Public Sector Energy Editorial 15 September 2015
An analysis of the local authority energy market and the latest developments around the UK.
Policy & Strategy
It has been a difficult time for renewable energy recently and unfortunately, the bad news just keeps on coming. This week I have to report that the Government has responded in record quick time to remove pre accreditation for the Feed in Tariff. The consultation process only started some three weeks ago. This attack on renewables is being driven not just by a change of Government, but by a change of personnel as well. Gone is Lib Dem Secretary of State Ed Davey, with Tory successor Amber Rudd taking a very different line.
The opposition is changing too. The news over the weekend was dominated by the election of Jeremy Corbyn as the new leader of the Labour Party. Some MPs in the current shadow cabinet have jumped ship voluntarily; others have been sacked by the Party’s new leader. Caroline Flint announced yesterday she was returning to the backbenches, as Lisa Nandy was confirmed as the new Shadow Energy Secretary.
One personality that is very much at the heart of the problems in the renewable energy industry is Chancellor of the Exchequer, George Osborne. He is widely seen as the author of all the changes recently announced. Yet he has been heavily criticised over his family ties to the oil and gas industry. His father in law, it transpires, is a lobbyist for the oil and gas industry, which might explain why he wants to have gas the base fuel for the UK and has supported the oil industry to the tune of millions:
The new policy landscape has still not completely fallen into place. We await the announcements following the review of FITs, the results of the consultation exercise on the removal of ROCs from April 2016 for schemes below 5 MW and also anticipate the re banding exercise for ROCs, all of which are expected soon. Presumably, it will also become clear shortly whether anyone is going to mount a legal challenge to the Government on the various proposed changes.
An interesting piece was included on LinkedIn by David Hunt, who was part of the REA UK Solar and On Site Renewables Group, which met recently with DECC officials. This is worth a read. He suggests that the FIT review was a stitch up from the start and simply a paper exercise. There were all sorts of questionable issues around the figures, not leas that they were based on irradiance levels in Winchester, when Sheffield has always been the benchmark in the past (which helped to improve DECC’s figures). He shares a view that I hold, which is the DECC staff probably do not even agree with the decisions that have been made and are merely the mouthpiece of the Treasury for this purpose. Read his personal blog here:
One of the silver linings that I have been focussing on recently is the relentless move towards grid parity for solar PV over the next couple of years. This is predicated on solar prices continuing to fall. That will be contributed to by the removal of Minimum Import Pricing imposed on China by the EU.
On that very issue, there is another storm looming on the horizon. This is because, whereby the EU has effectively applied a floor price to solar PV being supplied by Chinese manufacturers under MIP, it is due to come to an end in December of this year. It is widely believed that MIP has failed to have the desired effect, and now has the consequence of keeping prices at artificially high levels. It is known that solar panels are being sold more cheaply elsewhere in the world.
So there was considerable relief that the measures were due to come to an end and that would mean that prices will fall overnight by some 15% to 20%. However, the chief protagonist in the original complaint against the Chinese companies has now requested the EU for an extension of the provisions.
As Solar Power Portal comments:
“If the EU agrees to the review, current duties and the minimum import price (MIP) structure agreed between Brussels and Beijing will remain in place until the investigation is complete. This will take a maximum of 15 months extending the trade defence restrictions until the end of 2016.”
See its story here:
This story was also covered by Bloomberg:
The REA has also urged the EU to end MIP, which it says is artificially increasing the prices of solar PV in the EU. Its press release is here:
Finally on solar PV, a more positive story. The iconic Tate Modern gallery is to have an 82 kw solar PV array, courtesy of Solar Century. The former power station will be generating energy once again, but from renewable sources this time, thus helping its sustainability targets. Solar Power Portal reports:
As Jamie Hailstone reports in the news this week; a decision has finally been taken by the Government on the Navitus Bay wind farm project and planning consent has been refused. The application was for an offshore wind farm comprising of up to 194 turbines which would have a maximum installed generating capacity of 970MW and be connected to shore on the Dorset coast, together with related onshore and offshore works.
However, there was huge opposition, mainly on aesthetic grounds, which I did not see as particularly meritorious. I would certainly dispute the assertion that a wind farm off shore would spoil the view from the Dorset coast, but then I suppose it depends on your own view as to whether a wind turbine is ugly or not. Personally, I think power stations and electricity pylons are ugly but there are plenty of them about. I very much doubt that there would have been an impact on tourism either. Are we really saying that people will not go to Bournemouth for their holidays because there is an offshore wind farm that spoils the view?
Still, that is the decision and here is the Government’s news release:
Wave & Tidal Power
Wales Online reports that the Swansea Bay Tidal Lagoon project will have to wait until the end of the year before finding out whether Government support will be offered in the form of a Contracts for Difference (CfD) agreement. The problem that the developer has is the high cost of the support that would be necessary, which is rumoured to be even higher than for nuclear support:
Green Deal & ECO
The Government decision on the Green Deal is one of the items in the list of areas that the Conservative administration has undermined. This week, Public Sector Energy publishes a blog by Alex Krzesinski of YES Energy Solutions Ltd, who offers some insight into the market post Green Deal.
