One step forwards, two steps back? The strange case of Tory solar policy

The Conservative Party has had an on-off love affair with the solar industry ever since the heady days of David Cameron’s Quality of Life Commission. Professionally, I was happy to serve on the Commission. It helped to create the right political conditions for the launch of the feed-in tariff in 2010 and cemented Conservative support for it – something that had seemed impossible when we started debating the policy. In the intervening period, there have been a series of policy highs and lows. Too often it’s been a case of one step forwards, two steps back.

Right now, the real danger is that solar will be overlooked in the forthcoming Clean Growth Plan. There appears to be a mood afoot in Government that the job is done, that a so-called (actually non-existent) solar ‘target’ of 12 gigawatts by 2020 has already been met, and that there is little industrial value in UK solar. News this week that one solar farm has been developed ’subsidy-free’ for the first time in the UK has also led inevitably to a rather complacent response from Ministers. Yes, a solar and storage scheme developed on an existing solar farm site does offer a tantalising glimpse of a sustainable subsidy-free solar future into the 2020s and beyond. But one swallow does not make a summer, and it’s clear that very few such pathfinder projects can be developed subsidy-free in the foreseeable future.

In the context of what has happened to our sector since the 2015 general election, the Government would be unwise therefore to draw conclusions prematurely about the current health of the UK industry. Since 2015, employment in the sector has fallen by at least two thirds from a high point of well over 30,000. Large-scale solar deployment has stalled (notwithstanding isolated exceptions that nevertheless prove this rule), and the revised feed-in tariff has seen a dramatic year-on-year drop in rooftop installations. In 2015, there were 155,000 new domestic installations that year receiving the feed-in tariff. In the first six months of this year, the number was less than 5,000. It is undeniable that the sector suffered unnecessarily as a result of knee-jerk policy making in the aftermath of the 2015 election where solar was wrongly and public blamed for the LCF overspend. 

Ministers are keen to describe UK solar as a success story, and so it is. But what we need now from the Government is certainty and partnership for the future, rather than basking in past successes. The fact is, as the recent REN21 report showed, positive policies are still vital to the solar industry internationally. It is ironic that Solarcentury, a stalwart of the UK sector since the late 1990s, is now exporting successfully our UK solar expertise literally all around the world, while the UK domestic market remains in downturn.  

We need Ministers to build on the successes of the past, not assume that it is ‘job done’. Part of that will involve a change in mind-set in Whitehall – a previous Minister confirmed there are no solar champions in the Department of Business, Energy and Industrial Strategy (BEIS), which is quite extraordinary given the importance of this technology. In a recent Parliamentary written answer to a question about solar redundancies, BEIS Minister Richard Harrington MP said that: “many of those who work in solar are also skilled in other building trades, and will move between these with changes in demand.” It’s hard to imagine such a dismissive answer to questions about employment levels in other low-carbon economy technology success stories.  

For at least two years, the industry trade body the Solar Trade Association (STA) has been calling for a package of measures to ensure that solar can access a level regulatory and policy playing field. This includes action to reduce the burden of business rates on solar rooftop installations and to reduce the rate of VAT on solar storage. Charging people 20% VAT for batteries retrofitted to existing solar installations runs completely counter to the Government’s narrative about the importance of storage and the leading role that the UK can play in that emerging market. We are hopeful for action on this front in the forthcoming Budget.

The lack of a level playing field can also be seen in other policy areas. In particular, it is a nonsense that one of the cheapest renewable technologies, and the most popular, remains locked out of the Government’s competitive auction process for Contracts for Difference (CfDs). This is the mechanism that has seen a halving of the support level required for deploying new offshore wind from 2022. Quite rightly, this has been hailed as a potential game changer in the context of the eye-watering £92.50 strike price at 2012 prices needed for new nuclear. But solar inexplicably has been caught up in the fallout from the Conservative Party’s opposition to, and manifesto commitment to end support for, onshore wind. The reality is that solar could also deploy today at prices approaching half those required for Hinkley Point C. Yet we remain locked out of the scheme in a bizarre rejection of market forces. Including cheaper solar again in the CfD process would help to re-energise the UK market and help to put further downward pressure on solar and other technology costs and benefit bill-payers. It’s such an obvious policy move that it’s hard to understand what is holding Ministers back.

Finally, and inevitably, Brexit remains a destabilising factor in terms of solar industry investment in the UK. For our own part, Solarcentury is active all over continental Europe where markets are recovering nicely and we will have to make a decision in early 2018 on key issues such as headquartering and other contingency planning. In the meantime, Brexit does actually open up the prospect of helpful policy changes, including the possibility of scrapping VAT altogether for solar and other energy efficiency measures, and an end to the red tape of the EU’s unwelcome minimum import price for solar modules. Both issues add unnecessarily to solar costs in the UK. 

After a damaging two years of policy changes, there is now an opportunity for positive action leading to a renewed period of stability and certainty for investment in our industry. The solar industry success story deserves better than another policy round of one step forwards, two steps back.

Seb Berry is the Director of Corporate Communication at Solarcentury and Vice Chair of the Solar Trade Association

The views expressed in the article are those of the author, not necessarily those of Bright Blue

Nuclear reactors: is big beautiful?

