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

How to build a conservative narrative on climate change and energy

There is a deep and dangerous political polarisation around climate change. Labour voters are twice as likely as Conservative voters to be very concerned about climate change and to accept that it is caused by human activity. Conversely, Conservatives are twice as likely to be unconcerned, feel that climate change has been "exaggerated", or believe that this is a natural process. These findings are found consistently across all polls, including surveys of Members of Parliament. It is important to stress that the key dividing line here lies around "small-c" conservatives values rather than party loyalties and voting patterns; Labour voters with conservative values are more likely to be sceptical of climate change than progressive Conservatives.

However, as with the debate raging about whether to leave the EU, relatively few people have a decided position and the bulk of the population sits in between as slightly concerned or slightly persuaded. In focus groups people express this ambivalence but clearly look to their more opinionated peers to indicate the position they should hold. In public opinion there is still everything to fight for.

Is this polarisation "dangerous"? I think it is. Averting extremely damaging climate change requires a high level of economic mobilisation as well as the wholehearted commitment of Parliament and the entire population. Action on a commensurate scale cannot be forced through a democratic political system. Even if it could, wise and well-informed responses on this complex and multivalent issue require intelligent debate from multiple perspectives.

Yet, there is no inherent reason why climate change should be so polarised. Yes, climate change requires strong government policy and some intervention in personal freedoms, but so too do other economic and security challenges that receive bipartisan support. Climate change threatens us equally and is, if anything, even more threatening to deeply-held conservative principles around identity, nationhood, and opportunity.

Nor is polarisation universal. In Germany, where the Christian Democrat centre-right leadership of Angela Merkel has championed energy transformation, climate change has become incorporated into a post-war mythology of reconstruction through engineering. As a result, polls in Germany cannot find any difference in attitudes along political lines.

In the English-speaking world, though, climate change has become absorbed into other long-term political struggles and become a marker of political identity. In America, attitudes on climate change are now a stronger predictor of someone's personal politics than their position on any other issue, including the hot button issues of abortion, capital punishment, and gun control.

All of this goes to show that startlingly few people build their attitudes on the basis of the consensus of expert scientific opinion. Rather - and there is now a very large body of opinion to support this - people understand climate change through the lens of culturally constructed narratives built around values and identity.

Climate narratives have for a long time been off-putting to conservatives. Early communications, which shaped all subsequent representation, were dominated by environmental organisations. They placed climate change within wider conservation campaigns (focusing on impacts to vulnerable ecosystems or high profile animals such as polar bears) or a global justice narrative (focusing on impacts to impoverished populations in less developed countries). They built on previous campaigns to present oil companies as the enemy and global growth capitalism as the systemic cause. Solutions were often based around government intervention. And they blamed individuals for their lifestyle choices around transport, consumption and diet. None of these arguments were invalid but they were highly selective. The choices about what aspects of climate change to foreground were invariably taken through the lens of a liberal environmentalist worldview.

Although speeches by Margaret Thatcher in the late 1980s presented a distinctly conservative narrative for action, the dominant right-wing narratives started to move in the opposite direction, rejecting the environmentalist arguments and - fatally - challenging the science that underlaid them. These counter-arguments were supported by adroit and well-funded campaigning by pro-fossil fuel interests, especially in the United States.

Over time the polarisation developed its own momentum. Like global climate patterns, public attitudes can have positive feedbacks within which small initial changes become amplified over time. The different camps accumulated their own champions, information materials, and media support, each becoming defined by their antagonism to the other side.

However, once we understand that the cause of the problem lies with these publicly held narratives rather than some innate problem with the issue itself, we are in a much stronger position to find ways to rebuild support. In this case, the priority must be to develop distinctly conservative narratives around the threats and solutions to climate change.

For the past four years my organisation, Climate Outreach, has been exploring, developing, and testing conservative language around climate change. We have run extensive surveys and focus groups and written five publicly available reports. We are the only organisation in Europe conducting such research.

Our primary finding is that conservatives can and do respond strongly to climate change narratives which appeal directly to their values - for example, emphasising and validating national identity, tradition, respect, countryside and comfort. We have found that certain key frames (meaning language that signals a cluster of values) are consistently successful.

Balance can be an explanation of the problem (the weather has become unbalanced, the seasons are coming at the wrong times), the solution (we are too dependent on fossil fuels - we need a balanced energy mix) and the political process (we need a balanced debate with different points of view).