Finance & Legal
As mentioned above, and featured in the news from Jamie Hailstone this week, the Government has already announced the results of the Consultation exercise to remove pre accreditation from solar PV installations under the Feed in Tariff. This consultation paper was only published on 27 August 2015 and so the Government has moved in record time to do this. It also suggests that it was a foregone conclusion. DECC expressed an intention to lay an amended FIT Order in parliament on 9 September - in order to implement it by the 1 October, within the required 21 day parliamentary period under the legislation.
DECC explains pre-accreditation thus:
“Pre-accreditation allows a developer to lock in the subsidy rate well before major construction work or installation to acquire the necessary planning and environmental permits and grid connections has been completed. This means that although the subsidy level may have reduced by the time electricity begins to be generated, the developer will receive the higher subsidy agreed when the plant was in the planning stage but not guaranteed to go ahead.”
Pre-accreditation was seen as vital to some technologies, particularly hydropower, but was also useful for solar PV and wind energy. It has been removed, according to the Government to ensure that there is “better control over spending”. The speed with which the Government has moved clearly illustrates its determination to prevent an overspend on the Levy Control Framework and should remove any doubt as to the tone and content of further announcements, particularly around ROC bandings. The formal Government response is here:
And the news story of 9 September:
Electric Vehicles & Transport
A £10m Government competition to develop an ultra low emission battery has been won by the Warwick Manufacturing Group. The prize incentivizes the development of the next generation of batteries for electric and hybrid vehicles in the UK:
The wider significance of this was recognized by Professor Lord Bhattacharyya, Chairman of WMG. He made reference to the fact that the global energy storage market will be worth $50bn by 2020, of which $21bn will be in transportation. This project will play a significant role in the evolution of that market by creating a UK supply chain for battery packs to suit hybrid and electric vehicles requiring volumes from hundreds to thousands of units per year.
Turning to larger vehicles, DECC has announced the Clean Bus Technology Fund 2015, which will allow local authorities to bid for up to £500,000 – enough to retrofit hundreds of buses that will reduce nitrogen oxide emissions and improve air quality.
The fund is open for bids until the end of October, with a particular focus on pollution hotspots in cites and urban areas. The winners will be announced towards the end of the year:
It has also published the letter from Andrew Jones MP, Parliamentary Under Secretary of State for Transport, inviting local authorities in England to apply for Clean Bus Technology grants:
On the car front, Russia has issued a decree that all fuel stations must have EV charging points by November 2016. This will apparently apply nationwide and so is likely to boost the EV market significantly:
Finally on transport I came across an infographic on the Truck Locator website which was interesting as it is updated real time! Some worrying statistics in there:
In an interesting piece in Energy Post, the Chief Executive of National Grid indicates that he believes the idea of large power stations providing base load power is outdated in the modern context. The future is distributed generation and more locally based renewables. He thinks that solar on the rooftop will be the base load for many consumers. This raises serious questions about investment in more gas fired power stations and particularly the Government’s nuclear plans, such as Hinkley Point C, which will not even be built for a decade:
There is news this week from Pure Leapfrog of the launch of its new initiative Leapfrog Finance. Its Press Release of 10 September confirms:
“Leapfrog Finance launches with a dedicated £15m community energy bridge facility:
• New funding allows communities to take advantage of shared-ownership policy
• Community ownership allows profits to be channelled towards social impact programmes in local communities
• Investment into Leapfrog Finance by Big Society Capital is its biggest investment in community energy to date
• Enables communities to use local generation to fight local fuel poverty
Pure Leapfrog and Big Society Capital have entered into an agreement under which BSC will lend £15m to Leapfrog Bridge Finance Ltd, to fund large-scale community energy projects across the UK.” Read the Press Release here:
And the fall out from the various Government announcements is now starting to become apparent, including in the community sector. Here, a community group in Scotland has abandoned its plans to construct a wind turbine, with considerable benefit coming back to the community, due to the changes to the Feed in Tariffs:
It has been a difficult time recently in renewable energy but they are having none of it in Exeter. The ‘Relight My Fire’ festival is an event bringing artists to the streets and venues of Exeter to explore its relationship with energy past, present and future.
There are a spectrum of artistic events of interest, including:
• A discussion about community energy and an energy themed party on Friday at the Bike Shed Theatre;
• Walks, a film, pedal powered music (with a spot of SWIMBYism) and an exhibition on Saturday;
• Theatre and networking on Sunday;
• And a talk and workshop on Sunday; The full programme is here:
And finally …..
Only in America could someone come up with the idea of a self-driving electric hearse! Charles Bombardier has come up with the concept and the montage helpfully includes the corpse to show how it would all work. Incredible …