Setting a clear path for inexpensive clean energy

The UK Government’s controversial decision to axe the carbon zero home standards has motivated over 200 businesses to call on the Chancellor to reverse the decision and help reinstall investor confidence in the industry.

Approximately 230 firms and companies including some of the UK’s largest in the property and construction industries have written to the Chancellor George Osbourne urging him to reconsider.

At the beginning of July the government’s treasury department announced it was axing the zero carbon building standards for homes that was due to take effect in 2016 for residential properties as well as comparable standards for non-residential properties due to be introduced in 2019.

The open letter to the Chancellor was signed by senior executives from companies including Willmott Dixon, HAB Housing, E.ON and Tata Steel and green business groups including the Green Business Council and the Renewable Energy Association and stated that the signatories were “extremely disappointed to learn that this policy is being arbitrarily scrapped, despite the fact that the necessary primary legislation only acquired Royal Assent in February this year.”

“Since the policy was first launched eight years ago, business has invested heavily in preparing for future standards. This sudden U-turn has undermined industry confidence in Government and will now curtail investment in British innovation and manufacturing in low carbon products and services. There is no evidence to suggest it will increase housing supply or boost productivity.”

“The weakening of standards will mean our future homes, offices, schools and factories will be more costly to run, locking future residents and building users into higher energy bills. It also runs counter to advice from the Committee on Climate Change, impeding our ability to meet our statutory carbon targets cost-effectively at a time when we should be showing international leadership on this issue.”

The new standards would have meant developer would have to adhere to more stringent rules than before in the form of either installing a range of clean energy technologies to their new developments or funding local clean energy instillations.

The standards were thought to have the broad support of the industry however it has been suggested that a number of housebuilders privately lobbied the government that they be shelved citing higher detrimental construction costs should they be applied.

Speaking of the announcement chief executive of the UK Green Building Council Julie Hirigoyen said

“The speed and the stealth with which this administration has destroyed some of the long-term policies supporting the renewable and low carbon industries has been breath-taking,” she said. “We have witnessed an unparalleled wave of support from our members and the wider industry who are deeply concerned about how the government’s sudden, regressive and arbitrary decision to scrap the long established zero carbon policy will impact their business and investment.

“This U-turn not only means our new buildings will be less energy efficient and more costly to run, but it comes at a time when the UK should be taking strong action on climate change ahead of the UN conference in Paris in December. We urge government to reconsider its position for the sake of future confidence in the UK’s low carbon economy.”

A spokeswoman for the Treasury defended the decision to scrap the zero carbon building standards. “The government is not proceeding with the zero carbon buildings policy and instead is giving developers the time they need to build energy efficient homes as required by recent changes to building regulations brought in during the last parliament,” she said.

 

In more positive new the UK’s first non-profit energy supply company was launched in Scotland last week. Our Power Energy has been set up with the aim to cost the cost of energy bill to some of the country’s most disadvantaged communities.

Thirty five organisations including a number of housing associations joined forces to set the new company which plans to market heat and power to over 200,000 consumers by 2020.

The Ofgem licensed supplier of gas and electricity is expected to offer household utility rates at approximately 90% of the standard commercial tariffs to tenants by the end of 2015.

The consortium will purchase the gas and electricity on the wholesale market and due to its non-profit status will be able to offer them to its clients for less than the traditional providers leading to potential savings of more than £10 million to the communities over the next five years.

The company has secured funding of £2.5 million from the Scottish Government and £1 million from Social Investment Scotland.

Alex NeilScottish Social Justice Secretary said: “Fuel poverty is at its highest level in a decade with fuel prices having risen by an inflation-busting 7% between 2012 and 2013.

“A recent investigation by the Competition and Markets Authority (CMA) found that millions of energy customers are paying too much for their energy bills.

“That is why the Scottish government has invested £2.5m in Our Power. It will be the first independent and fully-licensed energy supply company registered as a non-profit distributing organisation owned by its members.

“This ground-breaking company will make a real difference to tens of thousands of low income households who are currently disadvantaged in the energy market and struggling to pay their bills.”

The chief executive of Social Investment Scotland Alastair Davis said: “Fuel poverty is a major issue for many households throughout Scotland. However, by removing profit from the equation, Our Power offers a new way of tackling this problem.”

In the future, the company plans to develop renewable energy projects as part of its business for the benefit of local communities.

In a perfect world inexpensive clean energy will be available for all. Projects like the Our Power Company are an excellent starting point for achieving this and it is something we can all admire. However more must be done in order to realise our overall aim.

