Public Sector Energy Editorial 20 October 2015

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


Policy & Strategy

Jamie Hailsone reports in this week’s news that the Unions have called on the Government to back the low carbon economy. Investor confidence is suffering as a result of Government policy. Coincidentally, today (Tuesday) the Minister of State for Energy and Climate Change (Andrea Leadsome) is to be questioned in Parliament on that sensitive subject. The Energy and Climate Change Committee will no doubt be asking some searching questions about those 27,000 jobs that are about to go in solar PV due to the FIT cuts, and also the Government’s commitment to the green agenda, which is now being widely questioned internationally in the run up to the Paris intergovernmental summit:

http://www.parliament.uk/business/committees/committees-a-z/commons-select/energy-and-climate-change-committee/news-parliament-2015/evidence-investor-confidence-leadsom-15-16/

The interesting point is why the Secretary of State, Amber Rudd is not going to appear?

High on the list of issues that the Committee on Climate Change will want answers on is the issue of cuts to financial incentives. This week I can report that Stephen Hammond MP told the Government at the Conservative Party Conference that the proposed FIT cuts are too drastic and need to be scaled back. He asks the question as to whether everyone is happy following the recent consultation from DECC and says that judging from his postbag, the answer is definitely no. Moreover, the complaints are not from serial moaners, but from industry and commerce. The reason that there is so much opposition is that these cuts might unravel all of the good work of the last five years.

So he suggests a cut in FITs to just 4p for two years and then further reductions as proposed in August before FITs are phased out two years later. As a former Transport Minister, Stephen Hammond does have some influence and it is interesting that Conservative politicians are now lining up to criticise these cuts.

And those cuts to financial subsidies for renewable energy continue to make headlines. Last week, Fergus Ewing of the Scottish Government brought its campaign on the future of renewable energy to London. It has made repeated calls for the Conservative Party to rethink its recent subsidy cuts.

Mr Ewing hosted a Renewables Roundtable event morning on 12 October to discuss the impact of recent UK Government decisions on renewables which Ewing says are "anti-business, anti-environment and anti-energy security". Edie.net reports:

http://www.edie.net/news/

Most interestingly, Mr Ewing claimed that the Government had been “surprised” at the level of opposition and also the links being made between cutting FITs and the investment confidence in the UK. Solar Power Portal reports on this:

http://www.solarpowerportal.co.uk/news/government_surprised_by_green_cuts_reaction_as_investment_pours_out_uk_says

Former Energy Minister Greg Barker, now chairman of the British Photovoltaic Association, also criticized DECC for its data on which the latest proposed cuts were based. He described this as “pretty poor”:

http://www.solarpowerportal.co.uk/news/greg_barker_slams_pretty_poor_decc_evidence_base_2345

As Jamie Hailstone notes in this week’s news, community groups have also been lobbying Members of Parliament on the cuts. The work of RegenSW is particularly prominent in this respect. On a more general note, the Government has published an EMR annual update, prepared under s5(4) of the Energy Act 2013. This proudly boasts that the Government has met all of its targets under EMR over the past year. Other views are, however, available:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/468337/EMR_Annual_Update_2015_web_accessible_version.pdf

The Energy and Climate Change Committee in Parliament is now going to look at the low carbon network infrastructure and has sought written submissions on this subject. The Committee will be investigating what changes are required from today’s electricity infrastructure to build a low carbon, flexible and fair network for the future:

http://www.parliament.uk/business/committees/committees-a-z/commons-select/energy-and-climate-change-committee/news-parliament-2015/low-carbon-network-tor/

The Government has also responded to the recent report by the Committee on Climate Change. In June 2015 the Committee on Climate Change and the Adaptation Sub-Committee published the seventh progress report on Government’s mitigation activity and the first statutory assessment of the National Adaptation Programme. A third document provided a summary of the issues for both adaptation and mitigation and presented five main recommendations for Government on climate change. This is the Government’s response:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/467818/DECC_CCC_Summary.pdf

Solar PV

Last week the excellent Solar Energy UK event at the NEC in Birmingham was held. This is the sixth year of this show and it remains the biggest and best of the calendar. Apart from dozens of speakers on every conceivable subject in four different theatres, there was an extensive exhibition of all the relevant technologies, both new and old. In particular, the energy storage demonstrations were interesting and when joined with social housing solar PV, such solutions seem compelling.