Nuclear power has long been a controversial source of energy. Detractors point to high infrastructure costs and difficulties associated with storing nuclear waste, amongst other concerns. Advocates, however, view it as a clean and reliable alternative, which the grid requires as the country steadily shifts away from coal and other fossil fuels which we have relied upon for decades.

But last week, the car giant Rolls-Royce released a report on small modular nuclear reactors (SMRs), outlining how they think the technology – first developed several decades ago to power submarines – could foreseeably bridge some of the differences in opinion between pro- and anti-nuclear voices, and usher in a “once in a lifetime opportunity” for Britain to be at the forefront of nuclear technology. Such bold claims, however, require scrutiny – given Rolls-Royce’s commercial interest in the technology’s adoption, and also the relatively untested nature of SMRs as part of the energy system.

Typically defined as nuclear reactors which can generate up to 300 megawatts of electrical power, and can be produced in a single factory on a repeated basis – i.e., ‘modularly’ – SMRs have been touted by their supporters as a way for the UK to tap a reliable source of energy, able to ensure the lights stay on when the sun isn’t shining or the wind isn’t blowing.

One of the main selling points of energy generated by SMRs – at least compared to conventional large-scale nuclear projects such as Hinkley Point C in Somerset – is cost. An economic fact true of most goods and services is that increased and repeated production has a tendency towards falling average unit costs – what economists would call economies of scale. For larger nuclear projects, which are effectively produced as ‘one offs’ every few decades or so, designers have been unable to exploit the potentially lucrative economies of scale because the actual technology involved typically changes to such a significant extent with each project. However, for SMRs, the opportunity to do so is theoretically much greater. Owing to the fact that a factory may fabricate many several SMRs, financial savings in materials and alike allow for a lower cost per reactor to be achieved, ultimately manifesting itself as a lower cost per unit of usable energy generated.

Others have highlighted the fact that financing SMRs could be more attractive to investors, relative to large-scale nuclear plants. Reasons for this are broadly twofold: on the one hand, capital expenditure costs will be lower given that the reactors will be much smaller – allowing a more diverse pool of investors to consider financing a project; on the other, the asset will begin generating dividends far sooner, because it can be built and operationalised more quickly, again, due to its smaller size. This could therefore mean that investors might agree to a lower strike price for their energy generated, given the fact they will not have to factor in more of a guarantee on their return on investment.

SMRs may not just make financial sense, but they could also play a vitally important role in expanding our nation’s ‘energy flexibility’, through helping to decentralise energy production. Decentralisation of energy can be advantageous for the environment because when energy is consumed close to where it is produced, transmission losses are minimised. Developments in other energy sources have already been heading in this decentralising direction for some time now – consider, for instance, solar photovoltaic panels atop people’s houses. Some have also suggested that because SMRs require less water for cooling than their larger cousins, they are more environmentally friendly in this respect, and could also help in bringing energy security to remote areas which may not be located close to seas or large rivers.

Nevertheless, questions do remain about SMRs. In this very blog, much of the financial case for them is based upon the theoretical assumption that economies of scale will be realised – and realised in sufficiently large proportions to warrant a revolution in the energy sector. Because the technology is so untested as a commercial source of electricity generation, estimates about how far costs will fall are difficult to accurately make at this stage.

Environmental NGOs have also criticised SMRs, largely on the basis that they are not strictly speaking a renewable form of energy generation – certainly, SMRs will still inevitably call for the intermittent disposal of spent nuclear fuel. Even if one is not inherently opposed to nuclear energy, it has been pointed out that nuclear waste is an area where large-scale plants have the upper hand over SMRs, because the latter would face a challenging coordination problem stemming from several nuclear sites all needing to dispose of individually lesser, but cumulatively equal, amounts of nuclear waste.  

Yet perhaps the foremost factor which could jeopardise the roll out of SMRs is the remarkable fall in the cost of certain forms of renewable energy, such as solar and wind power. Incidentally, these are technologies which have already very much felt the virtuous cycle of economies of scale themselves, as the costs of their parts have tumbled as they have become more and more widespread. Coupled with ongoing learning about how best to deploy renewables, and a fine tuning of the technology they utilise, wind and solar farms are now more efficient, and more cost-effective, than ever.

Indeed, in the aforementioned Rolls-Royce report, it is somewhat ambiguously claimed that they are “working towards” the medium-term target of £60 per megawatt hour of energy generated through SMRs. Initially, Rolls-Royce even concede that a figure of around £75 per megawatt hour is more likely. This would be noticeably more expensive than the £57.50 per megawatt hour of wind generated power, recently agreed to by two companies in the most recent Contracts for Difference auctions.

In 2015, the then Chancellor, George Osborne, signalled the Government’s ambition to explore new nuclear technologies – pledging £250 million into a nuclear research and development programme. Since then, it has launched a competition to invite engineers to submit their plans for the best value SMR design for the UK. As the nation continues its transition away from dirty and polluting fossil fuels, there is an ongoing debate about which technologies will power the UK forward. In theory, SMRs could have a number of potential benefits, relative to large-scale nuclear. But they also come with certain disadvantages, not least of which is their relatively untested nature.

Eamonn Ives is a Researcher at Bright Blue

Cracking a nut with a sledgehammer: how killing diesel risks taking local clean energy with it

Diesel engines don’t have a good rep these days. But while most public attention has been focused on those with wheels choking our streets, it’s a different bunch that the Government has actually been cracking down on.

