Public Sector Energy Editorial 24 November 2015

An analysis of the local authority energy market and the latest developments around the UK.

Policy & Strategy

The news for the next few weeks will be dominated by the Intergovernmental conference COP 21 in Paris. Hopes are high that a real deal can be reached on a global scale that will give some hope of staying below the two degrees Celsius limit for global warming from pre industrial times.

This is the target set by the IPCC. This is the United Nations body that coordinates worldwide scientific research on global warming and produces the Assessment Reports (there have been five reports) on which all climate policy is based.

However in advance of Paris, focus is settling on the US and Barrack Obama’s flexibility in the talks. One of the hopes for the conference is that it would lead to a binding legal treaty. But this gives President Obama a problem. As the Guardian reports

“John Kerry, the Secretary of State, reaffirmed this week that the US was seeking to avoid a legal treaty which would require approval from the Republican-dominated Senate. It is “definitively not going to be a treaty”, he told the Senate.”

It’s not that Obama doesn’t want to sign up to a legal treaty, but his domestic politics preclude this:

Energy Post has an interview with the new chairman of the IPCC, Hoesung Lee, who wants a more collaborative approach to the problems of climate change:

Domestically in the UK, last week was important because Amber Rudd, Secretary of State for Energy and Climate Change gave a speech on public policy from the Conservative Government – referred to as the ‘energy reset’ speech. This set out its approach and it was not good reading for those of us that support a move to renewable energy. The full speech is here:

The Renewable Energy Association summarised the main points as follows:

• It signaled an end to coal-power stations by 2025 with an industry consultation in the Spring;

• There will be three Contracts for Difference (CfD) auctions during this Parliament, with the first by the end of 2016 ‘if conditions on cost reduction are met’. Further details will hopefully be available before Christmas, with questions over what the caveats are and if ‘Pot 1’ technologies will also be included;

• No news was given on the RHI, but there will be a new heat strategy next year;

• A new dash for gas was signaled, with the Minister looking at how to reform the capacity market to allow for new gas generation;

• The next two carbon budgets are on track to be met, but the UK is behind on the fourth Carbon Budget;

The REA also published a press release:

Solar Power Portal canvassed reaction from industry to the speech, which predictably was not positive:

Damien Carrington of the Guardian described it a harking back to the energy system of the last century:

And Merlin Hyman of RegenSW said:

“The Government’s policies mean that our energy policy is now in the extraordinary position that, apart from coal, pretty much the only new electricity generation not to receive subsidies will be renewables.”

So what is the position for local authorities? The Government has made it clear that nuclear and gas generation are the main foundations of the new system. Neither are really available or of interest to local government. The Secretary of State has moved the focus to the energy security element of the “tri-lemma” (decarbonisation, affordable power and energy security) and for purely political reasons. She says that it is not the job of the Government, but the market, to choose solutions. But by bolstering gas and nuclear with support – at the expense of renewables – the Government already has effectively chosen.

The mention of three CfD auctions was in the context of wind energy, not solar, which might well be excluded from them.

I was also worried by the phrase: “In the same way that generators should pay the cost of pollution, we also want intermittent generators to be responsible for the pressures that they add to the system when the wind does not blow or the sun does not shine….”This sounds to me like added charges for renewables further down the line.

The capacity market is something that I have been looking into recently, in the context of social housing PV and battery storage. But here Rudd suggests that the capacity market will be rigged to ensure that it promotes the gas infrastructure that she says we need, hopefully not at the expense of the rest.

So the speech didn’t really tell us anything that we did not already know, but it confirms our worst fears: that renewables are in for a difficult time to the end of this Parliament. This seems to reinforce my own message to local authorities that they should view solar PV post-subsidy and come up with projects that do not rely upon Government funding at all.

So renewables is not in a good place right now, but neither is local government itself. The years of austerity are adding up and there is talk of authorities running out of money. One way to try and improve the situation is establishing Combined Authorities and such devolution deals continue to be agreed. Last week there were two more large devolution deals entered by the Government, this time in the West Midlands and Liverpool:

In my view, it is essential that energy and climate change are included in any package of devolution.

The Paris terrorist attacks recently have had all sorts of reverberations. As France extends its emergency powers, the nervousness of the Government with large groups of people that might be a target for terrorist attack is obvious. It is unfortunate that Paris will host one of the most important intergovernmental conferences in recent history next month, which could lead to a global climate change deal, and that there were plans for strong public support.

A march of up to 200,000 people had been planned to show such support, but the Government has now banned this on the grounds of public safety. The Guardian reports on a movement to show solidarity in other places, with 2,000 marches planned in over 150 countries worldwide:

Solar PV

Amber Rudd appeared before the House of Commons for an oral Q & A session last week, a day after her policy speech reported above. As reported by Jamie Hailstone in this week’s news she said that there was some hope for housing, schools and community projects. Solar Power Portal also reported on this story:

The Government has also increased its expectation of the total capacity of solar PV by 25%, from 9 GW to 12 GW. This was confirmed in Amber Rudd’s speech, although Andrea Leadsom said only last week that 9 GW was the expectation.

