Renew On Line (UK) 74

4. Policy debates

UK Duck Targets?

To meet the new ‘15% by 2020’ renewable energy targets proposed for the UK by the EU, ‘projects outside the EU should be considered’, according to Business Minister Lady Vadera, as reported in the Guardian 29/03/08. That actually is hardly a new idea- it’s what the EC suggested in the new EU energy plan as an option for all EU countries (see the Feature, Groups and Review sections in Renew 174)- EU countrys can import ‘GO’ certificates from outside the EU and can also make use of the Kyoto Joint Implementation scheme and the Clean Development Mechanism. But it certainly raised some hackles. 

Dale Vince from Ecotricity said ‘It makes a mockery of any attempts to address climate change. The idea that we can build wind farms or other renewable energy projects (abroad) and then offset them against the UK target is outrageous. If it were possible to build projects anywhere in the world where planning is lax, nothing would be done in the UK.’

John Sauven, director of Greenpeace, added: ‘This would allow a UK minister to lay the foundation stone of a power station in China and say it counts as our contribution to European renewable energy targets’. 

WWF said ‘Yet again Britain is found trying to evade its environmental responsibilities’.

It could of course be argued that, as far as the planet is concerned, it doesn’t matter where the emissions avoidance is done, but it is also true that their are risks with an approach that allows EU countries to go slower on their national programmes. Lady Vadera also wants the EC to allow all EU countries to count carbon emissions avoided from coal-fired stations fitted with Carbon Capture equipment- it is reasonable for them to be counted against the carbon reduction targets, but surely not against the renewable targets. 

It will cost every household in the UK at least £2,000 to comply with the new EU target of getting 15% of UK energy from renewables by 2020, raising energy bills overall by about 5%, according to a report by energy consultancy Pöyry (ILEX as was), commissioned by the government. The UK will have to spend far more to meet the target than other EU countries, since it lags behind on renewables and is a heavy energy user: at least €5bn p.a. for more than a decade, compared with just over €3bn a year for France and Germany, and well under €500m for most other EU countries.

NFUs green  priorities

NFU chief renewable energy and climate change adviser Dr Jonathan Scurlock has set out the UK farming industry’s recommendations for action, and what it believes its future priorities should be. The Climate Change Task Force, a joint initiative between the NFU, the Country Landowners Association and the Agricultural Industries Confederation, produced a report which  underlines ‘the essential role played by agriculture in the fight against climate change, and the substantial economic, social and environmental benefits in taking action now to ensure agriculture remains economically and environmentally viable’.

The National Farmers Union has been quite defensive recently about the prospects for biofuels, but this new report ‘Part of the Solution: Climate Change, Agriculture and Land Management’ offers some sensible positive priorities for agriculture and land management :

* Directed research on the UK greenhouse gas inventory to include: breakdown of components and emission factors more representative of land use and management; soil carbon and N2O balance; reduced or zero tillage systems; and integrated models of whole farming systems

* Delivery of best available practices for integrated nitrogen management to improve current nitrogen efficiency, with support from the fertiliser industry, agronomists, advisers and animal nutritionists

* Raising awareness of energy and carbon accounting, and promoting energy efficiency and carbon management by farmers, land owners and foresters through financial incentives

* Removing barriers to the uptake of anaerobic digestion to harness methane emissions from animal manures as a source of heat and power, through education, capital and revenue-based support, cost-effective electricity grid connections, and establishment of a digestive standard

* Realising the wider potential for the land-based industries to supply renewable energy.

HTTP://www.nfuonline.com/x24980.xml    More in Renew 175.

FIT for Micropower?

The hint by Energy Minister Malcolm Wicks  that a Feed-In Tariff might be considered for microgeneration projects (see Renew 172) was welcomed by Alex Murley, small systems manager at the British Wind Energy Association ‘It is good that they recognise more support is needed. The current system is not working and a replacement is needed. We would support a FIT as the most effective means of delivering the scale of adoption required.’