Every year the Government runs a reverse auction for electricity generators (and some storage and ‘demand shifting’ projects) called the capacity market. Winners are granted public subsidy to be available during the winter to provide power if supplies become tight. What the Government really wants this to do is to incentivise new, large gas plants. But it turns out it’s cheaper to build small diesel plants. Few gas plants can compete - and thus few get built. Instead, we now have up to 2GW of diesel generators installed locally. This is not good press for the Government: diesel has high carbon emissions and local air quality impacts. We shouldn’t be subsidising them (nor should we be subsidising coal plants, by the same token). So the Government set out to cut them out of the picture.

So far, so good. But what happened next risks undermining not just diesel, but the shift to local, clean, flexible energy too. What went wrong?

A quick rewind. The power sector has seen radical changes in the last decade. The major story has, of course, been renewables. Much renewables capacity in the UK is locally installed, which ushers in a fascinating new paradigm in which power doesn’t just flow from the beating hearts of vast coal, gas and nuclear plants out to the veins and capillaries of towns and villages. Now our homes, businesses and fields are themselves centres of energy; either used onsite or transmitted to local consumers.

This actually makes a lot of sense. You cannot transmit power without losing some of it. The further it travels, the more you lose. The UK wastes 8% of the electricity it generates in moving it from A to B (and over 50% overall if you include thermal power station inefficiency). But generating wasted electricity still costs money - and still incurs wear and tear of infrastructure used to transport it - all of which costs bill payers. If electricity is generated closer to demand, lower losses should entail a more efficient system, and thus lower costs overall. 

The rules governing the use of wires and pylons by generators and suppliers of electricity were not designed to support local generators, but they do end up reflecting the fact they do not use as much of the total network. There are 14 regional electricity networks, each of which connects into the larger national grid. Suppliers with customers in those regional networks pay charges based on the amount of electricity they buy into them at peak times. If local generators produce electricity during those periods less electricity needs to be imported from the national grid. This saves the suppliers money in reduced charges, part of which is then passed onto those local generators as a reward. This is called an ‘embedded benefit’, and it helps incentivise building generation closer to where electricity is consumed.

At least it did.

Connected locally, diesel plants can do what big, central gas plants cannot - access these embedded benefits. Take this revenue stream away, the Government thought, and perhaps gas will be able to compete again. Ever since, there has been pressure on Ofgem to do just that. And three weeks ago they announced a cut of up to 93% - almost entirely removing it. 

So much for diesels. But this also deals a blow to renewables and storage projects (such as batteries or pumped hydro) connected locally, of which there is several times more capacity than there is diesel. Worse, unlike subsidy cuts which only affect future projects, this hits existing projects too - punishing them for a problem they didn’t cause. Reduced projected revenue, and increased uncertainty, is expected to cool investment in local, clean, flexible electricity infrastructure. Storage - that oft-touted key to a renewable future - could be hit particularly hard. With access to few public support levers, projects often rely on being able to deliver power at times when rewards are available to build a business case. 

But was this simply an unintended consequence?

Actual rule change is undertaken by industry panels, which are dominated by sector incumbents including the ‘Big Six’. Only they have the personnel and capacity to resource such involved work. The panel that presented proposals to Ofgem in this case did not have a single renewable energy or community energy representative on it. In the consultation that preceded the final decision seven out of nine of the big commercial players were opposed to the benefit. The two in favour either have no large central generation assets of their own, or their own interest in renewables.

Whether the product of genuine manipulation, or simply the inertial imbalance of representation on Ofgem’s panels, it is the incumbent generators who won. They are, theoretically at least, now more likely to be able to build new gas stations - as diesel competitiveness is reduced - capturing public funds in the process. And the renewable and storage projects causing such havoc for their business models just lost revenue. 

So it’s the transition to a local, clean, smart - and ultimately cheap - energy system that is losing out.

Which raises several questions. Should Ofgem’s remit formally incorporate the UK’s 2050 climate target, given its pivotal role in shaping the systems that must get us there? Should incumbents be allowed to continue dominating the processes that evolve regulations? And should the Government ensure that Ofgem is driving our energy system to one that is lower cost, more local and lower carbon?

Our answers would be: yes, no and yes. The rapid (and urgent) transition in the design and operation of our energy systems for a liveable planet simply demands it.

Max Wakefield is lead campaigner at 10:10, a charity that focuses on practical, participatory and positive solutions to climate change. 10:10 work with everyone, from policy makers and politicians to community energy groups and schools, to create the practical and cultural change necessary for a rapid transition to a low carbon UK. You can join 10:10’s campaign to challenge Ofgem’s decision here

The views expressed in the article are those of the author, not necessarily those of Bright Blue

Intermittent renewable generation concerns get blown away

This week, a new report, Plugging the Energy Gap, was released based on research by Imperial College London. It looks at how to secure our future electricity needs at least cost and addresses common concerns regarding the intermittency and reliability of renewable energy generation like wind and solar. Such concerns have, in part, led to government blocking announcements on future auctions, which are the route-to-market for onshore wind farms and solar photovoltaic (PV) projects in the UK. Results of the report, however, show that these concerns are based on perceived, rather than actual, cost barriers and that the cheapest way to decarbonise our power system would in fact involve large volumes of variable renewable generation. This is the case even if any additional costs of creating the flexible system needed to manage intermittency are taken into account.

