5. Low Carbon Buildings Programme Running out of go

The government certainly got itself in a bit of a bind with the grants for domestic micro-power projects, under the Low Carbon Buildings Programme (LCBP)- the money for which keeps running out. In Feb., Science and Innovation Minister Malcolm Wicks commented, in answer to questions in the Commons, that ‘the higher than anticipated demand from the household stream under the Low Carbon Buildings Programme Phase 1 meant that the limited funds available to householders would have been exhausted by early 2007. As a result, we announced on 25 October 2006 that £6.2m from the £28.5m budget would be re-allocated to the household stream in order to satisfy demand through to June 2008. This re-allocation of funding to the household stream was made possible by transferring the majority of pubic and non-profit sector projects to the LCBP Phase 2, where £50m of funding is being made available to specifically support projects in the public and non-profit sectors.’

But that had evidently not been enough and a monthly cap on spending had been imposed. Wicks said that ‘By introducing a monthly cap, it will contribute to funding household installations through to June 2008, when some of our wider measures to promote microgeneration should be taking hold’. There were, it seems, no plans for further grants after that.

Asked what criteria will be use to determine when householder grants were no longer needed, Wicks said that the Energy Saving Trust study (Potential for Microgeneration: Study & Analysis) for the DTI ‘examines the impact of non-grant measures such as the Renewables Obligation, reward for export, the Energy Efficiency Commitment (EEC) and Building Regulations. The conclusions clearly show that these non-grant measures do stimulate uptake over the longer term’. He added ‘We are also starting to see evidence of the impact that the introduction of planning policies requiring onsite renewables is having on demand for microgeneration. For example, by Sept. 2006, Croydon council had approved 111 renewable energy projects since the introduction of a requirement for all new developments over a certain size to provide at least 10% of predicted energy needs through onsite renewables’.

Well yes, but that’s for larger community schemes. It doesn’t help householders seeking to get grants now- who have been turned away often early in the month, and possibly turned off the whole idea. In addition, the transfer of money to try to keep the scheme going has actually been at the expense of the community projects- robbing Peter to pay Paul. The DTI has simply removed community projects from Phase One of the LCBP. Wicks, noted that in order to provide the extra £6.2m ‘we have closed the Communities stream in Phase 1’. Evidently they will have to try their luck with Phase 2 Funding. But at least he was confident that ‘these changes should allow support for householders to continue until June 2008’. And he reaffirmed the view that ‘by this time, some of the wider measures to promote micro-generation should be taking hold, and we believe the sector may have matured to a point where householder grants are no longer necessary. There are no plans to increase funding.’

But then the Budget seems, thankfully, to have done just that, with £6m extra: see below. Subsequently Alistair Darling said that ‘the scheme is to be re-shaped to make best use of the extra funding. Proposals will be brought forward in May. We will re-structure the scheme to make it work better. We want many more people to be able to install low carbon technologies on their homes to help reduce damaging carbon emissions. This extra money will help us do it.’ But the DTI noted that ‘while the scheme is re-structured the decision has been taken to suspend it for the April allocation’ and that ‘it’s important that this final additional funding for household renewables, due to end in mid 2008, is used to best effect to bring on a microgeneration sector that can stand on its own two feet without further subsidy’. It claimed that the Budget would help, as would plans for including micropower in the EEC and for ‘waiving of income tax on any surplus electricity sold back to the grid’.

Green Budget - aid for LCPB

In his speech to the Green Alliance, Gordon Brown said the Energy White paper would ‘provide new incentives with the aim of raising eightfold the number of households which are producers as well as consumers of energy’

And in his 2007 Budget, Gordon Brown confirmed the removal of stamp tax on new zero carbon houses, and said that ‘by the end of the next decade, all householders will have been offered help to introduce energy efficient measures with the aim that, where practicably possible, all homes will have achieved their cost-effective energy efficiency potential’.

In addition, funding for the Low Carbon Buildings Programme will be increased by £6m to ‘over £18m’ to help meet household demand for microgeneration and there will be tax relief on any ROCs they earn from selling excess power.

More help for Micropower

The DETR has proposed a new planning regime to make it easier to install house-hold micropower; details in Renew 168

Microgen RIP?

BG Group has terminated its development programme for the Microgen Stirling engine based domestic micro-CHP unit. Microgen Energy Ltd, was established in 2002 as a BG subsidiary. As noted in Renew 161, in 2005, after a lot of initial publicity, Microgen announced that, ‘following a comprehensive review’ of the programme, they had decided that they needed to invest ‘more time on product design and reliability testing before launching the Microgen system’. They added ‘This will inevitably delay the commissioning of volume production and, as such, we are now targeting Spring 2007 as our commercial launch date’. With that now it seems abandoned, Powergens Whispergen is left as the front runner in the field.

STA LCBP battle
The Solar Trade Association attacked the ‘massive underfunding’ of the grants scheme- but it also came under fire, e.g. from Genersys, for not alerting members to the fact that only a few suppliers would be LCBP accredited

Local energy Select Committee want consumers to be producers

In a new report on ‘Local energy- turning consumers into producers’ the House of Commons Trade and Industry Committee says that ‘Local energy is capable of making a major contribution to the nation’s energy requirements both through electricity and heat’.