Charlotte Webster from Solar Century agreed, noting growing EU evidence from that FITs deliver significant results. ‘If you look at the grant scheme it really is a short-term option. What a FIT gives you, and what our customers want, is long-term security that they will receive returns on their investment.’

That’s certainly true for micropower, and even more so for the large scale projects currently struggling under the RO- see right. However, Wicks seems unwilling to consider dumping the RO.

*Peter Ainsworth, the Tory environment spokesman, was quick to claim ‘a huge U-turn’ by Labour on FITs, adding  ‘I don’t mind if the Government pinches our policies because it indicates that we are leading the debate on ideas for dealing with climate change’.  However, although the Tories have talked of a FIT for micropower, and of dumping the RO, in place of the latter they want a competitive auction process.  

UK programme ‘in a mess’

According to the European Wind Energy Association, at the end of last year, the UK had 2,400 megawatts of wind plant installed, about 2% of total UK generation capacity, well behind Germany at 22,000 MW and Spain at 15,100MW. The UK is even further behind on PV solar power, with installed capacity of 16MW at peak times, compared with 3,800MW in Germany.

Writing in the Observer (24/2/08) Tim Web argued that the main reason was the UK governments focus on the competitive market-based renewables obligation  as the main way to get renewables like wind farms to move ahead, coupled with weak programmes of grant aid for projects like PV. He noted that ‘Last year, Westminster awarded grants to help meet the cost of installing solar photovoltaic systems to just 270 households, compared with the 130,000 fitted by the Germans. And even this paltry amount is drying up: last month no awards were granted after the government cut the overall funding pot last year.’

James Cameron, chair of specialist investment bank Climate Change Capital, told Web that the government’s blinkered approach to subsidies is a missed opportunity: ‘On solar, for example, I’ve had conversations with government people here saying “Japan and Germany have already done solar, they’re better at it than us and it’s expensive anyway, so we won’t concern ourselves with it”. I find these kinds of argument unacceptable when we have so much to contribute to design, implementation and application of the technology, and when there is so much growth left in the market.’

As well as giving bigger grants to developers, Web noted that European governments offer guaranteed fixed-price Feed-In Tariffs for renewable generators. ‘In Germany for example, some wind farms receive £110 per MWh, more than double the wholesale price of electricity and about a fifth more than wind farms currently earn in the UK.’  However, that doesn’t mean that the final price to consumers is always necessarily high compared to  what it is in the UK under the  the UK renewables obligation.

Under the RO scheme, developers are given targets and must amass sufficient ‘renewable obligation certificates’ (ROCs) to set against them. They can also sell any excess they get to companies which haven’t managed to get enough. But the value the  ROC’s value varies depending on how many certificates suppliers need: if there is a shortage in the market, the price is higher. Web notes ‘Under current prices, a wind farm may receive about £40 for each MWh it generates based on the wholesale price of electricity. On top of that it receives about another £45 for the Roc it can sell on. The problem with this system is that developers do not know how much a Roc will be worth from one year to the next because the value fluctuates according to supply and demand. While it is possible to estimate how much it will earn, it does not offer the same level of certainty that fixed feed-in tariffs do overseas.  As a result of the higher risk, it costs developers more to raise the money to build the wind farms- costs which are ultimately passed on to the consumer.’  According to Energy regulator Ofgem it has cost £1.7bn in its first five years, on average £7 per year per household.

Worse still, at present, Web notes, all projects get the same- so onshore wind farms receive the same funding as more expensive offshore projects. He says the cost of building and operating onshore windfarms is £50/MW or lower and ‘since they can sell their green electricity for as much as £90/MWh, developers are making a tidy windfall’. The result is that we pay more than we need to, and also get less capacity.   The proposed modifications to the Renewables Obligation, with ‘bands’ for each technology, still gives on land wind projects 1ROC per MWH, so some will still get more than they need. Offshore wind projects will get 1.5 ROCs/Mwh, which may help more of them to get going, although Web notes that 2,500MW of offshore wind projects have received planning permission but not yet been built. ‘Many developers are concerned that their offshore projects are no longer economic. Costs have almost doubled in the past five years as a result of higher steel prices and a shortage of turbines and tugs to fix them to the seabed.’  He claims that the giant 1GW London Array development off the Kent and Essex coast, is ‘hanging in the balance’. (see section 2 above)