The industry believes that we will exceed the 12 GW level by next April, with a flood of solar farm construction projects being aimed to be completed before then:

Solar Power Portal also reports that solar PV may be excluded from the next CFD auction (as mentioned above), which will be held before the end of 2016:

Finally, as Jamie Hailstone reports in this week’s news, Exeter City Council has won an award for its 150 kw solar panel car ports, fitted to two car parks in the city. Well done to Exeter for being one of the first authorities in the country to do this.

Anaerobic Digestion

There are two reports this week about food waste. The first, in the Guardian, indicates that the EU has dropped plans to impose greater targets on its members over food waste. The plans would have required member states to reduce food waste by 30% by 2020. But at the Guardian notes:

“But in the new draft of the EU “circular economy” legislative proposal, which could change, …… countries are merely asked to take unspecified “measures” to curb food waste, with no timeframes or targets.”

The second report on food waste was a piece in last week’s Local Government Chronicle, which reported that the European Commission is ‘set to include mandatory food collections in its upcoming circular economy package’. It claims to have details of this from a leaked draft directive.

The main thing about food waste is that it should be separately collected and then processed in an AD plant to generate electricity and / or heat.

Green Deal & ECO

Next Energy News reports that the Parliamentary Select Committee that is taking evidence on energy efficiency at present has heard that the Green Deal was ‘far too ambitious’ in its policy aims and poorly implemented. This was also covered by Jamie Hailstone in this week’s news, particularly the local government contribution to this session:

Also in Next Energy News, the quote from Lord Bourne that energy efficiency measures are ‘too huge to be ignored’. Sadly, Secretary of State Amber Rudd appears to have largely ignored them in her landmark speech on future policy mentioned above:

And as Jamie Hailstone reports in this week’s news, Coventry City Council has topped the Knauf Local Authority Energy Index, with Peterborough City Council second. The index measures council performance in a number of areas, including energy efficiency in the community and housing.

Heat Networks

The London Borough of Sutton is seeking tenders in relation to a new heat network. The authority is a member of the UK District Energy Association and on 2nd November 2015, released the procurement of works and services for the Sutton Decentralised Energy Network. Details of the procurement can be found at under 'Sutton Decentralised Energy Network (SDEN). Details from the UKDEA:

Finance & Legal

Mentioned above is Amber Rudd’s speech last week and its importance generally for renewables. It also gave an in sight into financial incentives, with details of the CFD regime.

The Solar Trade Association was concerned that Rudd’s speech made no mention of CfDs for solar under Pot 1. CfDs were only mentioned in connection with offshore wind, with Rudd saying that “if the Government’s conditions on cost reduction are met”, DECC “will make funding available for three auctions in this Parliament, (…) the first of these by the end of 2016”.

However an article published in Solar Power Portal last week, quoting a DECC spokesman as its source, apparently confirmed that solar will be excluded from the 2016 CfD allocation round and was unclear as to whether the two subsequent rounds would include solar under Pot 1.

The Government has published a policy paper looking at the future of the Green Investment Bank and also sets out the government's approach to moving Bank into private ownership:

Electric Vehicles & Transport

According to Green Car Reports, US company Tesla is talking to the German Government about building a battery plant in Germany, along the lines of its Gigawatt battery plant currently under construction in Reno. There is no doubt that this should be a welcome boost to the sales of EVs in Europe:

And Pod Point continues to move forwards on its quest to raise £1.5m for investment in further EV charging points. It said last week that its equity crowdfunding campaign has reached the milestone of £1m investment raised.

It plans to use the majority of funds from Electric Equity to expand its sales and marketing function, which will help the company to win the key accounts and relationships we need to roll out more charge points.

If anyone is interested, you can buy shares with Electric Equity or get an 8% annual return over three years with the Open Charge Bond:

Energy Storage

The REA hosted its first event last week on energy storage, where eager developers, MP's, investors, and installers sought to better understand practical issues regarding storage projects.

At this event the REA launched its report on Energy Storage, entitled ‘Energy Storage in the UK – an Overview’. The report is well worth a read and can be downloaded here:

Community Energy

As reported by Jamie Hailstone in this week’s news, Exeter City Council is going for it to try and beat the deadline at the end of this month for the changes to community energy projects. It is seeking to raise £390,000 and has already passed the £125,000 mark.

And finally …..

The dangers from climate change include more extreme weather patterns, in particular violent storms. The problem is that such storms are interesting events for the population, some of whom have taken to trying to capture ‘storm selfies’, where you photograph yourself on a breaker on the Cornwall Coast as a 50 foot wave descends on you. Naturally, people are underestimating the risks of such activity:

And finally, the Guardian’s quiz on climate change. This is harder than you think – I hate to admit it but I only scored 7/11, which put me as ‘reasonably green’ according to the compliers, but in the top half of those who did the quiz. See how you get on:

Stephen Cirell