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Get barriers out of the way and we can build the electricity system of the future

Posted By Dr Gordon Edge, 20 January 2016
Updated: 15 March 2016

Giving evidence in a marathon two and a half hour session on low-carbon networks in front of the Commons Energy and Climate Change committee last week, I was reminded of a quote from one of my favourite authors, William Gibson: “The future is already here — it's just not very evenly distributed.” All the elements that we need to assemble a responsive, flexible, low-carbon power network are to hand; what is really needed is to roll them out, gaining experience on how the pieces work, individually and collectively, and consequently making them business as usual. Sure, reductions in cost of key elements like storage are going to be necessary, but we shouldn’t be waiting for those to happen before taking action to ensure the commercial arrangements are right to incentivise cost-effective applications of the key technologies. The legal and regulatory changes necessary are likely to be time-limiting steps for the low-carbon and distributed energy revolution that we need so desperately.

Firstly, there is the rapidly rising deployment of the variable renewables of wind and solar. It’s becoming a cliché to point out that these are now directly competitive with the cheapest new fossil-fuelled electricity. It is reasonable to point out that these technologies bring system challenges, though it is important not to overplay these. If we were to use “traditional” tools for managing these, primarily new peaking capacity and a lot of new wires, then the cost would likely be very high, so it is important that we bring on cost-effective alternatives. It is also vital that we open up the market for ancillary services so that where renewables are able to provide these economically, they can be rewarded appropriately. Wind turbines can provide frequency response, voltage control and reactive power, and National Grid is going to need more of all of these and other services besides. Ancillary services are going to be a much larger part of the cost of providing power to consumers, and it is important that as many participants as possible are incentivised to play in the markets for their provision to ensure that the cost is minimised.

Even more importantly, though, we are seeing huge activity in the areas of storage and demand side response, but their contribution to the system is currently being stymied by rules and regulations designed for an earlier era, and slowness in the roll-out of market arrangements that would allow the full potential of smart meters to be exploited. Nonsensical regulatory treatment that sees storage being charged twice for network services as it both receives and sends power out to the system clearly needs to be reformed. The spread of half-hourly metering to all classes of consumer would also allow full time-of-use tariffing and the ability to ensure response of demand to system signals.

Having been around this industry for over a decade, however, I know that even logical changes that everyone agrees must be implemented take a long time to work through the process, and if there is any contention then it is even slower. We must prioritise the regulatory changes needed for storage and DSR so that business models can be constructed around these exciting new technologies, and that as they mature they can be rolled out at the highest speed possible.

One thing that will have to be acknowledged is that a significant opportunity to get on the front foot with the smart grid was missed in the RIIO-ED1 distribution price control review. This process set business plans for the Distribution Network Operators that put off their transition to being Distribution System Operators until the next price control period, which does not start until 2023. The DNOs also massively underestimated the deployment of distributed generation in their planning, and thus the RIIO-ED1 settlements do not provide for sufficient investment in capacity to provide connections to such generators. Some form of reopener of the RIIO-ED1 settlements would obviate the purpose of having long-term price controls and so we may have to wait until the planned Mid-Period Review in 2019 to see any substantive action. This will slow progress in deploying smart technologies just when we need to accelerate.

In conclusion, it can be seen that unnecessary legal, regulatory and policy barriers are the major issue in getting that future network well distributed in the UK. Dealing with these won’t cost money but will require significant will on the part of policy makers and industry to see through the required changes in a timely way. I know that there is considerable excitement across the sector at the prospect of radical technological change leading to a new and more efficient system, with consumers at the heart. If we can channel that excitement the UK can get ahead of the curve and achieve a network fit for the 21st century, with huge opportunities to export expertise and solutions as others follow in our wake. Let’s get to work.

Tags:  DNO  DSR  legal  regulation  RIIO-ED1 

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Where next for People Power?

Posted By Maf Smith, 16 December 2015
Updated: 15 March 2016

Sometime before Christmas, and probably this week, the UK renewables industry expects our Government to publish the results of the Feed-in Tariff Review. The signs are not promising.

At the end of August Government launched its review and sought responses to its proposals to radically change the Feed-in Tariff, which I blogged about here.

Industry and the wider public responded, and in two months Government received some 55,000 responses. In the last 6 weeks a small group of officials in DECC will have been through them all.

There are apparently “only” a few hundred substantive responses. That is still a lot of detail for Government to consider. And while the other 54,500 odd may have been generated by wider public campaigns, I hope that the Government has taken note. This stuff is popular.