Good value for money for consumers

As conventional power stations close down, Britain is facing an “energy gap”.  By 2030, the UK requires the construction of new low carbon generation capacity capable of producing over 150TWh of electricity each year by 2030. That is the equivalent of around half of all current annual consumption.

This creates an unprecedented opportunity to create a secure, clean, flexible energy system fit for the twenty-first century. However, new policies are required to ensure that the capacity to plug this energy gap is delivered at least cost to consumers.

With this in mind, it seems evident that low carbon procurement decisions should be underpinned by value for money. On the 9th November 2016, the Government announced its second round of auctions for less established renewables. It did not, however, provide a clear cost justification on why budget had not been allocated to lowest cost, mature technologies. This was despite a very clear recommendation made by the Competition and Markets Authority in June this year following their investigation of the energy market, to provide evidence that these procurement decisions did indeed deliver value for money.

The lack of justification is even more troubling because on the same day the Government also published an update of the cost of electricity from new power stations. This clearly highlights that mature renewables like onshore wind and solar PV are by far the cheapest form of low carbon generation in the UK. In fact, it predicts that, in just a few years, mature renewable projects are expected to be the cheapest form of generation in the UK - and that includes gas. The renewables industry believes that onshore wind and solar PV are already cheaper than gas, but a new auction round is required to prove this.

The cost of intermittency

Understanding the real cost of variable renewables is not simple. Renewables, like solar and wind, are infamous for being intermittent. Even though wind and sunshine are free, there is a hidden cost to keeping the lights on when the sun isn’t shining and the wind isn’t blowing.

In a report on costs, the Department for Business, Energy and Industrial Strategy has said that they are working on understanding this topic in more detail. There is, however, already a growing body of evidence to inform this question and Imperial College London has been working on this issue. Their findings, reported in Plugging the Energy Gap, conclude that “the cheapest way to decarbonise the power system involves large volumes of variable renewable generation even when taking system integration costs into account.”

The analysis shows that it would be possible to more than double the levels of variable renewables without adding significant integration costs to consumers from current levels. So, contrary to general perception, system integration costs do not change the fact that mature renewable technologies are the cheapest form of low carbon generation. Given a chance to participate in future auctions, evidence suggests that mature renewable technologies will prove beyond doubt that they are cheaper today even than gas.

With the looming “energy gap”, the UK will need to build new generating capacity to deliver at least 150TWh more electricity per year by 2030.  This is an unprecedented opportunity to create a modern, secure, clean and flexible energy system.  Mature renewable technologies are still the cheapest form of new low carbon generation, even taking into account the costs of dealing with their intermittency. The Government will need to provide a clear trajectory for the deployment of all low carbon generation that is consistent with delivering on its long-term carbon budgets at least cost. At the same time, it can continue to grow regional supply chains as part of its industrial strategy. Plans to fill the energy gap and, at the same time, deliver on carbon budgets should strive to maximise the advantages for both consumers and the economy.

Alex Coulton is a senior policy analyst at RES

The views expressed in this article are those of the author, not necessarily those of Bright Blue

Solar PV: why the UK needs to get involved in a global opportunity

The global market for solar photovoltaics (PV) is ‘one to watch’ for every financier, policymaker and energy professional. If you are looking for a technology that is going to boom over the next few decades, you’ve found it.

This is ‘the one’ that is going to transform the way we generate our energy – at home and overseas.

Why? Because ultimately a solar panel is not that dissimilar to a computer microchip. Both are semiconductors. Both have seen staggering falls in costs as manufacturing economies of scale increase. For computing hardware this is known as Moore’s law, for solar it is Swanson’s law. Costs drop astronomically and efficiency goes up as more and more of the stuff is made.

And that means solar is quickly becoming a mainstream electricity generation technology. Bloomberg New Energy Finance recently predicted that there will be $3.7trillion of investment in solar between now and 2040, much of it small-scale rooftops. That is a market worth getting in on.

The International Energy Agency is predicting that globally solar could be the largest source of electricity by 2050. India is aiming to install 100 GW of solar by 2022 – more than twice the amount needed to supply all of Britain's power needs.  China is moving faster still, and will have far exceeded 100 GW by 2020. Hillary Clinton is talking of installing a billion solar panels across the United States. From Chile to Morocco to Bangladesh, the solar revolution is accelerating fast.

According to the International Energy Agency, we could have 440 GW of solar PV capacity installed worldwide by 2020. At present the UK has a world-class solar design, installation and financing sector and could, with help from UKTI, be out there getting our share of that business. Some already are, with leading solar businesses Solarcentury and Lightsource examples of home grown solar companies already starting to set up shop abroad.

However, in order to reap the rewards of export markets you need a stable domestic market to build on, and sadly the situation here in the UK could not be worse. Cliff-edge cuts to the Feed-in Tariff, Renewables Obligation and (in effect) Contracts for Difference has led the market to crash by over 80% according STA analysis, with thousands of jobs and exportable skills disappearing as we speak.

By 2030 solar could be generating 13% of global electricity by 2030, according to a new report from the International Renewable Energy Agency. Some might say “ah but that’s just for southern climes in the global sun belt”. Not true. Solar works well in Britain – solar panels in London generate much of the power they would in Madrid. Cooler British temperatures prevent the panels from overheating, keeping them efficient. Solar uses daylight, not sunshine or heat, generating power even from just diffuse light on a cloudy day.