Inexpensive clean energy can only be accomplished if we all work together. The government must set clear targets and offer initiatives in order to entice investors. In turn the developers and technology providers must use this investment wisely and constructively to ultimately produce clean energy for the benefit of everyone.

Scotland seeks clarity

Last week in Glasgow over two hundred representatives from the renewable energy industry met with Scottish Government ministers and officials to discuss the impact of the UK Government’s decision to end the Renewable Obligation subsidy for onshore wind early and how it will affect their businesses.

Speaking after the summit Scottish Energy Minister Fergus Ewing said “This decision by the UK Government can only be described as anti-business. The impacts could spread right across Scotland and the wider supply chain, including ports and harbours, transmission and distribution, consultancy, communities and the civil engineering sector.

“This morning’s event was attended by over 200 people from a wide range of businesses and organisations who are affected, which shows the strength of feeling throughout the industry.

“All of this is will come at great personal and economic cost to our businesses and people. I’ve heard from many successful businesses who are at the forefront of renewables technology who are now being forced to look at making redundancies as a result of these changes. I also heard from investors both in Scotland and abroad who are wanting to invest in this industry but these are currently being stalled because of the uncertainty this is causing.

“Delegates this morning spoke about the damage this will cause the rural economy – many of the shops and business that are vital to these communities.

“Over the next few weeks DECC will be seeking the views of those affected and I strongly encourage anyone with an interest to respond on this to ensure our concerns are heard.

“We will continue to make representations to both the UK Government’s Energy Department and to the Scotland Office, feeding back from what I heard at the summit and the many meetings I have had with representatives from the industry.”

Also speaking after the event Jenny Hogan, Director of Policy at Scottish Renewables, said: “The industry is urging the UK Government not to abandon the onshore wind sector in Scotland by pulling the rug from under it a year earlier than planned.

“Ending the Renewables Obligation one year early could have a devastating impact on onshore wind developers and supply chain across the country with around £3 billion of investment in Scotland being put at risk. We need UK ministers to urgently reconsider their position.

“The impact of this decision will be felt more harshly in Scotland because the biggest proportion of projects being developed in the UK are here.”

Shortly after the original announcement regarding the removal of the subsidy the Department of Energy and Climate Change informed the industry that there would be a grace period for projects that have already invested significant funds however no detailed information regarding this has since been forthcoming.

Ms Hogan added “The details around exactly how a company may receive a grace period also remains unclear. The lack of clarity is extremely damaging for investors but we hope to continue our talks with officials on how this will work in practice.”

In addition there is a further threat to the industry as the scheme introduced to replace the Renewable Obligation in the long term, the Contracts for Difference (CfD), is now also expected to be closed shortly with no new applications sought.

Regarding this replacement method Amber Rudd, Secretary of State for Energy and Climate Change, suggested that the CfD would be included in the Conservative government’s manifesto pledge to end new subsidies for onshore wind projects.

Commenting on the CfDs Jenny Hogan stated “We now believe onshore wind could also be under threat within the CfD framework, which would create even longer-term uncertainty for the industry.

“Onshore wind is already the lowest-cost form of renewable energy and plays a massive role in delivering on the UK Government’s legally binding renewable energy targets and cutting carbon emissions.

“After further discussion with our members we will be issuing a formal response to the Department of Energy and Climate Change on the early closure of the RO.”

We have discussed the UK government’s policy change and abolition of subsidies for onshore wind in great detail over the past few weeks. Our stance is widely known, we believe that renewable energy and in particular wind power has major role to play in our future energy mix.  To conclude therefore I would like to leave you with a quote from Dr. David Toke and Professor Peter Strachan from a recent article they wrote;

“There is much lamenting over the closure or mothballing of fossil fuel power plants, there are complaints about how subsidies are being “wasted” on wind farms and there are calls for more nuclear power in Scotland. Yet such talk ignores 21st century realities, including economic and practical considerations. Renewable energy must lie at the heart of our strategy to make energy in Scotland sustainable and secure.”

Dr. Toke and Professor Strachan’s article in full can be read here http://www.scotsman.com/news/only-one-winner-in-energy-debate-1-3826942

The Future of Wind Power in Scotland

In last week’s blog we wrote of the record breaking run wind farms in Scotland went on from January to April 2015. New analysis of wind data commissioned by WWF Scotland and provided by WeatherEnergy has confirmed that wind turbines in June in Scotland provided 620,144MWh of electricity to the National Grid, out of total consumption of 1,891,536MWh.

This represents an increase of 120% compared with June 2014, when wind energy provided 281,735MWh, WWF Scotland said.

