Renewable Energy helps drive down wholesale energy costs

New research from independent energy company Good Energy revealed last week that renewable energy has helped reduce the cost of wholesale energy in the UK. The research published last week and backed by energy experts at the University of Sheffield showed that the combined effect of wind and solar energy production reduced the wholesale cost of electricity by £1.55 billion in 2014.

The research therefore questions the government’s claim that cutting subsidies for renewable energy generation by wind and solar will help keep consumers bills as low as possible.

Government concerns regarding the cost of support mechanisms led to the recent raft of policy changes which in turn have vastly reduced and in some cases eradicated the subsidies.

However the research showed that although these subsidy schemes initially increase consumer’s bills this is only in the short term with in the long term renewables driving done the wholesale electricity cost, a phenomenon known as the Merit Order Effect.

The researchers using tried methodology quantified the Merit Order Effect of wind and solar for 2014 and found that wind and solar generators reduced the wholesale cost of electricity by £1.55 billion in 2014. Also in net terms the cost of supporting them via subsidies was “1.12billion in 2014, 58% less than the cost reflected in the Levy Control Framework. The value of the Merit Order Effect would also increase if there was further renewable energy development and finally if current savings are maintained, future planned renewable development may deliver net benefit to the consumer.

Juliet Davenport Good Energy Chief Executive said: “This analysis puts the bill payer at the centre of the debate around renewable energy subsidies. Let’s give them the full picture and not just half of it.

“What is not taken into account is the fact that renewable energy, such as wind and solar, has actually been bringing the cost of energy down for consumers.”

“The bill payer money invested into supporting renewables yields significant benefits, let’s be very clear about that.”

Also speaking about the research Dr Lisa Clark, from the Department of Physics and Astronomy at the University of Sheffield said “Decarbonising electricity generation is critical for the future sustainability of the planet. In the UK wind is a really important source of renewable electricity.”

“At the moment the costs of renewable subsidy schemes such as Feed-in Tariff and Renewable Obligation have cast doubt over future of renewables. But there are very few reports of the actual financial savings from renewable generation like wind and existing savings to consumers.”

“However, this report provides clear evidence that UK wind generation is typically saving UK consumers around £1.5 billion per year. This is more or less the same amount that the subsidies cost. At the University of Sheffield we have recently finished a similar study and we find very similar numbers.

“So not only is wind energy decarbonising our electricity generation, it isn’t costing any more than any other source of electricity to do so.”

Paul Barwell, Chief Executive of the Solar Trade Association said: “With the Government’s consultation on the Feed-in Tariff review closing this week, this report is very timely. This analysis shows that the net effect on bills of supporting new rooftop solar – under the STA’s £1 plan – is zero.

“The £100m we need added to consumer bills over three years will be completely offset by the savings from solar lowering the wholesale price. This is just the evidence that the Government needs.”

In recent years in the UK renewable developments have increased at an extremely fast rate culminating in the current total of 28.4GW of capacity, tripling in the previous five years. The most recent figures highlight the importance of renewables with 25% of the country’s electricity generated by wind, solar and other renewable sources in the second quarter of 2015.

From the report: “Solar, more so than any technology, has epitomised this dramatic growth. Spurred by rapidly decreasing costs (a doubling of solar capacity leads to prices falling by around 20%3), solar capacity in the UK has increased from just 96MW in 2010 to over 8,200MW today.

“Wind, whilst not quite matching this increase in capacity, has also seen significant growth. The UK now boasts more offshore wind capacity than the rest of Europe combined.

“Emissions from the generation of electricity currently account for around a third of the UK’s annual greenhouse gas emissions. Renewable technologies will play a key part in helping the UK achieve its ambitious carbon reduction targets – at least 80% in 2050 from 1990 levels. Decarbonising electricity provides one of the quickest paths to emission reduction.

“Other major contributors to emissions, particularly transport and heat, are harder to tackle and methods to do so are themselves heavily reliant on greener electricity.

“Alongside decreasing costs and the need to meet emissions reduction targets, renewable deployment has been supported by various subsidy schemes paid for through consumer bills. The Feed-in Tariff and Renewables Obligation are two such schemes, and make up the majority of the support. Both pay a fixed amount per unit of renewable generation, irrespective of wholesale electricity prices or other market metrics.”

Another effect of the scrapping of the support mechanisms is further economic pressures on farmers, already subject to extremely low wholesale prices for traditional farm products. The warning from Scottish Renewables, the National Farmers Union Scotland and wind turbine manufacturer Gaia-Wind has come ahead of the consultation on changes to the Feed-in Tariff.