The cost of solar has come down by 70% over the last five years. The cost of a typical solar installation on a home has dropped from around £20,000 five years ago to £6,000 today. Not yet cheap enough for it to be attractive without government support, but that gives you an idea of how cheap a way of generating power this has become.

And as the cost of the actual modules falls through the floor, the rest of the cost of installing a solar PV system, such as the labour, scaffolding, mounting gear and the inverter that converts the power from DC to AC make up an increasing proportion of the total cost. That means it is more important than ever to support a stable domestic industry with a broad based supply chain that can work to reduce costs as installed volumes increase.

The prize is enormous – a market of $3.7 trillion. If the UK moves now we can still get a significant slice of that. But export markets and domestic markets are inextricably linked, and if we want our businesses to thrive abroad, we have to allow them to thrive at home first.

Paul Barwell is CEO of Solar Trade Association

The views expressed in this article are those of the author, not necessarily those of Bright Blue.

The new energy mainstream

When Amber Rudd set out the Government’s thinking on energy in her “reset” speech, one of her comments was that “it may sound a strange thing to say, but fundamentally I want energy policy to be boring. Frankly, if at all possible, it shouldn’t be noticed.” It’s a sentiment I strongly agree with. 

The Secretary of State’s problem is that we are a long way from that point. Like it or not, energy policy has become a political battleground. But we all have a role to play in helping to deliver her vision.

In this critical territory, Bright Blue’s role has been very important. It is one of a number of groups which led and won the argument for the early retirement of coal-fired power stations. 

The question we now face is how we keep the lights on in a secure, sustainable and affordable way. 15 gigawatts of coal capacity will be coming off the system by 2025, along with most of our current nuclear capacity, leaving an energy gap equal to 20% of Britain’s power needs.

It would be foolish to claim that this gap could be filled by renewables alone. We will need a balanced energy supply in the future. Gas, nuclear and renewables, as well as storage, interconnection and more decentralised energy will all play a part. What role can the companies I represent play? What do we offer? 

The businesses I work with are pioneers and innovators in this changing market. Look at the progress we are making on storing electricity. Renewable companies are leading the way. Britain’s two largest storage projects - the landmark announcement by RES on a 20 megawatt battery storage system, and Statoil’s Batwind project at its Buchan Deep floating offshore wind farm – come from my members. 

The innovation we are now seeing in the energy market will – and must – also improve the deal for British consumers.  

Here, we are at a turning point. Onshore wind has become the cheapest large scale technology for generating new power in Britain. If we had a market signal, there are onshore wind projects which would clear at the lowest price, cheaper than new gas. The question we face as a country is do we want our consumers to benefit from this cheap source of power or not? And if we do, how can we create a market which allows onshore wind to compete?  

The onshore wind industry has benefitted from support from British consumers for over a decade. Now that costs have fallen, it is only right that consumers should benefit. 

The Government has rightly said that communities will be in the driving seat on decisions about future projects. The projects where benefits for consumers are greatest are likely to be in Scotland, Wales and Northern Ireland where wind speeds are higher. They are unlikely to be in England, and certainly won’t be in the wind-poor Home Counties. 

And if there is to be a future for onshore wind in Britain, the industry is also going to have to engage seriously and respectfully with those who have doubts about wind or renewables more generally. This includes those who have led the successful grassroots campaign within the Conservative Party over recent years to end subsidies for onshore wind, which led to last year’s election pledge and the recent Energy Act. We need to listen to our critics and we need to acknowledge the legitimacy of their feelings and reach out to them. I believe that for those who are not opposed in principle to onshore wind, there is a great deal of common ground. 

The overall economic and industrial opportunities offered by renewables are becoming clear. According to Bloomberg, half of all new energy investment globally last year was in renewables. Here in Britain, those who choose to be RenewableUK members now employ over 250,000 people. The offshore wind sector is driving down cost, innovating and investing in our country on a massive scale – over £20 billion in this decade; £6 billion by DONG in the Humber alone, an area with some of the highest levels of unemployment in Britain. In a few months, 1000 workers in Hull will start producing the largest single mould component in the world at the Siemens / ABP site in Hull. 

But the story reaches further and deeper. A few weeks ago in Bridlington I met companies building boats, training people for working at height and at sea, installing winch systems and other specialist equipment. I met experts in sea bed analysis, financial advisers, legal advisers, even a former Asda store manager whose father had invested in his business filming the building at the Siemens site and who now has a successful digital media business.  
 
And slightly under the radar in Scotland, Wales, South West England and Northern Ireland, Britain has built a global leading marine industry on the cusp of commercialisation. Global leading test facilities. Global leading companies. At a former oil and gas fabrication site, the turbines for the world’s first commercial scale tidal stream array are being built. Charles Hendry is reviewing the prospects for tidal lagoon power. We know there is value here – the Chinese, the French, the Canadians and the Irish are all looking to take what they can from British-led innovation and research.
 
There is a new energy mainstream globally and it is coming to Britain. It is disruptive. It is cutting edge. It is bringing investment and new business models. And above all it is shaking up existing markets. We should embrace it. It is not the only answer to the challenges and opportunities we face. But it can – and should – help. It will power Britain forward. 