For my part, I gave a number of different talks and in one talked about the solar PV marketplace for local authorities and the public sector. In particular, I explained the APSE Energy ‘medium term strategy’ that I covered a couple of weeks back in Public Sector Energy and its reception was universally positive. Here is the report by Solar Power Portal of that session:

http://www.solarpowerportal.co.uk/news/positive_momentum_of_local_authority_solar_wont_change_without_subsidies

Also speaking at the conference was Chris Jardine from Joju Solar and he said that some local authorities would continue to fit solar PV to social housing even if the returns were very low or non-existent. They would do this for altruistic reasons:

http://www.solarpowerportal.co.uk/news/altruistic_councils_represent_opportunity_for_social_housing_pv_market

Naturally, there was a lot of talk about the cuts to financial incentives for solar PV and what would happen to the current solar PV market place. Generally, there was a view that some firms will go and there will be a consolidation in the market (Jamie Hailstone reports in this week’s news on the third solar PV company to go out of business in little more than a week). Solar Power Portal reports on the panel session that kicked off the conference with some heavyweight contributors:

http://www.solarpowerportal.co.uk/news/consolidation_inevitable_for_uk_solar_concludes_seuk_keynote_panel_3482?

Part of the survival plan has to be to work with customers more closely on their energy use and needs and to become ‘smart contractors’. In particular, this refers to the addition of solar PV and battery storage to make buildings even more resilient:

http://www.solarpowerportal.co.uk/news/installers_must_become_smart_contractors_to_adapt_to_post_fit_3542?

The Solar Trade Association has sought to question the proposed cuts by DECC to Feed in Tariffs by starting an online petition. This needs 100,000 signatures to trigger a debate in Parliament. It currently only has 25,000 and so it is urging everyone to sign up. Here is the link:

https://petition.parliament.uk/petitions/106791

It is also important that local authorities respond to the Government’s proposals to register opposition, even if it is only a short letter, rather than a substantive response. The deadline is 23 October (this Friday). Again, here are the details:

https://econsultation.decc.gov.uk/office-for-renewable-energy-deployment-ored/fit-review-2015

Anaerobic Digestion

Energy Post reports on how farmers can become energy producers by changing agricultural sludge and slurry into power. Whilst this is not a new idea, and was being discussed in Cornwall Council as long ago as 2009, few projects have come forward. Now a Finnish company called Outotec (together with Stuttgart University) has invented a new drying and gasification process that should make this kind of energy production more affordable:

http://www.energypost.eu/new-process-gasify-sludge-slurry-may-turn-farmers-energy-producers/

Meanwhile, the Organics Recycling group of the REA has launched a campaign for mandatory collections of household and commercial food waste, which has received 50 signatories so far. My own views on food waste are well known, namely that local authorities should be collaborating together to build new AD facilities that will turn a waste project into an income stream. But it only works if there is commitment and a collaboration that will share the feedstock, costs and risk.

WRAP is also on this track, but the only way is for the public sector to grasp this opportunity, rather than leaving it to commercial providers:

http://www.wrap.org.uk/node/46544?utm_source=REA+Members+Mailing+List&utm_campaign=72c2d0edc3-151016_REA_Newsletter&utm_medium=email&utm_term=0_e5d7ecbe99-72c2d0edc3-250326797&ct=t(151016_REA_Newsletter)&mc_cid=72c2d0edc3&mc_eid=b07cc4415d

Hydropower

One of the largest hydropower schemes in the Lake District is nearing completion. According to ITV news, the £2.8m Scandale Beck project will provide power for 1,400 homes. Interestingly, it is being part funded by the Carlisle Diocese of the Church of England:

http://www.itv.com/news/border/update/2015-10-09/cumbrias-biggest-hydro-electric-scheme-nears-completion/

Energy Efficiency and Buildings

Mark Siddall is a well-known architect that has been involved in a number of Passivhaus projects over the last five years. I met him at a Passivhaus open day, when I was inspecting Steel Farm, one of his projects in Northumberland.