A cynic might say, of course it's popular, who doesn’t like subsidy? But they’d be missing the point. People simply want to see more renewable energy in use in our homes, on our farms, on our factory and office roofs and car parks. People get it, they like it, they want more of it. Asked recently by the National Infrastructure Commission what type of infrastructure they saw as most important the public said simply: investment in renewables. Conservative, Labour and Lib Dem voters all listed renewables as the type of infrastructure we should be investing more in.

I hope that the consultation has at least alerted Government to the fact that UK voters from all walks of life see renewable energy as important.

These same people would also agree that Government is right to worry about energy bills. And these same people know that renewables can add to our bills. But it’s not the case that the public doesn’t know what it wants. What the public wants is for Government to show leadership and to square the circle; supporting renewable energy but finding ways to make it cheaper and getting it on a sustainable path where it doesn’t require subsidy.

Unfortunately though, the Feed-in Tariff review did not set out a plan to move industry off subsidy. Its tone was that “there is no money”, “enough is enough” and “please close the door behind you”. There was no positive vision to be found anywhere in its 62 pages.

And so ready was Government to paint industry as little better than a group of subsidy junkies, they failed to notice that within the UK renewables sector is a group which is up for a difficult conversation. That could have been started by Government using the Review to say “look, we’ve spent what funding we had available. This is a great success, but in the current climate something has to give. Here are our thoughts for how we change the Feed-in Tariff scheme and some options for how we can support you in the future without giving you a subsidy”.

Our hope is that the significant public response, and the creative, mature way in which many have replied, has given Government cause to reflect. So despite the lateness of the hour, and despite getting off to a bad start in the original review, there is still time for Government to conclude this Feed-in Tariff review in a meaningful way. How? Well here are some things we will be looking for when Government publishes its response.

  1. Government must come clean and admit that while it is right that costs have been falling, the cost assessment made was very poor, and supporting some renewable technologies still requires a level of support.
  2. Government can be clear that the future has to be a subsidy free one. Renewable experts agree, but need help to get there. However, there should be an acknowledgement that there are wider benefits to small scale renewables, including helping communities and rural businesses manage energy costs, opening up the market to a diverse mix of generation and supply, and drawing people in to doing their bit to tackle climate change. These are worth supporting and this can be done without subsidy.
  3. Government should re-profile what funding is available to provide a sustainable glide path of funding for these subsidised technologies that is spread over the next two (rather than four) years. Doing this means using any available money more usefully.

Building on this, the most important thing we need from Government is that any statement on the Feed-in Tariff is not the beginning of the end for renewables, but the beginning of an open conversation about what next.

What industry needs is an opportunity to work with Government, with an open discussion about options to back small scale renewable energy without subsidy. If Government moves fast this could be done before the March budget. How good would it be to have a Chancellor use his next budget to set out how Government is supporting people, farms and businesses in being able to install renewable energy, manage costs and do their bit, without adding more money onto customer bills?

A response like this would be good politics. It would be Government leading on protecting consumers, while working with industry to identify solutions, and giving the public both things they want.

Alternatively, the Government could decide that it simply wants to phase out the Feed-in Tariff and avoid any discussion about what comes afterwards. In doing this it could talk up the money it is saving consumers. But it could not credibly claim to have a low carbon plan. The frustrating thing is that within many of the 55,000 responses, there is a credible plan that offers both these things. Let’s just hope that that’s the plan which captured their attention, as it deserves to be the blueprint for the way ahead.

Tags:  DECC  Feed-in Tariff  government  subsidy 

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Leadership abroad leads to leadership at home

Posted By Maf Smith, 14 December 2015
Updated: 15 March 2016

Many people have already given thanks for this weekend’s Paris deal. This significant international agreement shows how countries can choose to work together for their own short and long term ends, and take action which we all know to be necessary.

Speaking after the deal to an assembled press conference, Amber Rudd was clear that in the end the thing which secured the deal was political will, and the politicians there who showed leadership and signed up to an agreement that was far from perfect, but still vital. Having said this, Amber clearly didn’t want to imply that the contribution of others wasn’t important, but she was right to point out that at the end of the day only politicians could close the deal.

An important treaty like this shows the value of that mysterious thing – political leadership. Often allusive, it’s sometimes hard to track down, but obvious when it shows itself. A lot of political leadership has been witnessed in Paris these last two weeks.

An example of such leadership in the run up to Paris was the work of Philip Hammond in the FCO, who travelled the globe stitching a deal together and who has started to build a dialogue with Republican climate sceptics. Let’s hope that he keeps this vital work up.

