Renewable Energy in the UK

This week Hugh McNeal the new chief executive of trade body RenewableUK spoke with Business Green about the challenges the renewable energy industry in the UK currently faces. He also spoke of the day to day business of the trade body and how he thinks the future of renewable energy in the UK will unfold.

“You are meeting companies that are benefiting from the employment of offshore wind across all sectors of the economy. I don’t think people really get this, they treat each of the individual renewables [technologies] as a sector, but I don’t think that is true. I was meeting people who run winches or wrench systems or provide workers and staff to build offshore wind farms or they provide boats… I met lawyers and bankers and I met people who are spending time taking photographs of wind farms being constructed.”

“This is not just a sector it is something that has its tentacles into every part of economic activity in the country. When I started here I asked the team ‘how many people do the members of this organisation employ in Britain?’ which is a different question to the one normally asked about how many people work in renewables. The answer is over a quarter of a million. I get incredible energy from thinking about these companies, because they are innovators, they are disrupters, and if they are incumbents they are changing their business model. They are carving out a new way forward for Britain.”

“I think it is important – actually it’s crucial – to tell a relentlessly positive story about renewables, because it is a relentlessly positive story. This is no start-up. Renewables in general and I’m not just talking about wind and marine, are providing more of this country’s power than nuclear and coal. In terms of the infrastructure story – I can’t think of a bigger infrastructure story than the offshore wind infrastructure story under these last two Conservative-led governments.”

However McNeal does agree that renewable energy does not retain an entirely positive profile in the eyes of the country’s general populace. He therefore places a high amount of importance on the positive stories regarding renewable energy reaching the public as well as those in power.

“I think people can get lost in the numbers rather than the stories. You need to land the point that the industry is worth £20bn of investment, £6bn alone from DONG Energy between 2013 and 2019 in the Humber region, one of the areas of highest unemployment in the country… But then you need the stories to break through about the individual companies concerned. The other thing is I think we will see more [engagement and awareness] as people see the factories and the benefits. The investment in Hull is important, and we’ve seen the investment in the Isle of Wight and Campbeltown. This is the moment to show what the [offshore wind industry] looks like.”

With the offshore renewable energy sector potentially appealing to the new Conservative front bench offering long term employment solutions to areas with long term employment issues McNeal believes that they can overcome government concerns regarding cost and effectiveness of renewable energy and that we are not far away from a clear view on the role of renewable energy in the UK.

“Onshore wind is now the cheapest source of new energy generation that can be built in Britain. There are onshore wind plants that can be built here that are cheaper than gas. I’ve said that to people who are not used to hearing it, but there are plants that can be built at that cost point. We will have to see where the capacity market clears at the end of the year, but I am convinced of it. If you look at Bloomberg numbers or other analysts, we are in that sort of space for the best sites in Britain.”

“If you think about the size of turbines doubling, and the size of blades, and the percentages of cost reductions that have been delivered – you are almost in the realm of consumer electronics. It is like the TV that doubles in size as the cost comes down 30 or 40 per cent. You are in that sort of world; you are not in the world of multibillion pound infrastructure projects. It is phenomenal the UK is leading the world on this. I don’t think we should be shy about fighting on the grounds of cost or innovation. I think we have the most remarkable story to tell.”

However despite the optimism he did conclude with a reminder of the situation the industry currently finds itself in and the uncertainty it faces.

“There has been for the onshore wind sector in particular and for the marine sector now – two of the three main sectors we cover – no route to market and real pain in the last year. It is important that is understood. Thousands of people will probably lose their jobs in the onshore wind sector and we will probably lose the best part of £2bn of investment.”

We agree with Mr McNeal that there has been much to celebrate within our industry over the last few years and that it is not always been shown in a positive light. By the end of 2014 the industry was generating £46.2 billion in turnover per year and employed 238,500 people in full time positions.

Also, renewable energy generation records have been constantly broken on a yearly basis and we remain on track to achieve generation targets set in the previous decade. However, often the negative aspects have been targeted on a constant basis with subsidies in particular coming under particularly strong attacks from certain elements within the media.

Renewable energy is clearly here to stay though, the infrastructure developed over the past decade will remain for many more to come. With smart grid technology becoming more affordable and a potential energy storage revolution just round the corner the ability to manage the generated energy will become more straightforward leading to higher usage and less wastage.

Renewable energy is clean and safe and it’s sources limitless. The cost has already reduced dramatically over the past decade to the point that it is one of the cheapest sources of energy in the country. It reduces carbon emissions, helps the environment and due to cost reductions is now saving consumer’s money. The positive aspects outweigh the negatives dramatically and it position in our energy mix is here to stay.

