Guide to Greener Electronics surveys top IT companies' environmental performance each year. It still finds that most electronic gadgets are made using coal-fired generators.

Dell and Hewlett Packard are the best performing manufacturers, sharing a target to increase their use of renewable energy to 100 percent by 2020.

Apple, on the other hand, is not a green Apple, because it has no external verification of its energy use and no target to reduce emissions.

Sony has also earnt the ire of green campaigners for actually lobbying against stricter energy efficiency standards in California.

Google is another firm taking the issue seriously. Its electricity use was 25% renewable in 2010 and it has a target of 35% in 2012. The search engine is investing heavily in renewable electricity, especially solar power.

Google recently released the environmental footprint of several of its data centres and “cloud” services in the interests of transparency.

It says its motivation is "to enable users to hold their service providers accountable for minimising their environmental impact, as well as to manage their own footprint", and clearly sees a competitive advantage in doing so.

Other brands from many different sectors, from vehicles to white goods, are promoted on the Top Ten USA website, which lets users choose the most efficient products and save energy and money in running costs using (except for vehicles) the Energy Star logo.

Motorola has also pledged to begin taking advantage of renewable energy sources, promising to acquire at least 25% of its energy from wind, as part of the WindMade campaign.

Its director for sustainability and stewardship, Bill Olsonin, said part of Motorola's motivation for participating in WindMade was to encourage greater use of renewable energy sources like wind and solar around the globe.

Other WindMade corporate pioneers and founders are: Bloomberg, LEGO, PwC, DK, medical technology suppliers BD, personal care product provider Method, Better Place, which makes electric car infrastructure, hearing aid manufacturer Widex, advertising agency Droga5, solar company G24 Innovation, textile producer Engraw, HVAC maker RenewAire, and communication technology supplier TTTech.

Bloomberg's head of sustainability, Curtis Ravenel, commented on the WindMade initiative that “the supply side of the clean energy sector can clearly deliver, but now it is time to galvanise demand. It is now up to the corporate community to demonstrate leadership by committing to clean energy development. WindMade™ provides us with a roadmap for achieving this”.

Any company or organisation that procures and uses wind-generated electricity as part of their global operations can apply for a WindMade label for their operations.

WindMade's Technical Standard for Products will be released in 2012.

Monday, November 21, 2011

The solar PV feed-in tariff crisis is one sign of a maturing industry

solar panels on a council house in London
The furore over the change in the Feed-in Tariffs to small-scale photovoltaic (PV) electric power in the UK, with Friends of the Earth (FoE) and some companies threatening legal action, is just one part of a larger upheaval that is affecting the solar electricity industry globally.

Prices are falling, companies are going under, and a trade war between the US and China is looming.

At the same time, the number of installations and the generation capacity of PV are at a record high.

In Italy, experts are predicting that solar power will cost the same as ordinary electricity in 2014, with the rest of Europe following up to 2020.

As I have to speak on the subject at this week's Solar Flair '11 conference, I've been taking a closer look at the solar industry.

What I've found shows that, although they may be right about the government's mis-timing of the tariff change, FoE and their supporters are wrong to insist that the tariffs stay high.

To see why, we need to look at the wider context.

The state of the solar industry

Along with the whole of the renewable energy sector, which globally is seeing growth rates of up to 70% every year, PV is booming, despite the economic recession and public finance crises in many parts of the world.

But it is experiencing disruption caused by its transformation into a mature energy sector.

The latest figures show that the total installed PV capacity in the world is now 40 GW. This generates a huge 50 TWh/yr (EPIA 2011).

Last year, the EU installed over 13GW and the rest of the world installed over 17GW. For the first time ever, during 2010, Europe added more PV than wind capacity.

The new kid on the block, concentrating PV (CPV), is also doing well, with 0.02 GW connected to the grid worldwide during 2010 and early 2011.

Meanwhile, fossil fuels' annual growth is in the low digits, and nuclear's share is further shrinking.

But scratch a little deeper and you see that things could be better still.

PV is still generating less than 0.2% of total global electricity demand.

