Speech to the Micropower Council
4th June 2008
The US humorist Garrison Keillor used to start each of his lake woebegone radio monologues with the phrase ‘it’s been a quiet week in Lake woebegone’.
Judging by numbers of microgeneration units installed during the last year, we could conclude that ‘it’s been a quiet year for microgeneration’. At the time of the publication of the Government’s Microgeneration strategy in 2006, it was estimated that there were 82000, mostly solar thermal microgenerators installed in the UK. That figure had risen to between 92 – 95000 also mostly solar thermal. So about 7000 installations a year: interesting, but hardly going to set the world on fire, or more importantly, play much of a role in cutting carbon emissions.
Yet the report by element energy, published splendidly, two days before this conference takes place, estimates that with a range of support policies in place, 2-3 million units could be installed by 2020.
This is, of course a startling and some would say optimistic projection of a country where microgeneration is commonplace, and indeed embedded in many buildings both inside and outside the home or office.
I don’t think it is particularly startling, having been reasonably close to policy and political developments over the past year – it is actually a scenario that is well within our grasp, and one that feeds itself – that is the more widespread are installations of microgeneration, the more widespread they are likely to be, both because of their general acceptability, reduced cost, and increase in effective and trusted installation and support networks.
But that’s the sunny uplands – here we are, right now, stuck with must over 2000 solar PV installations and about 500 biomass boilers. So what is likely to make the change, and to what extent have the politics of the past year contributed to change?
I won’t go into a detailed chronology of the past year because that would be exceptionally boring, and nor will I go into a detailed defence of, or attack on government performance: what I want to do is seek to see hopefully with some objectivity, whether the policy changes undertaken, or under way, really will herald the great leap forward that the figures I have outlined.
Interestingly, the last ‘great leap forward’ – or rather the original great leap forward was the 1958 campaign by Mao Tse tung aimed at making sure China surpassed the west in production of steel within fifteen years. In doing this, Mao engaged in a form of microgeneration – a smelter in every back yard capable of producing, at cottage industry level the millions of tons of steel the great leap required. Unfortunately, several buckets of cold reality derailed the campaign – the iron ore couldn’t be supplied effectively to the backyard smelters, many of them broke as soon as they were fired up, and in those that didn’t the steel produced was such low quality that it could not be used in any further processes. End of the great leap forward – and perhaps a lesson in what we might and might not do.
Firstly do we have the products – the smelters that will begin to make the great leap work? I think the changes that have taken place over the past year in the emergence near to market of CHP boilers, the steps forward in supply and installation of solar PV, the increasingly practicality and reliability of biomass plant and ground source pumps – the ironing out of many teething problems with micro turbines and a better assessment of where they will work and where they wont, mean that we a re not really any more waiting for the fixes to come along that can make a mass market work reliably. What we need is here now.
Secondly, do we have the infrastructure to deliver? In this context, I think the most important development in this respect has been the final establishment and implementation of the code for sustainable homes – and indeed as we sit here today, the code has existed now as a mandatory reporting device for one month – but establishes, in so doing, a clear line ahead for building regulations that will lead to the zero carbon home by 2016 and other buildings by 2020 – and that means, progressively, that new homes will have to have increasingly embedded within them, forms of microgeneration that can, one way or the other export the energy to neutralise the energy it uses – a guaranteed and rising market for microgeneration over the next ten years. And the passing through the Commons at least of the Fallon bill (the energy and Planning bill) enables local authorities to move along faster than the code, enabling local authorities to set advanced standards in planning at an earlier date.
But of course, that’s about new homes – and we know that two thirds of existing homes will still be standing by 2050, and far more in 2020 – so what about the rest?
Well complementing the sustainable code has been the change to the General permitted development order – the building regs order that establishes what changes in homes or other buildings need planning permission and which are deemed to be permitted subject to agreed conditions.