Johnnie Andringa Gaia-Wind CEO said “For the vast majority of our turbine owners a sensible and supportive Feed-in Tariff is a crucial part of the economics of ‘distributed energy’ – the generation of power mostly for on-site use.

“Farm-scale wind – a sector with a substantial, if shrinking, base of British manufacturers – is becoming a core element of the rural economy as farmers seek to diversify from dwindling traditional income streams.

“The changes to the FiT, however, mean we could now see more company failures and job losses as a direct consequence of government policy.”

Stephanie Clark, Policy Manager at Scottish Renewables, said “Reductions in support for small-scale renewables provided through the Feed-in Tariff will hit rural businesses particularly hard, coming as they would on top of well-publicised low prices, particularly in the dairy industry.

“The UK Government’s consultation on changes to the FiT ends on Friday, and we are asking that rates be kept at a viable level in order to safeguard the jobs and environmental and economic benefits that the sector provides.”

Gemma Thomson, NFU Scotland’s Legal and Technical Policy Manager, told how the proposed FiT changes would “severely limit” the number of on-farm renewable schemes in future.

“These proposals will end many on-farm renewable plans, and severely limit the number of new projects that will come forward in the future.

“NFU Scotland’s President Allan Bowie has written to DECC to voice the Union’s concerns directly.

“The knock-on effect for farm businesses will be that a previously viable way of dividing risk and reducing exposure to price volatility will no longer be an option.”

In previous blogs I have discussed our need to secure our energy future in a way that is both clean and cost effective. The figures mentioned above show that renewable energy is now capable of delivering a clean cost effective and secure energy future for the entire population.

However the new government policy is endangering our clean energy future with fewer new developments likely, lower investment, and a reduction in new and even more cost effective technologies.

It is disappointing to think how far we have come in a relatively short space of time only to see the majority of good work undone by the policy changes. The outcome of the Feed-in Tariff consultation will be very interesting as it is likely to be a final opportunity for the government to redeem themselves and pave the way for a secure energy future.

Renewable energy continues to grow in Scotland

Weather wise, September was a good month for Scotland with plenty of sunshine and strong winds boosting the country’s renewable energy output. On average rooftop solar panels produced 70% of a household’s electricity and hot water needs and wind turbines produced on average 64% of the country’s electricity demands for the month, an increase of 80% on the same time last year.

Speaking of the monthly figures WWF Scotland director Land Banks said “We recently learned that during 2014 Scotland’s renewable energy sector helped us to avoid a record amount of carbon emissions. Given the big jump in renewables output during September, it’s very likely we’ll be breaking even more records this year.”

Throughout the month wind turbines generated enough electricity to supply 100% or more of Scottish households on five of the month’s thirty days. Solar panels generated 70% or more of the energy needs of average households in Dundee, Stirling, Perth, Edinburgh, and Glasgow, and 65% or more in Inverness and Aberdeen.

The most recent figures from the Department for Energy and Climate Change (DECC) for renewable energy generation in 2014 show that 49.6% of electricity consumed in Scotland for that year came from renewable sources, up from 44.4% in 2013, meaning that Scotland reached its 50% renewable electricity target a full year ahead of schedule.

Despite these positive figures Lang Banks believes more needs to be done to tackle the issue of lack of renewable heat sources. The Scottish Government has set a target for 11% of non-electrical heat demand to come from renewable sources by 2020 and on that Banks said “We hope, ahead of the Holyrood elections, that all parties commit to introducing a Warm Homes Act that helps bring clean and affordable warmth to thousands of households in Scotland, by supporting the growth of district heating and renewable heat.”

However positive news regarding renewable heat generation in Scotland was announced shortly after stating that the amount of heat generated by renewable sources in Scotland grew by 36% in 2014.

These new figures, released by the Energy Savings Trust on behalf of the Scottish Government state that 1GW of renewable heat capacity was operational in 2014, approximately 3.8% of Scotland’s non-electrical heat demand.

The Energy Savings Trust report looks at all forms of renewable heat generation including ground and air heat pumps, biomas, waste, and solar thermal and measures growth towards the Scottish Government’s target of 11% of heat usage coming from renewables by 2020.

Speaking of the report Fergus Ewing Scottish Energy Minister said “I am pleased 2014 has seen the biggest step change in heat demand generated from renewable sources, a significant step forward to decarbonising heating. We are committed in helping support households and business across become more energy efficient and use more low carbon and renewable heat sources.