Mr. McNeal was speaking to James Murray at Business Green and the full interview can be accessed at the following link:- http://www.businessgreen.com/bg/interview/2465930/winds-of-change-renewableuks-new-boss-promises-relentless-optimism-as-clean-energy-secures-its-position-in-the-mainstream

 

Heat solutions via renewable energy

As the benefits of renewable energy production and usage can now be seen throughout the country further advancements are required in order fully utilise the potential that we have. Whilst renewable energy is clean and does not require a traditional fuel supply its generation can be intermittent. Although this is not so bad as some have us believe there are solutions which can increase renewable energy’s usage at times when the sources are not generating as much as is being demanded.

The first of these is energy storage which we have discussed previously.  However last week a new report commissioned by Scottish Renewables explored the potential market opportunities for energy storage in the UK.

The report makes a number of recommendations for developing energy storage technologies as well as tackling the primary risk holding back a country wide roll out of energy storage in this country, a constant and reliable revenue stream.

The report “Cracking the code: A guide to energy storage revenue streams and how to de-risk them” was compiled and written by Everoze with assistance from RES and the University of Strathclyde’s Power Networks Demonstration Centre included the following recommendations; (1) long contracts from National Grid to help get the banks on board, (2) revenue streams designed to enable them to be stacked together easily addressing the revenue interface risk, (3) creating new revenue opportunities within the distribution network, (4) the introduction of a cap and floor mechanism for storage assets with long lifetimes, something which is already in place to support similar investments in other countries, and (5) the reduction of revenue risk which in turn will help deliver the £2.4billion of consumer savings previously highlighted by DECC.

Jenny Hogan, Director of Policy at industry body Scottish Renewables speaking at the report launch said “Energy storage is an essential part of the transition to a cleaner energy mix, for delivering an energy system for the 21st century and for reaching our climate change targets.

“While batteries today are 94% cheaper than they were in 1990, and a range of pumped storage projects are ‘shovel-ready’ or in the planning process, the current market arrangements are at risk of favouring more expensive sources of flexibility for our network.

“These range from ensuring that service contracts are procured in a way that supports investment in low-cost technologies, through to encouraging aggregators to ensure that people already deploying in storage in their homes are able to realise the full benefits it can bring.”

Felicity Jones, partner at Everoze, also speaking at the launch added “If the overwhelming challenge for the solar and wind sector has been cost reduction, the key challenge for storage is getting financiers comfortable with the merchant risk of revenue streams.

“Yes, continued reduction in the capital cost of storage is needed, but the bigger challenge lies elsewhere. Renewables developers eyeing up storage must flip their attention from cost to the other half of the profit formula: revenue.”

Another solution proposed to increase renewable generation and usage at first raises eyebrows and brings up a whole raft of safety questions. When you speak of hydrogen people’s first thoughts tend to be “isn’t that highly flammable?” It has been almost 80 years since the Hindenburg disaster, most of us weren’t even alive when it happened but even to today it inspires the negatively associate with hydrogen.

However over the past two years a team of scientists have been testing how dangerous it would be to run the UK’s gas network on hydrogen as opposed to natural gas.

At present natural gas heats approximately 80% of UK households. It is composed mainly of methane, a hydrocarbon, which when burned produces carbon dioxide a greenhouse gas which aids in global warning.

Under the Climate Change Act the UK is required to cut its greenhouse gas emissions to 1990 level by 2050 and the domestic use of natural gas is one of the largest contributors of our emissions and decarbonising heat one of our biggest challenges.

Most solutions have so far consists of different ways of electrifying heat that is replacing gas boilers with heat pumps or a direct heating system. However former Shadow Energy Minister Alan Whitehead casts doubt on such a plan being sustainable for all housing.

“As far as customers are concerned, that does mean, among other things, ripping out all their boilers, ripping out the mains, and replacing those with heat pumps. I would predict that pretty much every customer would regard that transition with some horror.”

Iain Conn, chief executive of British Gas owner Centrica, agreed “We pay 5p/kwh for gas, and 15p/kwh for electricity – so this whole idea of electrifying everything is mad, especially when we have got natural gas plumbed into all of the homes and if you electrify everything, what are you going to generate the electricity from?”

Both offered an alternative which would mean rather than changing the system would involve changing the gas.

Whitehead added “Rather than ripping everything out can we supply, for example, green gas, or different forms of gas supply into the system? Leaving it substantially as it is but actually changing the carbonisation mix of what goes into it – and giving the customer a much better deal.”