With the IEA projecting that electricity demand (18 trillion kWh) will rise by 76% to 4.7TWh by 2030, even if PV keeps up its current expansion rate it will barely keep pace with the increase in overall demand.

To make a real difference, deployment must increase at an even faster rate, which requires strong, international political will.

Falling prices

But the real good news is that the price of PV modules is falling fast.

In seventeen months the lowest price of mono-crystalline modules has been cut by 45% from €1.65/Wp to €0.91/Wp.

The more efficient multi-crystalline module price has fallen by somewhat less: 28% to €0.93/Wp.

The price of thin-film modules has fallen 32% to €1.3/Wp (prices from Solarbuzz).

And next year this downward trend is projected to continue with a further 10% price reduction.

Despite this, the cost of PV at the global average utility scale is still 3-4 times that of onshore wind & biomass.
Nevertheless, at this phenomenal rate of reduction, the forecast is that prices will be between €0.08 and 0.18/kWh in 2020 (depending on the application), matching the price of conventional grid electricity in many areas of Europe.

As the EPIA says in this year's market survey: "The price of PV modules has decreased by over 20% every time the cumulative sold volume of PV modules has doubled."

Falling revenues

This success is partly the cause of the industry's turmoil.

Although in this quarter revenues are forecast to rise by 22%, next year they are forecast to drop by 25% because of three factors: major cuts in solar incentives, a weak project financing environment, and the module price crash that is causing downstream companies to offload their stock or face significant write-downs.

So in the first three months of 2012, the market in Europe is projected to be down 72%, with the ground mounted (solar farm) segment the hardest hit and the residential sector the least affected (down 41%).

But Greece (fortunately for its financial state), Spain, and UK are still slated to provide the highest incremental market share growth opportunities.

Falling share prices

All these forecasts are hitting share prices.

German market leaders SolarWorld and Q-Cells are among the solar companies suffering, because last year they ramped up production to meet the surge in demand from Germany, UK and Italy due to the feed-in-tariffs.

SolarWorld, Germany's number two solar company by sales, has cut its projections and no longer expects 2011 revenue to reach 2010's €1.3 billion.

The situation is no different in China.

Shanghai-based JinkoSolar has forecast a 10% reduction in quarterly module shipments to 210-220 megawatt (MW), and expects revenue to be down by a similar amount at $270-$280 million.

Similarly, Daqo New Energy, Yingli Green Energy and ReneSola Ltd have also cut their shipment and profit margin forecasts.

First Solar, Suntech, Yingli, and Q-Cells (once the world's largest maker of solar cells) all have their shares down by around 25%.

American backlash

Even more dramatic shakedowns have been happening in the American solar industry, with Energy Secretary Steven Chu taking huge political flak for making a half-billion-dollar loan to California solar company Solyndra, that later went bankrupt partly because of the fall in module prices.

This and other bankruptcies and layoffs are being blamed by some on competition from China, whose solar cell prices are undercutting those of US manufacturers. (The cells are often assembled into modules by different companies.)

As a result, there are calls for an import tariff, which would lead to a crazy China-US trade war.

The industry is already divided amongst itself on the issue.

Germany's SolarWorld, which owns American factories, is pitched against a new body called CASE, or the Coalition for Affordable Solar Energy.

This is comprised of Carbon War Room, MEMC, SolarCity, SolarFirst, Sungevity, Suntech America, SunRun, Trina Solar, Verengo, Yingli Americas, Recurrent Energy, and others.

Billions of dollars are at stake, plus tens of thousands of jobs (the US solar industry, one of the world's largest, employs 100,000).

"The imposition of tariffs will be a setback to the US solar industry," is the view of Kevin Lapidus, Senior VP and General Counsel at SunEdison, part of MEMC.

My view is that this makes complete sense. It is hypocritical of anyone in the US to fight market forces, which are making solar power more affordable for everyone.
The US should quit moaning, import the cells from China as cheaply as it can, and make money on the rest of value chain - module manufacturing, installations and service.

The British solar storm

The US situation makes the UK FITs fiasco look like a storm in a teacup.