“There is however continuing uncertainty about the Renewable Heat Incentive (RHI), which the UK government have not commitment to beyond March 2016. We will continue to press for commitment to the long term sustainability of the RHI beyond next year to provide confidence for funders and stimulate investment in renewable heat technologies.”

Joss Blamire, Scottish Renewables senior policy manager added “These updated figures show we are moving in the right direction, albeit slowly. What the industry needs now is a strong commitment from the Scottish and UK governments to help increase the pace of development.

“With that in mind, the UK Government’s continued silence on commitment to the RHI beyond 2016 is worrying. Reduction or removal of that scheme would see our chances of hitting that 2020 target fall to almost zero.”

A further report released last week by Bloomberg New Energy Finance confirmed that new onshore wind turbines are the least expensive method of generating electricity in the UK with the cost per MWh approximately £55 compared to £75 approximately for coal and gas fired plants.

Seb Henbest BNEF’s head of Europe, Middle East and Africa said: “Our report shows wind and solar power continuing to get cheaper in 2015, helped by cheaper technology but also by lower finance costs. Meanwhile, coal and gas have got more expensive on the back of lower utilisation rates, and in Europe, higher carbon price assumptions following passage of the Market Stability Reserve reform.”

Also a recent study by the International Energy Agency found that in the last five years the cost of generating electricity from solar and wind has halved backing up the Bloomberg report.

With the cost of renewable energy now at its lowest, and lower than all other forms of energy generation, plus the weather doing its bit the future of the production of renewable energy has never been brighter. However the opportunity to build on this has been severely diminished by the recent policy changes by the UK government.

The amount of energy generated from renewable sources will start to level off in the near future before beginning to reduce as instillations are decommissioned. However over the same period we must reduce our carbon emissions as well as supply the nation’s energy.

The UK government’s answer is nuclear with up to six new power plants expected to be built in the coming years. However nuclear does not offer the clean energy that wind and solar can and with the cost of nuclear likely to be at least double, which will be passed onto consumers, the answer seems to make little sense.

 

The Wind Energy Industry in the UK

The latest State of the Industry report from trade body RenewableUK has shown the UK wind energy industry to be facing an uncertain future with those involved confused and concerned about the months to come.

However it also has shown up some contradictions with for example 29% of businesses questioned for the report expecting the hire new employees within the next 18 months and 31% expecting to have to make redundancies.

Likewise, 35% of the industry said they expect to company growth to exceed 10% in the coming year as they expect to secure the final Renewable Obligation subsidy prior to it closing in April 2016. In contrast 70% of companies stated that the investment climate was less positive than it had been in the previous 18 months mainly due to the reduction and removal of government support.

Since securing a majority in the May general election the UK Conservative Party brought in a number of policy changes to renewable energy subsidies including ending the Renewable Obligation for onshore wind a year earlier than planned in April 2016 and so far have failed to announce replacements despite promising to boost investor confidence.

The RenewableUK report also stated that regardless of the uncertainty surrounding the industry 2014 / 15 was still a good year for wind energy developments with 13GW of new capacity installed and a further 2.1GW currently in construction of which 98% is onshore.

The report, released last week, stated that £1.25billion was invested in the UK wind industry over the same period which resulted in a £402m of turnover for the onshore industry and £840m for offshore.

Also it was revealed that a record high 1.8GW of onshore capacity was consented in 2014 with 75% of that to be found in Scotland. However despite these expansions those asked still claimed the industry faces an uncertain future. For example only 30% of those asked said they expected investment to increase over the next 18 months compared to 60% in 2013. 42% stated that they expect investment to fall over the same period compared to 13% in 2013.

The report also confirmed that over 30,000 people in the UK rely on the wind energy industry for their livelihoods with roughly half of these employed directly within the industry but the impact of the government’s policy changes on employment is also currently unclear.

At present the sector still expects to take on new staff but at a much lower level of growth than before, from 70% in 2012 down to 39% this year. Also companies are much less optimistic regarding meeting the country’s renewable energy targets with only 3% of those asked believing we will reach the target of 13GW – 15GW by 2020 a drop of 16% from last year.

The report highlights the importance of stable long term policy for investors in the sector. Recently the UK government has been criticised for failing to deliver a strong policy by a range of high profile figures including John Cridland CBI Director – General, Lord Deben chairman of the Committee on Climate Change and former US Vice President and high profile green campaigner Al Gore. Only last month EY reported that the UK has fallen out of the top 10 of the global Renewable Energy Attractiveness index for investors for the first time.

