Monday, 21 September 2015

Wither UK energy policy?

The controversies over the UK government's energy policy continue:
Amber Rudd rejects concern over £24bn Hinkley nuclear plant cost - FT.com
Amber Rudd defends government's renewable policy blitz - 17 Sep 2015 - News from BusinessGreen

And the government is coming under increasing pressure from all sides:

MPs to consider whether recent UK energy policy changes have 'spooked' investors

MPs on the House of Commons Energy and Climate Change Committee have begun an inquiry into the extent to which recent UK energy policy changes have affected investor confidence.

18 Sep 2015

It is seeking evidence from the industry on how well the Department of Energy and Climate Change (DECC) considers the needs of investors when making policy changes, any steps the department should consider taking to reduce policy uncertainty and views about where future investment in the energy sector could come from. The closing date for submissions is 26 October.

Committee chair Angus MacNeil said that major energy projects could "take years from planning to completion, so maintaining investor confidence is crucial if we want to upgrade our energy system".

MPs to consider whether recent UK energy policy changes have 'spooked' investors

The UK’s energy policy has descended into dangerous farce

David Thorpe | 17 September 2015

The UK Conservative government is pursuing a dangerous path on energy, which could lead to lights going out next year.

The government is preoccupied with what it calls an “overallocation of renewable energy subsidies”. Lest you think this signifies a surplus of renewable energy in the UK, it simply means that the amount of money permitted to be spent on building renewable energy capacity by the Treasury, known as the Levy Control Framework, has been exceeded. This ideological policy is not based on any scientific or independent economic evidence but on a willingness to please a certain sector of Tory supporters.

The cuts are being made under the cloak of pretending to be keeping costs down for energy consumers. Yet other energy subsidies the government is doling out include £26 billion to the oil and gas industry this year (this figure is from an IMF report). Coal, the most climate-unfriendly fossil fuel, will receive nearly £18 billion of this subsidy. And most of the producers are overseas.

It is also promising £40 billion of subsidies for one new nuclear power station 

This compares to £9.1 billion due to support renewable energy.

The latest cuts to the domestic renewable industry, announced at the end of last week, prevent renewable energy suppliers from “locking in” the level of subsidies they will receive for the energy they supply in the future from the moment they register as suppliers.

This might seem fair enough, except when you look at the government’s other actions on energy, and you see it in the context of wider attacks on the renewable energy industry. These include plans to reduce the tariff for small scale installations (as used on schools and community buildings) from 12.47 pence a kilowatt hour to 1.63p/kWh from January, and the announcement at the end of last week of the refusal of planning permission for another offshore windfarm (did you think that the Tories just opposed onshore wind farms on the grounds of visual intrusion? Think again).

You’d think the government would want to support a successful industry. According to its own latest figures, renewables’ share of electricity generation increased from 19.6 per cent to a record 22.3 per cent between the first quarters of 2014 and 2015, due to increased capacity, mostly of solar PV and wind.

But no. These developments are causing chaos in the industry. They have prompted 13 investors, from the UK Sustainable Investment and Finance Association (UKSIF) to write to Chancellor George Osborne asking to reverse these cuts.

The Fifth Estate | The UK’s energy policy has descended into dangerous farce

However, there does seem to be a 'shift' in energy policy towards 'decarbonising' our system, as reported last week by the New Economics Foundation:

Energy round-up: a shift in focus


The government is expected to announce a shift in energy policy focus away from building new power stations. Instead, it wants to reduce the amount of energy we use, and shift the times that we use it.

Why is this important?

Our energy system is close to breaking point, as investment bank Jeffriesforecasts that, by 2016/17, just 53 gigawatts of capacity will be available to meet an estimated peak demand of 56 gigawatts. This leaves a 3 gigawatt gap.

But changing how much and when we use energy is also important when it comes to decarbonising our power systems.

Cutting how much we use in general will reduce the amount of dirty energy we need to replace with renewables.

Changing when we use it will also help renewables become a credible option. A problem for renewables is that the sun doesn’t always shine when we need it to. Rapid advances in battery technologies are providing part of the solution to this issue, but shifting the time of usage can also help smooth over the spikes in demand.

How does it work?

Here are three exciting pilots:
Voltage reduction technology can instantly dip the strength of power when supply is not meeting demand. This has been tested in a successful trial with 485,000 households in North West England, and could reduce electricity demand by up to 3%.

None of the households noticed any difference during the trial – voltage is delivered in a lower but acceptable range.
Demand response schemes give financial rewards for reducing usage. The government’s pilot offers companies payment in exchange for reducing their demand during the winter peak, where spikes in demand occur.

Paying companies that can be flexible about when they use electricity, and allowing them to invest more in energy efficiency, is far more cost-effective than building new power plants. The Association for Decentralised Energy thinks that this could substantially reduce power consumption by 2020.
Time-of-use pricing simply prices electricity considerably higher during peak times, incentivising households to shift their usage.

13% of domestic electricity consumers in the UK are already on some form of Time of Use tariff, the most common being Economy 7. Smart meters can boost this area by submitting real-time information to customers.

Don't miss these:
Betting against ourselves: Australian website gives odds for its first beach to disappear as a result of climate change:

Interested in learning more about demand side response?
Citizens Advice have released an excellent new report that has all the detail you need.
Coal loving Corbyn? Energy Desk explains how much we know about new Labour Party leader Jeremy Corbyn’s proposals for the UK energy sector.

In other news…

Unattractive to investors

The UK has dropped out of Ernst Young’s Renewable Energy Country Attractiveness Index (RECAI) top 10 for the first time in 12 years, as a result of recent changes in government policy. We warned about the declining attractiveness of the UK’s renewable sector earlier this year. It’s likely the UK will slide down further the ranking with the supply side support policies dismantled further.

Community energy

Community energy fortnight has taken place during a difficult time for renewables - latest government announcements on slashing solar feed-in-tariffs will be particularly painful for community energy. Yet a recent survey has shown that 78% of the population would like the government to do more to help communities generate their own power and keep the profits.

The energy we want

Contrary to government policy, 67% of people would support renewables scheme near their home a survey by Co-operative energyhas shown. Even more so if they get a share of the profit – support jumps to 78%, an approach research by Young Fabians last year explored. Even the thought of a wind farm nearby was acceptable – with 53% in support and only 19% opposed. Yet, rejections of wind farms continue withfour recently turned down in Wales.

Robin Hood Energy

Following the set up of a not-for-profit energy provider in Scotlandearlier this year, Nottingham City Council has done the same. Robin Hood Energy was actually established back in 1948 to supply those in fuel poverty, but the city is now opening it up to customers all over England and Wales.

Climate debt

New research published in Nature Climate Change has shown that each UK resident has racked up a climate debt of US$4,000 since 1990. Though we’ve performed better than citizens of the US or Australia in recent times – each owing $12,000 for the damage they have done to the atmosphere – if we go back further than 1990 then no-one has contributed more to climate change than the UK.

Cost of carbon

We highlighted that the cost of carbon is still far below the cost of the damage it does in last week’s chart. Now another study published in Nature Climate Change shows that the current price of carbon is actually below zero, after taking all subsidies into account. Without more effort to cut these subsidies, carbon pricing will fail to provide a meaningful incentive to reduce use.

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