The proposed tariff fall of 50% from 42p to 21p per kWh more or less mirrors the fall in the cost of the modules themselves.

Installers are able to buy their products at discount prices now. They'll need to change their marketing tactics, and there will be less business, but sensible installers will diversify into renewable heat and energy efficiency, for which subsidies are also coming.

Indeed, not all installers oppose the cut. Sheffield-based company A Shade Greener doesn't believe its own business will be hurt.

The wrong technology

The real question is: is PV cost effective in the UK? In other words, if the government has limited cash to spend on cutting carbon emissions, which it does, is it worth spending it on PV?

The short answer is: no. And here is the evidence.
According to the last available comparative figures, from the government's Explanatory Memorandum To The Electricity And Gas (Carbon Emissions Reduction) Order 2008, the cost in pounds sterling of saving one tonne of carbon for each renewable technology in the domestic sector is as follows, in order of ascending price:

Community heating with wood chip: £3
Ground source heat pumps: £42
Wood chip CHP: £49
Wood pellet boilers (primary): £58
Micro Hydro (0.7kWp, 50% LF): £60
Log burning stoves: £110
Mini-wind 5 kW, 20% LF: £125
Wood pellet stoves (secondary): £126
mCHP: £176
Photovoltaic panels (2.5 kWp): £218
Solar Water Heater (4m2): £346
Micro Wind (1 kWp, 10% LF): £685
Community ground source heat pumps: £697

This makes PV seventy times more expensive than a district heating system using woodchips and five times dearer than ground source heat pumps.

Saving energy saves public money

And this doesn't even take account of energy efficiency measures.

Again, on the government's own admission, as the AECB recently pointed out, properly insulating buildings saves ten times more greenhouse gas emissions per pound spent than the current Feed-in Tariff (FIT) for renewable electricity - and will still offer five times the abatement per pound, even if the tariff is cut.
As the AECB's Andrew Simmonds says, energy consumers are being told to finance a vast increase in electricity generation and transmission, but if demand was cut few of these new power stations would be needed.

Put another way, properly insulating buildings offers the same carbon and energy benefit as building offshore wind turbines at around a fifth of the cost.

Looked at from this angle, the FITs policy is the gift of a sledgehammer for climate loony James Delingpole with which to attack the Government's climate and energy policy.

He is, for once, not entirely wrong to point out in these cash-strapped times, with fuel bills high anyway, the government is pushing them up still further by financing a form of power generation that doesn't even work efficiently in most of the UK because it doesn't get enough direct sunshine throughout the year.

If you need more evidence, here's another table, adapted from the same government source, detailing the number of kilograms of CO2 saved per pound spent by technology, if they are delivered as a single measure (we ought to include energy efficiency measures, because the goal is really to save carbon emissions):

Existing community heat to CHP: 88
SWI* internal to U of 0.45W/m2K: 42
SWI* external (semi-det house): 25
Wood pellet boilers (primary): 24
Fuel switching to green tariff: 24
SWI external (flat): 23
Loft insulation (prof virgin): 21
Micro Hydro (0.7kWp, 50% LF): 16
Ground source heat pumps: 14
Replacing old boiler (65% by 88.3%): 13
Air source heat pump: 13
MCHP (revised): 9
Glazing E to C rated: 8
Loft insulation (prof top-up): 7
Heating controls - upgrade with new heat system: 6
Mini-wind 5 kW, 20% LF: 4
Solar Water Heater (4m#): 4
Flat roof insulation (whole house): 3
Underfloor insulation: 3
Photovoltaic panels (2.5 kWp): 3
Community heating meters: 3
Draughtproofing (ie not with glazing): 1
Micro Wind (1 kWp, 1% LF): 0
* SWI = solid wall insulation

By the way, I don't believe the figure for draughtproofing, and the one for micro-wind would only be true in urban areas, but the rest of it looks convincing.

Again, PV is more or less at the bottom of the list for cost-effectiveness: 14 times more expensive than internal solid wall insulation.