Hugh McNeal is Chief Executive of RenewableUK

The views expressed in this article are those of the author, not necessarily those of Bright Blue.

Winning the green global race

Conservatives care for much more than a strong economy, important though that is. Beautiful landscapes and diverse wildlife all have intrinsic value. They improve our quality of life, and conservatives should protect and enhance them.

However, the dichotomy between economic progress and safeguarding the environment is a false one. We are now seeing that the transition from polluting fossil fuels to sustainable energy sources offers a major economic opportunity. Policies to tackle climate change sometimes get framed as harmful for economic competitiveness. But countries that take a strong lead on environmental action can gain a competitive advantage in the new global low-carbon economy. Global investment in new green energy infrastructure is boosting economic growth and creating jobs.

A number of reports have come out in the past month, which have quantified the size of this green economic dividend. These include a major study by the Renewable Energy Policy Network for the 21st Century (REN21), a report by the International Renewable Energy Agency (IRENA), and a survey by the Office for National Statistics (ONS). This blog will highlight some of the principal findings.

Investment

Investment in global renewable energy in 2015 was $286 billion, according to REN21. This is an increase on the previous year’s total of $273 billion. It is also double the amount of investment that new coal and gas-fired power attracted over the same 12 months. In the rankings of countries for renewable power investments, the UK came fourth, after China, the US, and Japan.

A major milestone was achieved in 2015, as renewable investment in developing countries outstripped that of developed nations. Moreover, this crossover has occurred before the effects of the Paris Agreement in December 2015 have been felt, where additional finance assistance was pledged to developing countries to help them mitigate and adapt to climate change.

Employment

There were just over eight million jobs in the green economy globally last year, according to the IRENA data. Europe’s share of this green employment was 1.17 million in 2014. Following a 20% increase in solar installations around the world last year, solar energy is now the biggest green employer overall.

The latest ONS figures show that the UK’s green economy employed 238,500 people in 2014 and turned over £46.2 billion. Energy efficiency is the biggest employer within this sector, supporting 155,000 jobs. That statistic underlines the imperative for a successor policy to the Green Deal to ensure this market continues to thrive, which we will be exploring in the second report from our Green conservatism project.

Low-carbon transport makes up over half of the UK’s green export market, generating nearly £3 billion for the UK economy. This reflects the current strength of the UK’s automotive industry, which now manufactures and exports pure electric vehicles around the world. For example, the Nissan Leaf is produced for the whole European market in Sunderland. With news this week that there are now globally over one million electric vehicles on the road, the potential for growth in this sector is significant.

But do these green jobs outweigh jobs lost in other sectors, such as fossil fuels? The UK Energy Research Council produced a report last year examining this very question. It's clear that net employment is what matters in this debate, as government spending in a particular sector will always boost short-term employment. Their study found reasonable evidence the renewables sector is more labour-intensive than fossil fuels, both in the construction phase and the average lifetime of the plant.

The UK in the green global race

The low-carbon transition is happening across the world, and momentum is gathering. The issue is not whether the UK participates in this, but whether it leads and wins big shares of these important new markets. At the moment, the UK is in a good position. It was the first country in the world to put into statute a framework for cutting emissions and it is now the first developed country to phase out coal-fired electricity. The UK is also the world leader in offshore wind with the most installed capacity of any country.

In the last Parliament, the Prime Minister would often refer to the ‘global race’. In few sectors is the opportunity as great or the competition as fierce as the green economy. Conservatives should champion environmental policy, as it will help Britain succeed in winning the green global race.

Sam Hall is a Researcher at Bright Blue

Why a democratic energy system for the UK is inevitable

Say what you like about renewable energy – and a vocal minority certainly like to – but the public love it. The latest quarterly research by the Department for Energy and Climate Change (DECC) found that over four-fifths (81%) of respondents support renewable energy. That only 19% backed shale gas provides some explanation of why ministers are doing all they can to bolster the nascent industry.

Energy is a basic right in the modern world: it is a national shame that one in ten UK households are in fuel poverty. And how focused the system is on decarbonisation is a major determinant of whether we meet our carbon targets and our share of the Paris commitment to keep temperature rises to no more than two degrees.

But there’s a dichotomy. It’s true that if you ask people whether they like solar, wind or tidal energy, they’ll happily say yes. It’s also true that most of us want to see climate action: 70% of DECC’s respondents said climate change was a concern. But away from the survey booths, most people simply don’t seem to have the kind of relationship with energy that turns their in-principle support to something more concrete. The daily expectation of energy is in practice little more than plugging an appliance into the wall, hitting the on-switch, trusting that it’ll work, then grudgingly paying a bill to one of six big energy companies that, the DECC research showed, we increasingly distrust.

There are two reasons people feel like this. First, our centralised energy system is disempowering and old-hat. It has underinvested for years. Retail companies are unpopular, with ScottishPower’s recent £18 million fine just the latest evidence of failing customer service; the public bristle at huge profits while millions struggle under mounting bills. Second, the majority have a passive relationship with our energy system; very few have a stake in the green economy. Energy isn’t a thing we do, it is something that is done for us. But things are changing.