Throughout the month wind turbines in Scotland provided enough electricity to power 1.7 million households. WeatherEnergy’s data analysis confirmed that wind generated 33% of Scotland’s electricity needs for the entire month. The data also confirmed that electricity generated from wind could supply at least 100% of Scotland’s households on six of the thirty days in June.

Solar figures were also analysed and WWF Scotland confirmed that on average throughout the month, sunshine provided 80% of the electricity requirements for households with solar panels. When broken down into individual areas this came out as 109% of the electricity needs of an average household in Aberdeen, 105% in Edinburgh, 98% in Inverness, and 89% in Glasgow.

Regarding the data WWF Scotland director Lang banks said “While much of the attention may have been focused on the welcome summer sunshine, June also turned out to be an astonishing month for wind power in Scotland. Thanks to a combination of increased capacity and stronger winds, output from turbines more than doubled compared to the same period last year.

“These figures show just how much wind power has gone from strength to strength. However, wind power in Scotland could and should be playing an even bigger role in helping to reduce climate emissions from the power sector.”

“We therefore hope that the forthcoming Government onshore wind summit can find ways forward to help ensure this clean energy source can meet its true potential.”

Karen Robinson, of WeatherEnergy, said: “While good for generating power from the sun, the summer months often see a dip in the output from wind turbines. And, while output was certainly lower than the month of May, this June saw a massive jump in output when compared to last year.

“While the data confirms Scotland is knocking out of the park on wind power, it also confirms it’s no slouch when it comes to solar power too.”

SNP MSP Mike Mackenzie said the figures released today showed Scotland had a “real opportunity to be a world leader on renewable energy”.

“This excellent progress must not be put at risk by the reckless approach of a Tory government with scant regard for Scotland’s interests,” he added.

Mr Mackenzie said: “These outstanding new figures are a welcome demonstration of the strength of Scotland’s renewables industry, with a 120% boost on the previous year’s figure showing the incredible strides Scotland is making in producing clean, sustainable energy – and showing the vital role green energy can play in meeting our energy needs.

“This is exactly why the UK Government’s decision to cut onshore wind subsidies funded through the Renewables Obligation is so dangerous – which could see a loss of investment of up to £3 billion, put more than 5,000 jobs at risk and put at risk the excellent progress Scotland has made on renewables in recent years.”

Although the renewable energy industry in Scotland is relatively new compared to the fossil fuel industry it is maturing at a good pace. The clean energy that it is providing to the nation on a regular basis is helping us both protect our environment and meet EU targets on carbon emissions.

However this has not been achieved without the help of subsidies. All industries tend to get subsidised to some level however it is the burgeoning industries that require them the most. In terms of the renewable energy industry the technology required new and as a result is extremely expensive. Add to that the costs of development including construction and maintenance and the project is not cost effective.

A desire to create a cleaner environment plus a need to meet specific targets on carbon emissions with the additional benefit of long term savings for the consumer in order to get the industry moving the UK government offered subsides on renewable energy projects.  These subsidies attracted developers and the industry started to grow.

Over the past ten years this growth has continued and in the last three has picked up considerably. Therefore we are seeing record generation taking place throughout the country. So is this the time to end the subsidies? The UK government certainly think so with their recent policy change however their reasons seem more political.

Our thoughts are unsurprisingly different. This is because at present the industry has yet to become cost effective. The subsidies that wind energy projects receive have been decreasing as the technology becomes less expensive and this reduction was planned to continue over the coming years ending up at zero. However we are not in that position at present so the eradication of the subsidies will see the industry in terms of new projects grind to a halt.

Generation records may be getting broken however the UK is still behind on its carbon reduction targets. Earlier this year we were given a warning by the EU that we were in danger of not making our targets and if not would face penalties. Wind power (including the subsidies) is the most cost effective way of reducing carbon emissions. The eradication of the subsidies and the subsequent lack of new projects will make achieving our targets much more difficult and much more costly.

Had the industry been allowed to continue with new projects developed and those established generating clean renewable energy, the subsidies would have been phased out gradually. This would have a led to a robust industry operating with efficient and cost effective technology. In turn this would have meant energy savings for the consumer as we would have been creating our own clean cheap energy and would not have to rely on fossil fuels being purchased from an ever diminishing overseas market.

At present our energy future is not secure and unless policies are rethought and changes made then this will continue to be the case.

 

Onshore wind continues to grow in Scotland

Wind farms in Scotland have been breaking records again. From January to April 2015 they generated enough electricity to power over 950,000 households for a full year. In total 4,452GWh of electricity was generated in the three months from January to April which was a 4.3% rise on the previous record breaking quarter and continues the strong showing from 2014. 49.8% of all electricity used in Scotland in 2014 came from renewable sources as capacity rose 9% over the year to 7.4GW.