What we need now though is political leadership at home. The recent energy reset speech has helped steady some nerves but there remain more questions than answers about Government priorities. Ongoing concerns over energy efficiency, renewable and CCS programmes show that problems are wide ranging and the continued lack of a clear narrative causes many people to question which direction Government wants to take us in.

The Committee on Climate Change has shown that in the next decade we will need to take out twice as much carbon from our electricity system as we are set to do this decade, which is a long way from the “we’ve done enough position” some would have us believe.

Its fifth carbon budget, recently submitted to Parliament, suggests a continued growth of renewable energy in the 2020s. The CCC has seven scenarios about our path to decarbonisation. All involve a substantial increase in onshore and offshore wind generation. Their least cost pathway sets out a significant increase of wind energy between today and 2030.

In contrast to the CCC, in DECC’s own scenarios, updated alongside the recent “reset” speech, DECC proposed capping renewables at 2020 levels and instead seems to suggest we rely on additional interconnection to keep the lights on and cut carbon. Relying on the French, Dutch and Norwegians isn’t credible. And it’s not leadership.

Government now needs to make up its mind though. The Paris deal and the new Fifth Carbon Budget gives the UK a chance to set out a fresh plan and a clearer Conservative carbon narrative.

Former Energy Minister Greg Barker has written that ‘sceptic voices on the Tory backbenches are finally starting to recede into the rear view mirror of history’ and along with those sceptic views must be left behind the old arguments and false choices between growth and low carbon.

All of us want to know how Government will look to use markets to drive down costs and drive out carbon; how it wants to use better, leaner regulation to deliver innovation; and how it wants to broker private sector investment and expertise to minimise risks to the public sector and the public purse.

In the UK’s renewable industry Government has a partner willing to take on this role. We now see that with the Paris deal we know what some in Government have sometimes seemed unwilling to say - that it is committed to climate change action at home and abroad, today and tomorrow – cannot be doubted. We know that deeds will have to follow from this.

Tags:  2020  Amber Rudd  CCC  DECC  Paris 

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Wind is the Solution

Posted By Maria McCaffery, 09 December 2015
Updated: 15 March 2016
It’s great to see that the SolutionWind campaign has been generating a buzz at COP21, the United Nations climate change talks in Paris. One of the key messages of the campaign is that many of the world’s biggest companies are using wind as their primary renewable energy source. The roll-call of Chief Executives going on the record to highlight the key role of wind energy in their business model is impressive, as it includes the CEOs of the likes of Google, Ikea, Lego, Unilever and BNP Paribas, among many others.

Unilever has committed to using 40% renewable energy, including wind, by 2020, as well as working towards a 100% goal in the future. Their Chief Executive Paul Polman has been taking an assertive stance, commenting that in some parts of the world “we’re still seeing too many fossil fuel subsidies and we need government support to level the playing field”.

Amen to that – we’re advocating fair competition in which newer technologies are nurtured, planning laws are balanced so that they don’t penalise one technology while promoting another, and there’s a recognition that polluters must take financial responsibility for their emissions.

It’s good to see that Mr Polman recognises the strong business case for energy efficiency too, with his company consuming 20% less than it did in 2008 - even though it’s continuing to grow. As a result, the company has already saved an amount of energy equivalent to the quantity needed to run 40 factories – a good example of how business is doing its bit to tackle climate change.

The Chief Executive at BNP Paribas, Jean-Laurent Bonnafé, notes that the investment case for wind energy is clear: it’s a mature technology with a successful track record of introducing technological innovations, it provides a predictable revenue stream and it’s increasing economically competitive.

His last point is particularly applicable to onshore wind here in the UK, where it’s one of the most cost-effective of all our energy sources. That’s one of the reasons why we’re working so hard to ensure it has a future. We need to see onshore wind farm projects included in future CfD auction rounds, as well as measures to ensure that householders, farmers and small businesses can generate their own power using small and medium-scale wind energy, so that we can continue to demonstrate that renewables offer good value for money.

There are many other great examples. Lego has invested £288m in an offshore wind farm and has a long-term goal of producing more renewable energy than the power it uses. Google powers 35% of its operations through long term Power Purchase Agreements mostly from wind energy. The company says these are attractive because they’re cost-competitive and offer long-term visibility in terms of pricing – and predictability is a valuable commodity.

For these successful companies, wind makes good business sense, so they’re making substantial, long-term investments in onshore and offshore wind energy.