It’s even worse when it comes to newer options like wave energy. Web notes that, although marine projects are to be give 2ROCs/MWh, ‘research commissioned by the government suggests that the extra support for marine energy will not be enough to make a big difference. An Ernst & Young study recommended that marine energy- which currently does not operate commercially in Britain- would initially need three times as much support as onshore wind, the cheapest renewable. If marine energy received such backing, Ernst & Young projected that 1,000MW of capacity could be deployed. But when the government opted to grant only two, rather than three, ROCS for marine energy, Ernst & Young slashed its estimates about how much capacity would be installed by 90 per cent, to a paltry 100MW.’

By contrast Web notes that in Portugal and Spain, ‘wave farms receive more than twice as much for their electricity than cheaper wind farms- which is why Pelamis is about to be deployed in Portugal, not Scotland’.

CSP in Parliament 

In response to a very up beat presentation on Concentrating Solar Power (CSP) by Dr D Stote MP on Feb 28th, Energy Minister Malcolm Wicks,  commented  ‘The debate focuses on the key issue of how the UK could benefit from concentrated solar power. Unfortunately, we do not have sufficient sun resources for that technology in the UK. Therefore, for concentrated solar power to be of value here, it would be necessary to establish the HVDC transmission network that my hon. Friend proposed. I accept the argument that an HVDC network has the potential to deliver energy across long distances with minimal losses. However, building and maintaining an infrastructure of HVDC transmission lines and managing a network that feeds into national grids across Europe is an enormous and expensive task.’

He added ‘My officials have discussed CSP with international counterparts, and there is a general consensus that building the infrastructure would be costly. However, some of our European colleagues are engaged in developing that technology. For example, we believe that support for CSP in Germany is primarily for developing a manufacturing capability, rather than for applying the technology within national borders.’

So what about the UK? Well sadly all we got was the standard free market rhetoric ‘We believe that fair, open and well regulated markets are the best way for us to achieve the massive investment in the clean energy needed, and to create opportunities for the most efficient and cost-effective technologies and solutions to develop and succeed. Concentrated solar power could have a part to play along with other technologies.’

He concluded ‘I assure my hon. Friend that the Government will continue to follow developments in concentrated solar power and long-distance electricity transmission’.

Nuclear v Renewables

The nuclear industry has weighed in against the level of support being given to renewables, with EDF arguing that ‘If you provide incentives for renewables... that will displace the incentives built into the carbon market. In effect, carbon gets cheaper. And if carbon gets cheaper, you depress the returns for all the other low-carbon technologies’- like nuclear power.

The Guardian may have overstated it by suggesting that ‘nuclear power and renewables in Britain are mutually exclusive’, but there are obviously conflicts, both operational and financial.  Certainly, for many in the renewables community, the balance has gone far too much over to nuclear.  Philip Wolfe, Renewable Energy Association (REA) executive director, said: ‘There seems to be a mismatch in the sense of urgency the Government attaches to developing nuclear and renewables. The Government has an excessive concentration on electricity and an inadequate realisation that there needs to be a much more coherent energy policy. Heating and ventilation are often completely neglected in policy-making. Under the EU energy directive renewables will make up 15% of the total energy mix in the UK- twice as large as nuclear, which provides 7% at the moment.’

* The REA wants priority access to be given to renewables when being connected to the grid, powers to introduce feed-in tariffs to offer incentives for the use of renewables and a review of Ofgem to make sure it is working effectively. Wolfe says that, in addition to micropower and renewable heat including biomass CHP, ‘the technologies covered by the RO should be able to deliver at least 23.5% of electrical energy when you add the potential of biomass, landfill gas, eligible hydropower, wave and tidal stream energy. This suggests the 2020 quota should be raised from the 20% specified in the Energy White Paper to 25 to 30%.’