The greenest gas option would be pure hydrogen which burns cleanly and produces only heat and water. Plus hydrogen could be produced via electrolysis using renewable energy during periods of higher generation but lower usage. A water source would be required but since the burning process produces water there would be no overall negative effect.

So brings us back to the potential danger and the recent tests carried out. Mark Crowther, technical director at Kiwa Gastec who carried out the testing said “Gas leaks are rare, but do occur from time to time from sources as diverse as a defective gas appliance to DIY accidents.”

“The project was designed to prove whether accidental leaks from a pure hydrogen, or hydrogen and natural gas mixture supply, would have more or less risk attached than a leak from a natural gas supply.”

The testing showed that since hydrogen is much lighter than natural gas it was less likely than natural gas to accumulate in dangerous amounts. Also while hydrogen is odourless this could be countered by artificially adding odour as is done to natural gas.

“Overall it would appear hydrogen is of about the same risk as mains gas,” Crowther stated. “Because of this, and its zero carbon footprint in the grand scheme of things its widespread use will almost certainly be safer for the future of mankind.”

The key to this is that the hydrogen could be delivered via the current gas network infrastructure. Central heating systems would remain mostly intact although new boilers (at a cost of about £3,000 each) would need to be installed. Estimated costs are therefore about £2 billion per large city.

Dan Sadler, who ran the H21 study for NGN and is currently seconded to the energy department said “Whatever we do it’s going to cost a lot of money. The alternative is we get 90pc of people in cities who use gas for their heating to convert to electric, and we then have to rebuild all the electrical infrastructure.”

However Professor Jim Skea, a member of the Committee on Climate Change remains sceptical stating “I don’t think we have found in our analysis that using hydrogen networks for residential heating is necessarily the most cost effective way to do things.”

The Committee on Climate Change believes that heat pumps and district heating systems are less costly way of achieving this but that means a sharp increase in electricity generation. If this is to be achieved while complying with the Climate Change Act this will have to be generated from renewable sources in vast quantities and stored for usage in high peak periods which brings us full circle.

Either way renewable energy must play a major role in heating us whilst at the same time vastly reducing our carbon emission levels. Whichever method wins out will be dependent on market forces but regardless we have to ensure that it does happen.

 

Renewable energy in the UK post-referendum

Trade body Scottish Renewables this week warned that renewable energy generation in Scotland may be under threat due to Brexit repercussions.  Chief Executive Niall Stuart speaking at a conference hosted by Scottish Renewables said that Westminster must not get in the way of progress the industry has made over recent years and the process of leaving the EU begins.

Also, Mr. Stuart asked for clarity for the sector which has been reeling since the UK government started to cut subsidies for renewable energy in 2015 which experts have predicted could see a loss of £3 billion of investment and a loss of over 5,000 jobs.

“The many questions thrown up by Brexit just add to the huge uncertainty that was already surrounding Scotland’s renewable energy sector following numerous changes to support by the Westminster government over the last 12 months,” Mr Stuart said.

“Confidence amongst most of our members is incredibly fragile right now, and we need clear leadership at Westminster and Holyrood if we are to deliver further growth, to protect the many thousands of jobs supported by the industry, and to deliver the change in our energy sector that the people of Scotland want to see.”

Also speaking at the conference Renewable UK Chief Executive and Scottish Renewables director Hugh McNeal stated that Brexit could actually prove to be advantageous to the industry.

“It is tempting in these unprecedented times, in the period of uncertainty and market volatility since the vote, to focus only on the challenges ahead. The fears are very real. The stakes very high, in terms of investment, jobs and consumer bills if we lose access to the European Energy Market.

“It is precisely now, at this moment which is so unpredictable and uncertain, that I believe we should reflect on what we can offer; cheap, home-grown electricity able to deliver hundreds of millions of pounds of capital investment for our economy over the next few years, helping companies all over Britain just at a time when we need it most.”

He added that currently there are a number of onshore wind projects that are “ready to build now, ready to be financed; projects that can generate economic activity and capital investment, projects it makes sense to build given the benefits they will bring and the challenges we now face”.

Due to the government’s ending and reduction of the Renewables Obligation and Feed-in Tariff respectively plus ongoing uncertainty over whether onshore wind will be able to access price support contracts offered to offshore wind projects new developments are struggling to find a route to the market the is cost effective.

Recent speculation that projects may be developed without subsidies or with a new price structure developed to ensure that inshore wind can offer new generation capacity at cost fully competitive with new subsidised gas plants has yet to become tangible.