In more positive news Scotland has exceeded its target of 500MW of community owned renewable energy capacity as the total has now reached 508MW. Energy Minister Fergus Ewing made the announcement at the Holyrood Magazine Community Energy Conference in Perth last week.

The Scottish Government recently published a Community Energy Policy Statement which charts the economic and social benefits of shared energy ownership.

Speaking at the announcement Mr. Ewing said: “Community energy represents tremendous potential to empower people to make the most of their own local resources. By creating a system that focuses on local energy, we can help to tackle some of our most pressing issues – from security of supply, to increasing energy costs – and stimulate local economic renewal.

“I am delighted we have met this target early which creates a huge opportunity to increase our ambition and to keep Scotland in the lead. We will be considering the scope to review our target alongside other energy policy development over the coming months.

“There are still challenges we need to overcome – community energy generally has higher capital costs, longer lead in times and frequent delays in connecting to the grid, while the UK Government is intent on slashing support for small scale renewables.

“The first national Community Energy Policy Statement makes community energy a central part of our energy ambitions and we are providing the best possible environment to help ambitious community groups reap the financial benefits of owning or hosting renewables schemes. I want to see more communities take decisions about their local energy system and to have an economic stake in new developments.”

Anne Schiffer, energy campaigner for Friends of the Earth said: “We wish to congratulate the Scottish Government and those communities involved who have made this happen. With the UK Government’s sustained and ideological attack on renewable energy, this announcement is fantastic news.

“What is important now is that we see this as a starting point of a citizen-led renewables transformation not the end. Scotland must continue to lead the way to an energy future that benefits both people and the planet. To ensure even more communities benefit across the country, we urge the Scottish Government to double the 2020 target to 1000MW as well as set an ambitious target of 2000MW for 2030.”

“Community ownership has been instrumental in achieving broader public acceptance of renewables and is vital in helping reach the Scottish Government’s 100% renewable energy target for electricity demand by 2020. Community energy helps tackle climate change and enables communities to use local natural resources to create jobs and strengthen local economies.

“Climate change means that we have to transform our energy systems from dirty fossil fuels to renewables. Community energy allows us to put people at the heart of that change.”

The positive aspects of the RenewableUK report come from what has been achieved under government support. With that now removed the future looks much more uncertain as confidence in the industry continues to diminish. Thousands of livelihoods are now under threat and billions of pounds of investment could be lost unless the government can come up with a new attractive clean energy strategy.

However nothing at present has been forthcoming. Schemes such as the Scottish government’s Community Energy Policy Statement should be applauded as they help greatly however they can only go so far. The proposed 1000MW is only a small percentage of our overall targets expected to be met by 2020. Where we go from here will be crucial. We await any announcement from the government on this with keen interest.

 

Reduction targets should push us towards carbon neutrality

Ice cream producer Mackie’s of Scotland along with Absolute Solar and Wind Limited have completed development on Scotland’s largest solar PV instillation. Made up of 7,000 solar PV panels and capable of generating 1.5million kWh of energy the development is expected to generate enough electricity to produce 4 million litres of ice cream per year whilst at the same time saving 850,000kgs of CO2 emissions.

Glasgow based Absolute Solar and Wind were chosen by Mackies’ as the company looked to become a carbon neutral business. The 1.8MW Solar Farm at the family run businesses in Aberdeenshire site is the second time the two businesses have worked together. Previously Absolute installed a T4 40kW Chip Biomass boiler and 2 x 199kW Biomass boilers in the Mackies’ production factory.

Andrew McGown, Director and Head of Solar at Absolute Solar and Wind said “We understand this project to be the largest solar farm installed and connected to the grid in Scotland, and it is a project we are incredibly excited to have been involved in. Solar makes great sense, enough sunlight falls on the earth’s surface every hour to meet world energy demand for an entire year. It’s great to see forward thinking companies like Mackie’s embracing this.”

“As with any new installation, we work directly with the client to understand their needs, their business location and their future ambitions. From this, we are able to make recommendations with regards to the best renewable solution available to them.

“After growing significantly over the years, this latest project for Absolute is testament to the core values the company is built on and our desire to be market leaders in the field of renewable energy. Similarly, Mackie’s has over 100 year’s history and it’s fantastic to be on their journey to become a more energy efficient and green business.”