And look at how combined heat and power (CHP) comes at the top of both lists. Why is it so backward on supporting CHP?
The government has achieved its other policy objectives for FITs: heightening awareness of renewable energy and climate change amongst the public and bringing down the price of solar through upping demand.

It is absolutely right to link the FIT in future to energy efficiency measures.

But why-oh-why has it implemented the whole set of policies back to front? The Green Deal for energy efficiency should have come first, followed by the Renewable Heat Incentive, and only then, possibly, Feed-in Tariffs for electricity.

Solar prices will continue to fall anyway, improving the payback period for those who do want to install PV modules.

My advice to the solar industry: your sector is growing up. It will soon survive without subsidy if you go where the sun is, which is where it makes sense financially anyway.

Friday, November 18, 2011

Fuel poor targeted by renewable heat trials

evacuated tube solar water heaters
Social housing tenants across the country are to receive £4m in the start of a trial that will help prepare for next year's Renewable Heat Incentive (RHI).

The exercise involves installing sustainable heating systems such as biomass boilers, solar water heating panels, heat pumps (ground source, air-to-water and water-to-water), in solid walled properties managed by 24 social housing providers across Britain.

These types of properties are harder to heat and insulate than more modern, cavity-walled dwellings and are typically inhabited by those classified as living in fuel poverty.

The social landlords comprise the first winners to be announced under the £15m Renewable Heat Premium Payment (RHPP) scheme competition, which was launched in August.

Participants will each receive up to £175,000 in the form of the following support for each technology:
Solar thermal hot water: £300
Air source heat pump: £850
Ground source or water source heat pump: £1250
Biomass boiler: £950.

Most of the winners are in the south west; a total of 558. Scotland, which is of course a much colder part of the UK, gets just over 400 schemes, the south east about 370, the east of England 310, Wales 290, with London getting the lowest number, because it has proportionately fewer solid walled properties: 32.

Air source heat pumps will receive the most support; they are very easy to install. Solar thermal comes close second, followed by ground source heat pumps and biomass boilers, which are the heating source of choice north of the border.

Air source heat pumps are controversial since some experience has shown that poor installation and management can lead to minuscule or dubious fuel or carbon savings.

One householder has complained to BRE that his MCS-approved air source heat pump achieved savings of only 200 watts over a 24 hour period, because of the number of motors it uses.

The results of the monitoring are expected to clarify this, together with the cost-effectiveness of ground source heat pumps, which is reduced if a trench has to be specially dug for the installation.

They are more cost- and carbon-effective if a hole in the ground is already available due to other construction activity.

One of the conditions for taking part in the scheme is that, once installed, participants permit the measures to be monitored to gauge their effectiveness, to better design the full roll-out of the domestic RHI that is expected next autumn.

Currently half of the UK’s carbon emissions come from the energy used to generate heating in buildings.

The Government estimates that the total of the measures under the RHPP and the RHI (domestic and non-domestic) are going to save the equivalent of the power supplied and carbon emitted by two new gas power stations up to 2020; that is, an average of 4.4 million tonnes of carbon per year.

Energy and Climate Change Minister Greg Barker commented that the scheme "directly targets many of the people who could struggle to pay their heating bills in the winter. It will encourage an increase in the number of new heating technologies in social housing and help people deal with expensive fuel costs.”

Karen Lawrence, director of delivery for the Energy Saving Trust, said she was well aware of a great appetite for green technologies among social landlords, to "help tenants heat their homes more cheaply and efficiently".

"We also know councils and housing associations have become increasingly proactive and knowledgeable in the field of sustainability – and this was reflected in the standard of the bids for funding that were received," she added.

“Both this and the householder strand of the RHPP will also be great learning opportunities," she said. "Real data on performance in people’s homes is absolutely key in successfully boosting the market for renewable heat technologies.”

No doubt the Government also hopes it will help them avoid the costly and damaging mistakes associated with the mis-setting of the feed-in tariff levels for PV.

The vouchers are being issued on a first come first served basis. The scheme is still open to applicants, who can apply here or by phoning Energy Saving Trust on 0800 512 012.

RHI for businesses and organisations

Meanwhile, the non-domestic RHI will start at the end of this month.