In our 2015 report, Power Failure, the New Economics Foundation pointed to the exciting renaissance in locally-owned energy supply companies that are setting out to deliver either green energy, or cutting bills for the less well off, or both. Nottingham and Bristol City Councils have established their own fully licensed energy supply companies with social objectives, with Nottingham’s Robin Hood offering bill savings of £265 a year. With the London Mayoral election this week there have also been repeated calls for both main candidates to pledge to set up a similar scheme in the capital.

Increasingly we are likely to see cash-strapped councils turning to setting up energy companies as a way to bring in new income while also delivering decent, green outcomes for the people they serve. Mayors and local leaders don’t need to wait for government to navigate the minefield of the power of the big utilities and manufactured tabloid outrage about ‘green crap’. They can, and will, get on with it themselves.

The DECC poll also showed that three-quarters of the public agree that local communities should be given a financial stake in renewable energy developments. That would be a start: only a tiny, albeit influential, 5% of the public ‘oppose’ onshore wind farms, yet even that 5% might find their concerns diminishing if they could actively benefit from the development.

But there are ways to deepen that relationship still further, given a national framework that’s specifically designed to provoke widespread engagement with renewable energy.  Denmark’s “right to invest” principle requires developers to give communities first refusal on becoming equity stakeholders in the project – a far deeper relationship than the occasional ‘community benefit’ payment coming your way. And in Germany energy generated locally can easily be sold locally – technically possible in the UK but hugely costly due to the operation of our market and centralised grid – meaning you could get cut-price energy from the wind farm on the hill over there.

The dust is still settling on on DECC’s controversial cuts to solar subsidies, which led directly to a 75% drop off in installations. It does look like the government has tried to slow the pace of small-scale energy while devoting ever-greater political attention to getting new nuclear and shale gas off the ground. But the decentralised renewable energy genie is out of the bottle, and it’s a game-changer. By the end of this year all IKEA stores will be selling solar panels, which may soon find themselves plugged into thousands of Tesla’s home storage batteries, or similar. Anyone signing up becomes an owner of a small piece of the green economy; as does anyone investing a few pounds in a larger project via platforms such as Abundance; as does anyone who switches to a private or public energy company built around principles of social fairness and environmentally sustainable energy.  

Restoring public purpose and opening up new models of ownership in energy are two sides of the same coin. They are both enabled by the radically changing profile of energy technologies themselves: smaller-scale, renewable systems, with characteristics that naturally enable more local, more dispersed approaches. This is the way things are inevitably heading, as the IPPR argues: ever-more-attractive economics, breakthroughs in electricity storage, and smart grids.  

A quarter of Germany’s total energy mix is from renewables, of which half is owned by private citizens or community groups. The German ‘Energiewende’ – its nationally-mandated plan to deliver 60% of energy from renewables by 2050 – has democratisation at its core. Ninety two percent of the German public think renewable energy should continue to be expanded.

This is chicken and egg: the more people have a stake in the clean energy economy, the more support there will be for it, and vice versa.

The UK’s Energiewende is just as likely to be found in that combination of local, democratic energy and the disruptive characteristics of the technology itself.

David Powell is Associate Director for Environment at the New Economics Foundation (NEF). He tweets at @powellds.

The views expressed in this article are those of the author, not necessarily those of Bright Blue.

It surrounds us

There will come a storm. There will come a flood. So warns climate scientist James Hansen. Coastal cities, if not entire regions, risk elimination.

An increasingly hostile climate is preparing its bite and all eyes are on the coast.

195 countries may have signed up to action in Paris - “a major leap for mankind”, said French President François Hollande – but the countries surely best placed to lead the response are the ones with the domestic industrial capacity to develop new solutions.

The solutions we develop must be sustainable for the long term. The countries based on mature market economies will be best able to attract the capital and expertise, both creative and technical, to envision and deploy these solutions.

All of which establishes opportunity for the UK. Bags of it. None more so than in the power sector.

And yet we are more concerned, understandably, about our ability to simply keep the lights on.

We are now dependent on imports (even coal), and we have allowed our nuclear energy capability to erode. Our energy is more expensive, and it isn’t ours. We are not tapping into the potential of our own market economy.

Moreover we face a growing shortfall in our power requirements. We are closing plant and not replacing capacity at sufficient scale. We are migrating fossil fuel transportation and domestic heating towards electric solutions - meaning our power requirement will be increasing, not decreasing.

Some have proposed the solution of interconnectors. Why build power stations when we can import power for less?

The short answer is: a nation does not accumulate wealth or knowledge by outsourcing core industries. Moreover, while undoubtedly useful within the mix, we cannot import power at the scale required and we cannot rely on imported power to be long-term secure.

Nor will imported power help us conceive of and deploy domestic power solutions that can be sold on to other countries with similar resources and similar challenges.

When national strategy and market incentives truly align, wealth is created, as are jobs and capabilities, as are international opportunities.

This is why the strategy of harnessing the UK’s vast tidal range resource is so relevant. Nature has bequeathed us an advantage and all the while it lays dormant, so too do the wealth, jobs, capabilities and international opportunities.

Atlantic tides are lifted into our estuaries twice a day with the reliability of an atomic clock. For 100 years we have pondered ways of harnessing this “lift” and turning it into hydropower. Today, through a novel combination of existing and proven technologies – plus a modern energy system better suited to accommodating new sources of power - we can now do this.