Mac Mackie Managing Director of Mackie’s said “As a business we have always seen the value of renewable energy, from both an economic and an environmental perspective.

“We’re constantly challenging ourselves to be as green as possible, and working with Absolute we feel well placed to ensure that we will always get the best out of our renewable solutions.”

Andrew McGown from Absolute added: “Look no further than the business plan of both companies and you can understand why this partnership is a perfect match.

“Whereas Mackie’s of Scotland’s aim is to ‘become a Scottish global brand from the greenest company in Britain created by people having fun’, here at Absolute our mission is ‘to offer the very best of knowledge while earning the highest respect in the commercial world of Wind, Solar, Biomass and Destratification in Scotland and the North’.

“It is fantastic to have such a strong partnership and this is a relationship that will continue to flourish following this launch.”

This news comes at the right time as this week the Scottish Government confirmed solar PV projects below 5MW will continue to receive support following the UK Government’s decision to close several renewable energy subsidies.

The UK Government does not want projects such as these to be able to capitalise on the policy which guarantees the same level of support for the lifetime of the project known as grandfathering.

The Scottish Government has devolved powers over grandfathering policy and has confirmed it will retain support for solar PV projects in Scotland.

Fergus Ewing Energy Minister said “The UK Government’s decision to slash support for renewables is misplaced and actively discourages investment in clean energy.

“The industry needs clarity and certainty to allow the necessary decisions to be taken and I will do what I can to support the 3,000 solar jobs in Scotland that are under threat.

“So to maintain a consistency and certainty for a growing industry, I have decided to use the powers I have to retain the status quo until the closure of the Renewables Obligation in April 2016.”

John Forster, Chairman of Solar Trade Association Scotland (STA Scotland), commented “This shows that the Scottish Government is fully committed to solar providing as much as possible of its 100% renewables target for Scotland.

“Solar projects in Scotland now know what level of support they are going to get, and that they will get it for the full 20 years. It won’t be possible to cut support for Scottish projects down the line in, for example, year 15 of 20.

“We particularly appreciate how the Minister has moved as quickly as possible in making this decision, allowing solar businesses to plan ahead and focus their efforts on any Scottish projects in the pipeline.”

Later this year in Paris the governments of over 190 countries will meet to discuss a new global agreement on climate change. The conference which takes place from the 30th of November to the 11th of December is aimed at aimed at reducing global greenhouse gas emissions and avoiding the threat of dangerous climate change and in conjunction a local community in Perthshire Scotland held a Live Earth event which highlighted the initiatives taken locally to help reduce negative climate impact.

As part of the event in the villages of Birnam and Dunkfield, coordinated by 12-year-old Ruby Flatley the Live Earth ambassador for Birnam, a 100-metre long community bunting was created showing why people wanted climate action.

Organiser Jess Pepper said: “Hundreds of people from around our community made flags on the theme, #fortheloveof… showing why folk want climate action. The bunting is now 100 metres long and every piece tells a story. It will be hung in Birnam Arts.

“The community bunting will then go to on the road to Paris via the People’s Climate Rally in Edinburgh next weekend and then on to Paris in December.

“This is the only Live Earth event I am aware of in Scotland and in the UK apparently.”

The event highlighted the initiatives carried out by the local community to reduce their climate impact, such as the community growing project called The Field and a community orchard.

Jess said: “We were also celebrating what people in their own homes and local businesses are doing to reduce their climate impact.

“It could be growing or supplying or serving local food, supporting and promoting active travel, or improving their energy efficiency and switching to clean energy sources.

“For example, people who travel around our area caring for older people are using electric cars and one of the hotels has switched to using a biomass boiler for their heating instead of using fossil fuels.

“It was a great atmosphere throughout the day and was a successful event.”

The challenge to make an energy thirsty business such as ice cream production carbon neutral is difficult at the best of times. The UK government’s recent policy changes have added to the difficulty however with new carbon emission reduction targets expected to be agreed at the upcoming conference in Paris more businesses must follow Mackie’s lead and take the necessary steps to becoming carbon neutral.

The UK is already behind on the current targets and the new targets are expected to be even tougher. Therefore it is everyone’s responsibility to reduce their carbon footprint but more emphasis will be on businesses and industries that use high quantities of energy. Positive moves by these types of businesses will have a greater effect on the country’s carbon output.

Initially costs may be high but the long term commercial benefits for the companies and environmental benefits for the country will be worth it.