It was originally scheduled to commence at the end of September, but required state aid approval. This has now been granted, subject to a small change in one tariff.

Businesses and organisations will be able to install sustainable heating systems and receive a favourable tariff for each unit of heating produced, over twenty years, in the same way that the feed-in tariff works for electricity.

This is expected to provide a huge boost to the heating industry.

The new rates are as follows:

Small biomass <200 kW: 7.6p/kWh (Tier 1) or 1.9p/kWh (Tier 2)
Medium biomass <1000 kW: 4.7p/kWh (Tier 1) or 1.9p/kWh (Tier 2)
Large biomass >1000 kW: 1p/kWh
Small ground-source heat pumps <100 kW: 4.3p/kWh
Large ground-source heat pumps >100 kW: 3p/kWh
Solar thermal <200 kW: 8.5p/kWh
Biomethane and biogas <200 kW: 6.5p/kWh.

Wednesday, November 16, 2011

UK to seek legally binding deal at COP17

The Foreign Office has set out Britain's negotiating position at December's climate change talks, as the World Energy Council lists the five nations in the world most prepared to withstand climate chaos.

John Ashton, the Foreign Office's special representative for climate change, says the UK would like to see a legally binding approach come out of the COP17 UNFCCC climate summit, now only two weeks away, and that most people "would be right" to be alarmed if this "falls off the table at Durban".

This is because "a voluntary framework will not be enough to keep us within the 2oC limit of manageable climate change".

In June, Ashton met the Chinese Ambassador Liu and they agreed to maintain consultation and cooperation during the COP17 negotiations. Liu said China, the world's budgets emitter of greenhouse gases, "expected to carry out mutually beneficial cooperation with Britain in energy conservation, environmental protection and low-carbon economy".

In his article, Ashton says that "an effective [legal] regime must bind all major economies", but that this doesn't need to happen "all at once, any more than we needed to include everyone from the start to make the GATT work".

Such a deal would mean that "as soon as countries become sufficiently prosperous" they should undertake to "accept binding caps" in the form of "a second phase of Kyoto commitments for those willing to accept them".

The other major economies must unambiguously avow a "commitment to commit" by 2020.

"This would at last unblock the path to a binding regime with full participation."

This position represents the UK's response to calls from the most vulnerable countries to climate change made this week in Bangladesh for "a comprehensive and legally-binding global agreement" and "a second term of the Kyoto protocol without a gap between the first and the second", at the same time as balancing the reluctance of richer developing countries to invest in emissions reduction at the perceived expense of growth, and some developed countries' refusal to sign up to Kyoto II.

Ashton calls the Kyoto Protocol "arguably the EU's greatest diplomatic achievement" and compares the choice facing us to that between Churchill's determination to fight Hitler and Lord Halifax's attempt at appeasement before World War Two.

This choice "between what needs to be done but looks impossible, and what can be done but is clearly not enough, is as old as history", he says, but history shows us that when everyone is determined, we can prevail.

And we have to because "there really is no plan B for the climate".

The energy trilemma

Also today, the World Energy Council is calling on policymakers at COP17 to address what it calls the “energy trilemma” of energy security, social equity and environmental impact mitigation.

Launched in London by Pierre Gadonneix, Chairman of the World Energy Council and Honorary Chairman of EDF, its 3rd edition of the 2011 Assessment of Country Energy and Climate Policies, lists those countries which it thinks possess the most coherent and robust energy policies that most successfully manage the trade-off between the three dimensions of the trilemma. These are:
  1. Switzerland
  2. Sweden
  3. France
  4. Germany
  5. Canada.
Mark Robson, of consultants Oliver Wyman, which co-authored the report, explained that these and other top-ranked countries “are those that have diversified their energy resources and actively manage demand for energy through well-established energy-efficiency programmes".

Each of these countries have strengths in different areas. France scores because of its reliance on low-carbon nuclear, while Sweden has good social policies and energy efficiency, and Germany is a world leader in renewables.