I’ve noticed that Unilever’s Paul Polman has been particularly pro-active yet again in the last few days, praising the British Government for committing £5.8bn to a climate resilience fund to help the poorest nations most affected by global warming, as well as sticking to its policy of providing 0.7% of GDP for development aid.

He’s also right to continue to hammer away on other important issues. He told the BBC that “there are also some areas where I would expect the UK obviously to be a little bit more progressive, for example the risk of reducing the subsidies for wind or solar would send the wrong signal at this point in time."

When business leaders are lining up to argue the robust economic case for providing political backing for wind energy, all parties would do well to listen. COP21 has provided an ideal forum for the debate to be aired on the world stage. If we are to tackle climate change effectively, wind is a big part of the solution.

Tags:  2020  COP21  Lego  SolutionWind  UN  Unilever 

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Scotland's forward-thinking message on renewables

Posted By Maf Smith, 04 December 2015
Updated: 15 March 2016
Last night, Scottish Renewables hosted its 14th Scottish Green Energy Awards in Edinburgh. I need to confess I’ve always had a soft spot for the event, having been there right at the start and being one of a small team who established and grew the awards in the early 2000s.

Today the Awards are a major enterprise in their own right, and it’s remarkable to see their scale. That shows you how far we have come, and how important Scotland is to the renewable industry. Renewables can now provide a quarter of UK power needs. In Scotland they provide 50%. That’s a major achievement delivered over the last 15 or so years, and tracked faithfully by this awards dinner.

Now I spend most of my time outside of Scotland what I value about the Awards is how well they remind you of the positive differences being made. As one of the judges for the Awards themselves, I’ve been part of the discussions about shortlisted projects, and who should be the winner we select. It’s a real privilege, because it brings you back to what we are here for: making a positive difference to people’s lives and our environment.

Let’s take just a few examples from last night’s winners. First how about Beinn Ghrideag wind farm? It’s the UK’s largest community owned wind farm, and the Point and Sandwick community in the Western Isles worked for 10 years on their project. The scheme has been generating since September, and has already earmarked £700,000 of funding to a local hospice, energy efficiency, young people and arts and culture. It’s a great example of how renewable energy can help secure the economic future of such communities.

Or Green Marine and Leask Marine; two companies jointly given the Award for Best Supplier. Both companies are based in Orkney and have grown to serve the hugely important wave and tidal sector now present around those islands. There is a huge pride in these family firms building a future from our industry, and developing world class expertise at the same time.

Or Sgurr Energy, one of Scotland’s most successful renewable energy companies. Sgurr was started by Ian Irvine and Steve McDonald back in 2002, and they won the Best New Business back at the 2004 Awards. Now they have won for Export Achievement. As an employer with over 250 staff working around the globe, it wasn’t surprising that Ian Irvine wasn’t there to collect the award, being away in China hard at work.

My personal favourite award was the Judges Award which went to Highlands and Islands Enterprise. HIE are 50 years old this year so it was an appropriate time to celebrate all that they do for our industry. As an enterprise body they show the very best of the public sector; always wanting to push things on, find ways to tackle problems and make a difference to communities and businesses across northern Scotland. At RenewableUK we see many great examples of work by local enterprise partnerships and other agencies, but HIE remains something special. If the UK Government could drink from the HIE water cooler for just one day, imagine the difference it could make.

I write this because HIE has shown that partnership matters. Industry and public bodies working together with a common purpose to bring economic, social and environmental benefits. For HIE, renewable energy is an obvious choice as an economic opportunity given the fantastic resource there. But many seem oblivious to what renewable energy has helped us achieve.

Perhaps I can end with a simple example to illustrate how Scotland gets it, whereas others seem clueless. Today the GMB’s Chief Paul Kenny was in The Sun bemoaning wind energy and saying that “nuclear and gas are the only shows in town”. His figures don’t stack up by the way, but what he doesn’t seem to get is that there is employment to be had from development of gas, nuclear and renewables. His Scottish colleagues seem to get this however. At the same time as Paul was complaining loudly in The Sun, his Scottish colleagues were arguing that fabrication jobs for a new generation of floating offshore wind farms should come to Scottish yards. So Scottish union reps are doing their bit to fight for new jobs in Scotland. Their colleagues in their London offices are doing their bit to chase these jobs away.

Put like that it's simple isn’t it. Renewables are an opportunity. Anyone looking to pass that up would do well to put their name down for a place at next year’s Scottish Green Energy Awards and see first-hand how this is an opportunity already delivering and making many people proud.

Tags:  Green Energy Awards  Scottish Renewables 

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