It says the term ‘local energy’ is ‘more accurate, easier to understand and less restrictive in its scope than the word microgeneration or any of the other terms of art used to describe energy produced by individuals, businesses or communities for their own consumption’.

Currently, the report notes, local energy contributes less than 1% of Britain’s electricity and heat, but it ‘has the potential to reduce carbon dioxide emissions by displacing the use of fossil fuels, decreasing network losses, and increasing energy awareness amongst users’. It says that ‘In the debate about localised energy production, there is too much emphasis on electricity production and not enough on the contribution that could be made by local heating schemes, whether household or community-based, to energy security and reducing carbon dioxide emissions’, adding that ‘for domestic installations, local heat production such as solar thermal systems or ground source heat pumps will often be just as beneficial as electricity generation’.

However the report warns that ‘there are some situations involving micro-combined heat and power where local energy systems will not necessarily lead to a reduction in CO2 emissions’, and notes that wind and solar PV are ‘only suited to certain locations or consumption patterns’ and most local energy technologies ‘are not yet cost-effective, reducing the potential for dramatic take-up in the near future’. But it concluded ‘if costs fall, and/or prices of energy from other sources rise, and certain government interventions are put in place, local energy could contribute a sizable proportion of the UK’s energy mix in the long run’.

Making it happen

The Committee noted that ‘the requirement of planning permission is a significant deterrent to households wishing to install local energy systems to the exterior of their properties’, and backed the government’s commitment to allow residential installations ‘permitted development’ status. It added ‘If the government is serious about expanding the level of local energy capacity in the UK, it must provide consumers with confidence that distribution companies will purchase exported electricity at a reasonable price’. It said the government and Ofgem should use their statutory powers ‘to enforce an appropriate scheme post haste’.

It went on to back REFIT: ‘We acknowledge the regulator’s preference for a market-based approach to pricing, and the need to keep low transaction costs for commercial suppliers and consumers. However, depending on its level, a feed-in tariff could be used to encourage the development of local energy.’ It also felt that ‘many of the practical barriers faced by households could be overcome if commercial energy suppliers were to offer local energy systems as part of a package of energy services to their customers that also included energy efficiency measures’ and thought that it would be helpful if the ‘Renewables Obligation could encourage commercial suppliers to offer services specifically for those households wishing to install local energy systems’.

It saw government procurement as an important stimulus and it backed the Code for Sustainable Homes, which it said ‘provides a welcome demonstration of the Government’s intentions for future Building Regulations,’ but felt that ‘if costs for local energy technologies fall significantly, relative to energy efficiency measures, or relative to the cost of energy from other sources, the Government should then establish a framework for the incorporation of local energy into future Building Regulations, and that any such framework must place more emphasis on the role of local heat production than has been the case so far’.

In terms of larger systems, it welcomed the approaches that had been adopted by Merton, Woking and now the Greater London Authority, for example in terms of promoting community CHP, and thought that this type of development should be supported more. But they were aware of ‘the potential difficulties of implementing a Renewables Heat Obligation’.

And looking at the energy system as a whole, they noted that ‘Consideration of the long-term potential of local energy has led some commentators to speculate about the implications it would have for the transmission network’ and even to suggest there could be very little need for it in future. The National Grid however had told the Committee that this would only be the case were there no need to exchange power between local networks (i.e. they were self-sufficient in all situations) and if there were minimal differences in the cost of producing electricity in each area. The Committee felt that ‘This is not likely to be the case even with a very large expansion of local energy capacity... Combined with the intermittency of some renewable sources and the need for large-scale back-up capacity, this means there will still be a need for a transmission network for balancing demand and supply across the system.’

So although ‘some of the debate over energy policy in the past year has focused on the apparent choice the UK faces between adopting a centralised or decentralised energy system.. National Grid ’s finding suggests that, in fact, these two are not mutually exclusive.’ Indeed they might be mutually reinforcing: certainly the former was needed to help the later since ‘local energy supply is rarely likely to match local demand exactly’, and local energy could also help reduce demands on the transmission system. But ‘there will be a continued need for a transmission network that can balance electricity flows across regions and maintain security of supply’.

To some extent there is potentially a false distinction here between central and decentral systems- a confusion between networks and generation scales. By ‘decentral systems’ we usually mean distributed generation using small local projects, while we think of centralised systems as having large generators linked to users via grids. However, you could argue that it would be possible to have a system with a lot of small generators meeting local needs but also linked into the national grid network for balancing. While on one hand, it is not implicit that you need large traditional GW scale generators anywhere in the system, and on the other, there are not many in the UK context who argue for total local-only decentralisation.

But clearly when the committee came to comment on conventional large scale centralised coal and nuclear plants, it maintained the traditional view. Local energy ‘cannot make a significant contribution in the next decade in closing the capacity gap created by the closure of coal-fired and nuclear power stations’. Although the committee said ‘evidence we received does suggest that the capital cost of a large-scale deployment of local energy could be significantly less than an equivalent amount of nuclear power’ it felt that ‘in a liberalised energy market... it may still be easier for the Government to provide incentives for the construction of relatively few nuclear power stations than to change the behaviour of millions of UK households’.

*Trade and Industry Committee Session 2006-07 First report