Some will criticise Canada's position because of its rejection of Kyoto and its exploitation of shale gas, but this is mitigated for the WEC because it has rich energy resources and energy is affordable for its people.

Focusing exclusively on reducing greenhouse gas emissions is not sustainable for reasons of expense and social equity, the WEC says, but that, while free market solutions alone can’t deliver sustainability, correctly managed market-based solutions are cost-effective.

The report says that "only vision led and coherent energy policies, that address the 'Energy Trilemma' have a chance of gaining public acceptance and investors’ trust to deliver a sustainable energy future".

Investors require political decisiveness and stable regulatory regimes, not, as in Australia, the threat that an opposition party could gain power and roll back policies.

This year’s report has focused on three critical key issues – transport, energy efficiency and finance.

Of transport, Christoph Frei, Secretary General of WEC said the sector “represents a quarter of total CO2 emissions" now, but by 2050 "could be 80% higher".

"However, with clear policies that empower governments, the public and private sector to intervene, we could limit this increase to 15%," he says.

"The pace of climate change is largely unknown," said Joan MacNaughton, Executive Chairman of the report and Senior Vice-President, Environmental Policies & Global Advocacy at Alstom, and so our response "must be based on the worst possible outcome, and focussed on the long term".

This is another reason why energy efficiency and robust policies are significant, because they will provide cost-effective and timely ways to sustainably address the trilemma.

She praised China for the extraordinary and often under-appreciated efforts it is making to reduce emissions.

The report emphasises that "promoting energy efficiency is widely viewed as being the largest, cheapest, and fastest option for tackling key energy problems, and many solutions are available already".

The report is also optimistic that transport and mobility policies can be designed that "make a real contribution to environmental and social objectives".

But it notes that attracting financing for energy-efficiency initiatives and encouraging consumers (residential and industrial) and energy suppliers to adopt even existing solutions is one of the biggest challenges facing energy policymakers.

The WEC estimates of cost are that about only 1.4% of global GDP will need to be invested each year in energy-supply infrastructures to 2035 and the report examines a range of financing instruments that address these challenges.

Renewable energy grows

Another report released today by the Worldwatch Institute and REN21 says that renewable energy is growing faster than fossil fuel energy and nuclear.

"While fossil fuels' annual growth is in the low digits, and nuclear's share further shrinks, renewable energy sources see growth rates of up to 70% every year," it says.

"Today, renewables already supply 16% of global primary energy consumption, and 20% of worldwide electricity."

The sector's growth has been a positive constant, despite the economic recession and public finance crises in many parts of the world.

Amongst the most rapidly growing national renewable energy markets in 2010 were China (+26%), Germany (+10.4), and the United States (+5%).

For the first time, developing country investments in renewables surpassed those of the developed world.

Monday, November 14, 2011

Eco-projects for electric vehicles and smart grid launched

wireless electric vehicle charging
A smart grid for the Isle of Wight and cable-free electric car charging stations, two important rehearsals for the UK's low carbon revolution, are being launched.

Electric cars

In London, the UK's first Wireless Electric Vehicle Charging (WEVC) trial, backed by David Cameron and Boris Johnson, is expected to start in early 2012 and will involve up to 50 electric vehicles (EVs).

The technology employs Qualcomm's wireless inductive power transfer that enables high-efficiency charging across a large air gap - although it doesn't say what losses are incurrec by using this method as opposed to plugging in.

It makes charging an electric car at home or in an organisation's parking space a breeze. The driver simply parks the vehicle in the usual way and the system automatically aligns for power transfer, making parking easier and charging hassle free.

The trial will be based partially in Tech City, the East London cluster, and companies such as vehicle manufacturers are being invited to participate by registering their interest at www.qualcomm.com/wireless-ev-charging.

Prime Minister David Cameron called it “a giant leap forward for the electric car industry", saying he is "delighted that London businesses will be among the first to benefit".

"Creative, high-tech advances such as this are extremely important as we work to rebalance our economy," he added, "and the decision to trial this at Tech City shows confidence in the UK as an ideal place for innovation and investment.”