Tidal Lagoon Power has secured investment and planning permission to build a pathfinder tidal lagoon project, a scalable blueprint, at Swansea Bay. You’ll find it in the Conservative Party 2015 General Election manifesto and the National Infrastructure Delivery Plan.

The Government has in response commissioned an independent review into the national opportunity of developing tidal lagoon infrastructure at home and then exporting the technology and expertise to the world.

We have formed a coalition of world class engineering and technical partners. British-made turbines and generators will capture, hold and harness tidal movements in large inshore impoundments.  Incoming and outgoing tides will be converted into power that can be flexibly managed in real time by National Grid.

The scale is enormous. A national fleet of six tidal lagoons, including the pathfinder at Swansea Bay, could supply 30% of British households. The power output is 100% predictable, and the infrastructure is set in place for 120 years, double the lifespan of any other power station. Lagoons in different estuaries with different tidal timetables will stretch tidal power generation around the clock and start to smooth out the delivery curve.

Because the scale is enormous, this power will be cheap. In fact, we expect our second project between Cardiff and Newport to require a lower level of public financial support than any other new power station in the UK.  All new power stations require some level of public support due to market failure. And we need new power stations.

The necessary financial support for the pathfinder at Swansea Bay – a global first-of-kind - is higher, but can be delivered at the same level of intensity as Hinkley Point C and below that of many other low carbon options. As a small project, its impact on bills is also small, currently registering on our spreadsheets as just 24 pence per household per year on average. It may well cost more to post your annual statement to you.

That money buys more than power, industry, jobs and exports. The pathfinder at Swansea Bay will showcase the range of additional benefits unique to lagoon infrastructure: it will act as a tourist attraction and leisure facility; it will host mariculture farming and numerous conservation initiatives; it will be home to arts and education facilities; and it will help the region adapt to climate change by protecting against coastal storms and sea level rises.

So as the UK develops its strategic response to climate change, in a world where scores of other nations are now committed to doing the very same thing, we’d do well to scan the coastline of our island-nation and see not threat but opportunity.

Andy Field is Head of Communications at Tidal Lagoon Power

The views expressed in this article are those of the author, not necessarily those of Bright Blue.

Post-coal: the future of the UK energy mix

In her “reset” speech last November, Amber Rudd announced plans to close all the UK’s unabated coal power stations by 2025. With this announcement, the UK earned praise from the likes of Al Gore for its leadership in consigning one of the dirtiest forms of power generation to the history books.

The big question, of course, was what would fill the gap left by coal. Ms Rudd’s answer was unambiguous: gas and nuclear.

But investors don’t exactly seem to be queuing up to build new gas power stations. And even if the government can put in place the right incentives for new gas turbines to be built, unless this “dash for gas” is coupled with Carbon Capture and Storage (CCS) technology, the UK will break its international commitments on decarbonisation. The prospects for CCS nose-dived when, just a few days after Ms Rudd’s speech, the government quietly cancelled its £1 billion competition to develop the technology.

So much for gas – and, if anything, the outlook for nuclear is even less rosy.  The government has pinned its hopes for the first UK nuclear power station to come online since 1995 on EDF’s Hinkley Point C. But the omens aren’t good. The final investment decision has been pushed back again and again; EDF’s Chief Financial Officer has resigned over the project; and the company’s own engineers argue that the official project timeline is unrealistic and that the reactor needs to be redesigned. The other power station that EDF is building with the same “European Pressurised Reactor” technology - at Flamanville in France - was, at the last count, running three times over budget and six years late.

So, a troubled picture for gas and nuclear, which are supposed to pick up the slack from coal. No doubt we can expect another slew of headlines promising “black outs”. In the short and medium term any such headlines will be unfounded: yes, winter margins are tighter than they have been in the past, but this is all relative to the UK’s excellent energy security standards.

Nevertheless in the longer term, if the government’s hopes for gas and nuclear prove unfounded – as it seems they might - and as existing power plants continue to reach the end of their lives, there is a genuine question about the UK’s future energy mix. The answer to this question could be renewables, which accounted for over 22% of UK power in the first quarter of 2016.

But the rise of renewables poses challenges: National Grid has warned that this summer we may actually have too much power during windy, sunny days, which, if not properly managed, could lead to surges that damage grid infrastructure and even domestic electronics. Tidal lagoon technology would ease this issue by providing utterly predictable power, but until the government supports it, our renewable generation will continue to be largely in the form of wind and solar.

The need to balance the demand for power with the variable supply from wind and solar leads to some novel economics. We have reached the point where energy customers could, at certain times, actually be paid to consume power. This could be heaven for energy-intensive industries with non-time critical processes that they are happy to start and stop at short notice.

By the same token, owners of batteries could be paid to soak up excess energy by charging their batteries - and could then be paid again to provide the energy back to the grid at times of high demand. This possibility, combined with the continued fall in the cost of storage technology, will create fascinating new markets and business models.

Increased demand-side flexibility and greater use of energy storage will both be critical as we transition from a system of large centralised power stations, to one of decentralised renewables. The National Infrastructure Commission’s recognised this in its excellent Smart Power report. Sensibly, HM Treasury accepted all the report’s recommendations – a more enlightened approach than relying solely on nuclear and gas.

Juliet Davenport is CEO and founder of Good Energy

The views expressed in this article are those of the author, not necessarily those of Bright Blue.