McNeal added “it is vital the sector now works to build a broad coalition, one that reaches out across industry, across all political parties, to help deliver a route to market for the industry.”

It is only natural to speculate what potential positive and negative impact the UK’s break from the EU will have on the country’s renewable energy industry but the truth is we do not know. However the uncertainty that this brings will have a negative effect at least in the short term.

There is a belief among a number of industry movers that after the UK leaves the EU with no legally binding carbon emission targets to achieve the renewables industry will be cast aside as cheaper and unfortunately dirtier alternatives are sought. However as we have demonstrated previously these options only tend to be cheaper in the short term and the lasting environmental consequences do not make up for any short term financial gain.

The most recent evidence we have of the government’s future direction however is positive as last week they committed to a bold new carbon emissions target with DECC confirming that Ministers have approved the recommendations for the fifth carbon budget put forward by the independent Committee on Climate Change (CCC),  with the official statement reading “The Government has agreed with the Committee on Climate Change and proposes that the fifth budgetary period covering 2028 to 2032 should be set at 1,725 MtCO2e.”

Therefore the situation at present although not perfect does show promise. Our hope is that it can be built upon and that renewable energy will continue to feature high in our energy mix.

Renewable Energy Generation and Emissions in the UK

Last week the Department of Energy and Climate Change released its most recent figures relating to energy data giving us a good indication as to the current state of the UK’s energy sector. Also, the UK’s decision on the fifth carbon budget was also announced which tied together nicely with the latest energy data.

The info has given us a good idea of what areas of our energy generation and distribution require more work and the extent of that. The figures released are for the first quarter of 2016.

In that period the UK renewable electricity capacity stood at 31.2GW – 3.3GW higher than the same time last year, and 0.7GW higher than the fourth quarter of 2015. The last of the large scale solar farms connected to the grid under the Renewables Obligation accounted for more than half of the new capacity added in that period.

 

Renewable electricity generation increased its UK share during the first quarter to 25.1%, a 2.3% increase over the same period in 2015 mainly due to increased capacity. However slower wind speeds accounted for a slight dip in onshore wind electricity generation.

The DECC also provided figures showing our progress against EU renewable energy targets. In total renewable energy accounted for 8.3% of our energy consumption in 2015 up 1.2% on the 2014 total. The EU target stands at 15% by 2020 so an increased rate is required over the final four years if we are to achieve that.

Also in the release was data relating the government’s flagship smart meter programme however the results were at best, mixed. 540,000 meters were installed by the large energy suppliers in the first quarter, up 34% on the previous quarter. The jump however has been attributed to the inclusion of an additional large supplier whose figures had not been included previously, rather than a sharp increase from existing suppliers.

Also 18,900 non-domestic smart meters were installed over the same period, a 26% decrease compared to the previous quarter.

As of the end of March 2016 the large energy suppliers now operate 2.75 million smart meters in domestic properties across the country. This represents 5.8 per cent of all domestic meters operated by large suppliers in the UK. Also there are 560,000 non-domestic smart meters, which accounts for 20% of all non-domestic meters operated by large suppliers.

As of March there are 3.6 million smart and advanced meters in the UK homes and businesses operated by both large and small scale suppliers. The UK government set its own target of having every home and small business with a smart meter by 2020 and as things currently stand have some way to go to achieve that.

The next part of the data related to emissions and for the first quarter 2016 total greenhouse gas emissions was 483 million tonnes of CO2 equivalent for the 12 months to the end of the first quarter, according to provisional estimates. The total marks a decrease of 32.1 million tonnes of CO2 equivalent compared to the same period in 2015.

As is the norm energy supply represented the largest chunk of emissions but also showed the great decrease over the period. This is mainly due to a vast reduction of coal use in energy generations.

Finally the data for transport showed renewable energy accounted for 4.1 % of total transport energy a fall of 0.8 compared to the same period the previous year. The EU target for renewable transport energy is 10% by 2020. As with smart meters there is some way to go.

It has yet to be made clear what impact the UK’s EU referendum vote will have on the impending targets. However it is possible, and after recent news events some may say likely, that the UK’s full exit from the EU will not have occurred by the time these targets are due to be met.

This could mean us having to pay extortionate fines in order to achieve our release. Others may be happy just to leave them as they would no longer be our problem. However regardless of where the government of that time stand on the EU, their carbon emission and renewable energy generation targets and any forthcoming fines these targets were designed with the people and creating a clean safe environment to live in.

Any government which abandons them cannot truly be said to have their people’s best interests at heart. So when the dust settles a clear policy on renewable energy generation and carbon emission reduction will be required. How long we will have to wait for that remains to be seen.