Justine Greening, the Secretary of State for Transport, commented that the trial is "a great example of how vehicle recharging could work in the future".

The project supplements the £30 million Government fund from the Technology Strategy Board and the Office for Low Emission Vehicles to kick-start installation of recharging points in eight areas across the country.

The Mayor of London, Boris Johnson, said he wants London to be “the electric car epicentre of Europe".

"We are already on this path with Transport for London delivering a citywide charging network,” he added.

Andrew Gilbert, executive vice president of European Innovation Development at Qualcomm said, “Wireless charging eradicates the EV plug-in cable and makes charging of electric vehicles simple and easy for drivers”.

A Wireless Electric Vehicle Charging steering committee, containing representatives from TfL, the Mayor’s office and central government will be set up to oversee the trial.

Incidentally, a fascinating new film, called Revenge of the Electric car, is being premiered this month, telling the tale of the fightback of electric car enthusiasts against the oil industry which tried to kill the idea.

It shows Tesla CEO Elon Musk putting his personal fortune on the line, Bob Lutz, GM's Vice Chair, staking the GM brand on the very technology it once tried to destroy, Nissan's CEO, Carlos Ghosn, backing a car almost no one believed could happen, and an ordinary enthuisiast who proves you can convert a car yourself.

Welcome to EcoIsland

Meanwhile, an entire British island is launching its bid to become self-sustaining in energy, water and waste treatment.

The Isle of Wight’s EcoIsland project is the largest single sustainability project in the UK.

On 15 November, next week, The Minister of State for the Cabinet Office, Oliver Letwin will help to kickstart the EcoIsland Partnership Community Interest Company (CIC), which will establish a Global Innovation Centre for Smart Grid technology to connect every building on the island to renewable energy generators.

Working with Global Partners IBM and Toshiba, it plans to join up both the current and future wind, tidal, geothermal and solar power generators on the island.

The Smart Grid initiative is a crucial part of the Isle of Wight’s aim to become the first truly sustainable region of the UK.

It also expects residents' fuel bills to reduce by up to 50%.

David Green, the CIC's CEO said: “The Isle of Wight community needs to act quickly to avert the possibility of black-outs from increased demands on the UK's electricity generation capacity.

"We are looking to use the Island’s natural resources to make it self sufficient in terms of energy, food, water, fuel and waste, enabling the community to take its destiny back into its own hands”.

Since February 2011 EcoIsland has raised the first tranche of the £200m private funding that is required to achieve its goals, and set up partnership agreements with Cable & Wireless; Scottish & Southern Electric (SSE), as Distribution Network Operator and energy supplier; ITM Power, providing energy storage and clean fuel production in the form of hydrogen for commercial and private vehicles, and Southern Water, which also aims to have a zero energy footprint through the development of renewable energy.

It has already spent £25m installing photovoltaic modules and 500 air-source heat pumps on 3,500 social houses and pioneered the use of a 'Greenback' discount card backed by 65 local companies, which helps its 142,000 residents save up to £400/yr.

By 2020 it wants the island to become a net exporter of energy and to have created hundreds of green tech jobs, as well as cutting the amount of waste it sends to landfill to zero and to stop exporting its waste off the island, in order to take full responsibility for all of its residents' needs.

Proof that corporate reputation matters in a world in climate crisis

The Environment Agency's Performance League Tables for the Carbon Reduction Commitment (CRC), may not be the most accurate register in the world, but it's worked in one respect: it's got the organisations whose energy efficiency performance is published in it anxious about their reputation.

Isn't that the point of the CRC? Naming, praising and shaming are highly effective ways of making people get their acts together.

The Environment Agency's website does say that all participants were given a chance to check and verify their data until 27 September. Some hadn't noticed their own mistakes until it was too late.

But others were concerned about the inadequacy of the criteria used by the EA that completely ignores energy-conscious behaviour which ought to be recognised.

For example, BT, which scored 95% on its Early Action Metric, argues that the CRC league table should also give credit for consuming better energy, not just less energy.

Its Director of Energy and Carbon, Richard Tarboton, complained to me that the telecom giant's use of wind turbines, solar arrays, and other low carbon energy sources, are not recognised in the current CRC league table.