Scotland’s Energy Minister Fergus Ewing was delighted with the new figures and the performance of the wind sector of the renewable energy industry, the electricity it generated in the first quarter was enough to power 960,000 homes for a year. However despite this positive news he also warned that the country’s renewable energy and wind power potential was in danger of being curtailed by the UK government plans to halt the subsidies for onshore wind developments. This policy change is likely to stop the progress of 250 onshore wind developments in Scotland.

The Energy and Climate Change secretary Amber Rudd is to visit Scotland at Ewing’s invitation to discuss the new policy and likely negative impact it will have compared to other parts of the country.

Mr Ewing said: “These statistics show renewables continue to go from strength to strength, with almost half of Scotland’s electricity use coming from renewables last year and wind delivering record amounts of power in the first three months of 2015.

“Scotland accounts for around a third of total UK renewables generation. Given the record amounts of power now coming from wind, and a healthy pipeline of wind projects with consent and in planning, the UK Government’s proposals will have a profound and disproportionate impact on Scotland.

“I am pleased Secretary of State for Energy and Climate Change Amber Rudd has accepted my invitation to come to Scotland this summer to meet with the industry and developers and see the harmful effects this decision will have.

“Onshore wind is one of the most cost effective renewable energies, yet the UK Government’s perverse decision to end support puts this hard work and progress in jeopardy and the Scottish Government will continue to argue against it.”

Head of Policy WWF Scotland, Dr Sam Gardner said: “It’s great to see Scotland’s renewable electricity sector making consistent progress year on year towards its 2020 target. Green electricity is helping to slash carbon emissions, increase energy security and deliver jobs and investment.

“It’s clear that Scotland’s on a journey to a clean energy future, we should embrace this transition and work to secure all its benefits. However, the recent UK Government announcement to cut support to onshore renewables earlier than planned is pulling the rug from underneath the industry at a crucial time, undermining confidence and putting future investment, and all the economic, environmental and health benefits this could bring, at risk.

“Independent engineering analysis for WWF Scotland shows that we can have an almost entirely renewable electricity system by 2030 that provides security of supply and allows Scotland to continue to play to its strengths and to be a net power exporter. However, the UK Government needs to restore confidence to a very nervous energy sector by providing a stable policy framework and a level playing field for onshore wind in competitive auctions.”

The newly revealed statistics also showed that in 2014 19.6% of UK electricity was generated by renewable energy. In the first quarter of 2015 this amount had risen to 22.3%, another record. This meant that renewable energy continued to increase its lead over nuclear generated electricity which came in at 18% for the first quarter of 2015. Carbon heavy fossil fuels continued to produce the most with coal at 30% and gas at 24%.

Onshore wind in particular generated 7.0TWh from January to April, an increase of 4.7%, whilst offshore wind also rose to 4.7TWh, an increase of 6.3%. This was due to both an increase in capacity and strong wind speeds. Solar PV generation showed the most significant gains, increasing by an impressive 60% to 0.8TWh.

Taking into account all energy uses including electricity, heat, and transport, renewable energy generated 7% of all energy used in the UK in 2014, up from 5.7% in 2013. However using the EU’s method of measurement the figure is 6.3% as opposed to 7% which is still up from 2013 but falls well short of the 15% 2020 renewable energy target set by the EU.

Renewable energy has a long and successful history in Scotland. From the hydro-electric instillations developed in the 1950’s to the UK’s largest onshore wind farm at Whitlee the country has utilised its vast renewable sources well and as shown above, continues to do so. The Scottish government is pro-renewables recognising our potential and setting the ambitious target of generating 100% of our electricity via renewable sources by 2020, a target we were on course to meet.

However the change in policy from the UK government has put realising our own targets and those set by the EU in jeopardy. The EU reduction targets for carbon emissions are legally binding and it has already been noted that the UK are behind on their interim targets and need to do more in order to reach the overall targets by 2020. With the halting of the onshore wind subsidies this target will be even more difficult to achieve and at present no definitive contingency policy has been devised.

With the Scottish government being pro-renewables, particularly onshore wind, and the UK government implementing a policy change which effectively halts growth in this industry the outcome of the proposed talks between the two energy ministers will be very interesting. Our hope is that a compromise can be reached allowing Scotland to continue to increase its onshore wind generation capacity whilst at the same time help the UK on a whole achieve its EU carbon emission targets.