And although this still has some way to go on clarifying the position of wind – it now means that far greater certainty is secured for installations across the country – no longer will installers need to worry about several hundred different reactions to their products depending on location so retrofitting can be undertaken in quite a different environment from henceforth.
And, in terms of retrofitting, there is the supplier obligation CERT, assumed now to be extended to 2020, which will add to the supplier certainty about the role that microgeneration will play in discharging the obligation.
So there are, in place or imminently in place this year a number of important structural devices - the guarantees that the iron ore gets delivered - that begin to point the way towards a vastly increased take up of microgeneration.
So what has all the fuss over the energy bill been about? Why have we been hearing dire predictions that unless particular amendments were passed, there would be no future for microgeneration?
Well, of course some of that is hyperbole, and some of it has an element of truth to it. We have, of course in the energy Bill the potentially important redistribution of ROCs. – Two ROCs for dedicated biomass CHP, and Solar PV, both of which can have implications for the take-up of forms of microgeneration.
But lets be clear – the ROCs market has not significantly penetrated microgeneration, even with the changes in part rocs and agency Roc farming in 2006 and in any event, two ROCs only covers an element of microgeneration, and does not touch heat at all.
Of probably greater medium term significance to microgeneration in the energy bill as it stands is the amendment introduced at report stage in the Commons which establishes a framework for the roll out of smart meters – enabling every home potentially to have installed meters which enable with equal ease the recording and calibration of both import and export, and effectively enable plug and earn microgeneration to become a reality.
And of course there has been the amendment that wasn’t the feed-in tariff amendment that didn’t get put into the bill at report stage, and which could, perhaps be reintroduced amidst some controversy, during the passage of the energy bill in the Lords. Some say that this amendment, which could introduce a tariff for microgeneration fixed over a period of years would be just the thing to kick start a mass based microgeneration industry, and the example of Germany is cited.
Others express concern about the disruption of a universal feed in tariff to ROCs, and suggest that among other things, it is the long term establishment of investment certainty that produces results, and that to turn over the ROCs system in mid stream would be closer to disastrous that visionary.
For what it is worth, I don’t think that the amendment as put before Parliament would have worked – it might for a start, have bankrupted small green energy companies who have a large portfolio of tariff customers, in the absence of any pooling mechanism in the amendment – and it doesn’t of course address heat.
And yet, it is clear that we need a better mechanism to underwrite the development of microgeneration than two ROCs for some forms, valuable though those may be. We need to introduce such a mechanism without jeopardising ROCs for larger renewables – so we need to be clear about what such a mechanism addresses and what it doesn’t.
And we need to ensure that it addresses what I think is one of the key questions in the development of real-life microgeneration installations – will the pay back the investment over a reasonable period, and will they do so in a reasonably secure way? The problem with grant regimes is that they come and go – they tend to be funded with lump sum funding over specified periods – and when the period is up or the lump sum is exhausted, that’s the end of the capital incentive. Far better, in my view a known forward calculation of what the installation of the system will do in terms of its earning power – and money can be borrowed on the back of it.
So I think we do need a system, spread across the market in its effect, constant in its effect, and encompassing if possible heat delivery as well as electricity production. Heat delivery incentivises the heat networks that heat works on as well as the installation of the plant itself: and I think the signs are that government has ‘got’ heat – the DEFRA call for evidence and the preannouncement of a heat strategy in the summer autumn are encouraging.
But it is important that a tariff system works well – and is not the metaphorical steel of such low quality that it can’t be used.
But finally what of the smelters – will they work or will they break? Mostly now, it seems they will work. I think there is still come way to go on standards and agreed certification – in short a mature industry needs the guarantees and assurances that go with it.
I think now the future is increasingly bright for microgeneration – and the stirrings of a successful great leap forward in microgeneration are beginning to become apparent. But it requires still a great deal of application, investment and skill of trust, of some careful policy and legislative thought to make it so – and most of the people who will engage in that process are in this room today – it’s both a great challenge and a great responsibility.
What do you think of this story? Email Alan