He has issued a call for the Government and power industry to implement an accredited 'energy source label' in order to create customer demand and increase the share of renewable generation.

He even says that this would provide "an opportunity to merge CCL (Climate Change Levy) and CRC into one scheme, thereby reducing the administrative burden" for all concerned. Such a change would be revenue neutral to the HMR, Richard says.

Waste company Veolia Environment, ranked 1,299th, is also furious at its ranking.

Since the company also generates its own renewable energy from its waste plants, for example from landfill gas, which exceed what it consumes, its net emissions as defined under the CRC are actually negative.

But the CRC scheme design did not envisage there would be zero or negative emitters when calculating an Early Action Metric (EAM) score, and so Veolia Environment's early actions are not properly reflected in the Performance League Table.

In another example, Pepsico, ranked at the same level, became in January the first company in the world to use the Carbon Trust's Carbon Product Footprinting as a management tool to drive green growth across its supply chain, and this should have earnt it some Early Action Metric points.

Many companies with high rankings in the table obtained the same support from the Trust.

Furthermore, the Environment Agency gives no credit in the criteria for improvements companies have made as part of a Climate Change Agreement.

If organisations are not rewarded and recognised for their efforts, then there is less motivation for them to change their behaviour.

If they are not exposed for their lack of effort, so that the public and stakeholders can lobby them for improvements, then the same applies.

As Harry Morrison, Managing Director of Carbon Trust Certification said this week, all this fuss at least means the issue is being "forced into mainstream business thinking".

And, heaven knows, we need all the effort we can make.

The latest news around climate change and efforts to tackle it are even more alarming than last month's.

This week, the International Energy Agency warned in its World Energy Outlook that there is a high risk of the world being locked into a high carbon future which would cause cumulative carbon dioxide emissions over the next 25 years to create a long term disastrous average temperature rise of 3.5°C - far higher than the red-line level of 2°C.

It says "delaying action is a false economy, as, for every dollar of investment in cleaner technology not invested by the power sector before 2020, an additional $4.30 would need to be spent after 2020 to compensate for the increased emissions".

Everywhere, emissions are rising despite the recession.

More and more polluting coal plants are being built around the world.

In America more fossil fuels were burnt in 2010 than in 2009, while renewable electricity remained approximately constant, the Lawrence Livermore National Laboratory reported.

In the UK, too, last year, greenhouse gas emissions increased by 3.5%; more than double the 1.3% growth in the economy, according to PwC Low Carbon Economy Index.

Up to now, the Government has boasted that it has decoupled economic growth from a growth in greenhouse gas emissions.

Now it emerges that it has achieved the amazing feat of increasing emissions while stalling the economy. So it's still decoupled, but in the wrong way!

It also emerged this month that the Government expects that no new nuclear plants are likely to be built before 2025, and that the Great White Hope, carbon capture and storage, is possibly a shimmering mirage.

Both of these technologies are too expensive and technically immature to make any difference by 2020, i.e., in the all-important five year-long window of opportunity which the IEA says is all we have left.

Its World Energy Outlook 2011 makes it abundantly clear: energy efficiency and renewable energy are really the only games in town.

The UNFCCC Durban climate summit is fast approaching, amidst a stormcloud of anxiety from low-lying 'vulnerable countries', whose ministers are wailing this week about the total lack of climate finance committed to support developing countries to mitigate and adapt to climate change between the years up to 2020.

At least one ray of sunshine this week is that EU finance ministers signed off an estimated total of 4.68 billion euros in 2010 and 2011, as part of a commitment to provide 7.2 billion euros from 2010-2012 to help developing countries adapt to climate change and curb emissions, despite Europe's frightening debt crisis.

Jonathan Grant, director of PwC sustainability and climate change, said this week that the world needs nothing short of a revolution in the way it produces and uses energy.

A revolution is sparked by millions of individual efforts and a sense of overwhelming crisis.

The CRC may seem relatively small beer, and it needs improving, but it's part of the global revolution that is required to surmount this crisis.