As someone who has been championing better quality buildings for some time, he has been looking into the standards of new homes. He now claims to have ‘compelling research’ that suggests up to 95% of new homes do not meet the required energy efficiency standards under the Building Regulations 2010. According to him, not only can this lead to increased heat loss and higher carbon emissions, it results in poor indoor air quality. But it also means that consumers are being sold a product that is inaccurately described.

He asks the question where this leaves builders and developers of domestic and commercial property with reference to the new Consumer Rights Act 2015, which came into force earlier this month.

Heat Networks

Jamie Hailstone reports this week in the news on a new report on decarbonising heat in the UK. It seems that the Government is not making sufficient progress in relation to renewable heat. This is partly due to the Renewable Heat Incentive ending shortly and there having been no announcements from DECC yet on the next phase of support. This means that projects have all but stopped in the interim.

Now Carbon Connect has published a report that calls for an improvement of that situation and the adoption of a cross party low carbon heat roadmap to 2050. It also calls for announcements on ECO and the RHI:

http://www.scribd.com/doc/284986395/Policy-for-Heat-Transforming-the-System-FINAL?utm_source=REA+Members+Mailing+List&utm_campaign=72c2d0edc3-151016_REA_Newsletter&utm_medium=email&utm_term=0_e5d7ecbe99-72c2d0edc3-250326797&ct=t(151016_REA_Newsletter)&mc_cid=72c2d0edc3&mc_eid=b07cc4415d

Finance & Legal

The REA reports that DECC's lead Civil Servant, Stephen Lovegrove, has said that he expects the UK to be largely free of renewables subsidies in 10 years time. He stated this at a conference last week, as reported in the Financial Times:

http://www.ft.com/home/uk

Of course, this depends on Government policy on those very subsidies and the general view in the industry is that the Conservative Government is not exercising particularly good stewardship of the regime that it inherited from the former Coalition Government.

Electric Vehicles & Transport

Coinciding with the visit of President Xi to the United Kingdom this week, green car reports considers a steep growth in electric vehicles in China:

http://www.greencarreports.com/news/1100507_will-next-chinese-five-year-plan-boost-electric-cars-dramatically

And as more EVs come to the market, it is important to compare their features. The most important element here is charging times and capability as reported here:

http://www.greencarreports.com/news/1100000_buying-an-electric-car-why-charging-rate-dc-quick-charging-matter

Energy Storage

As mentioned above, storage was particularly featured in the Solar Energy UK event at the NEC last week. The most exciting potential use of storage is in conjunction with solar PV.

As an example, a housing solar PV project could now include batteries being fitted in conjunction with the solar panels. The idea would be that the battery is charged up during the day (despite the ‘deeming’ regime still paying for half of the electricity that has been put in the battery) and then the energy is discharged to the grid at peak times, when the suppliers will pay the premium rates for it.

If this can be perfected, then such projects will be able to be made cost effective without any subsidy from the Government.

And finally …..

Well known campaigner and founder of Solar Century, Jeremy Leggett has been recognised for his work on the green agenda with a lifetime achievement award at the Solar Energy UK conference last week:

http://www.solarpowerportal.co.uk/news/jeremy_leggett_takes_home_outstanding_achievement_award_at_solar_power_4572

The latest chapter on his book ‘Winning the Carbon War’ is now available from his website. I am in the process of reading this and it is gripping!

Stephen Cirell