Health is another major frame outlining both the causes (dirty carbon pollution/burning coal/car engines create major health impacts) and the impacts (heat waves, will have a major effect on our health). Health is also a meta-frame for responding and taking action: as Margaret Thatcher said to the Conservative Party conference in 1988, "it's prosperity that creates the technology that can keep the earth healthy".

Waste is a frame with strong behavioural resonance, especially for older people, and our testing found that appeals for energy efficiency are best received in terms of a wider morality about reducing needless waste.

In research people of all political stripes respond poorly to language based around apocalyptic threats, which they either find too disturbing to accept or regard as exaggerated and manipulative. Conservatives are innately sceptical of such language and are, if anything, even more resistant to negative messaging. In our research we found that positive language about the future is far more effective, especially when framed around conservative values. This does not mean that we should deny the existence of major threats, but rather that we should place these within a deeper context of constructive change.

Environmental organisations often assume that they can build broader political support by presenting positive economic opportunities of shifting to renewable energy. Such messages are relevant and important especially for financial and policy audiences. However, our own work found that such messages were less effective outside an affluent urban elite.  Grassroots conservatives responded very poorly to messaging about the opportunities for big business and became suspicious of their vested interests and profiteering. Stronger messaging for this audience is usually around opportunities for small business, local installers, and community-based enterprise.

Communicators need to be careful with how strongly they promote the change of the shift to renewable energy - and even the core terms of "transition" and "transformation" may be problematic. Although left-leaning environmentalists are very drawn to talk of radical change and "energy revolution", conservatives are extremely wary of such destabilising and politically charged language.

However, conservatives do not reject change out of hand. Rather, they recognise that there are different spheres of life within which they will tolerate different levels of change. In a context of city living, and some degree the local community, people welcome change if it might lead to a cleaner environment or more prosperity. In the context of the home, on the other hand, people prioritise values around security, comfort and family, making them highly averse to change. For twenty years energy efficiency campaigns have, quite wrongly in my view, focused almost entirely on saving money rather than these more powerful intrinsic values. If you can afford to insulate your house you are likely to be far more motivated by the prospect of a more comfortable, cleaner, healthier family home than saving a hundred pounds each year off your energy bills.

Seen from this perspective, the rapid introduction of so-called "smart meters" requires very carefully considered messaging. Forcing people to have a box on the wall of their most private and sacred space, reporting information on their behaviour to government and despised energy companies, has all the makings of a communications disaster.

People require reassurance that their home and countryside - which many regard as a key mark of national identity - will not look or feel significantly different in the future. The most successful narratives are variations on the same reassuring theme: our most important values will be defended and strengthened; change will be careful and balanced.

Finally, the acceptance of all these messages is dependent on the perceived trustworthiness of the communicator. Left-wing and environmentalist communicators should be careful not to actively antagonise conservatives, but are unlikely to win them over. Unfortunately, because of the political polarisation there is a severe lack of high profile conservative climate champions. Although many senior figures admit privately that climate change is a major problem, they see major personal risks in becoming associated with such a toxic issue. Everyone concerned with climate change, whatever their politics, needs to help create a safe and supportive environment for conservative voices to speak out strongly on the issue, in their own words and values.

For all its contradictions, society has been built through cooperation and mutual interest.  What is missing in the climate discourse is the glue that holds this together - the narrative of combined national purpose that can bring this into the political arena. Left and right can still find common ground around the need to defend our way of life, livelihoods, jobs and cultures from an existential threat. There is no need for us to settle our differences - in fact we must recognise and respect those differences in order to find the creative solutions we need. But we also need to tap into something deeper: our shared humanity and our immense capacity for empathy and cooperation.

George Marshall is the co-founder and Director of Projects at Climate Outreach, an Oxford-based charity that is an international leader in climate change communications. He is the author of Don't Even Think About It: Why Our Brains Are Wired to Ignore Climate Change (Bloomsbury 2014).

Climate Outreach's specialist reports on climate communications can be found at http://www.climateoutreach.org.uk/resources/, including recent reports on talking with the centre-right public and politicians. 

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

The path to decarbonisation and the fifth carbon budget

By the end of June 2016, the Government must announce the level of the fifth carbon budget. This will set a legal cap on UK carbon emissions for the period from 2028 to 2032.

Five yearly carbon budgets are a key component of the Climate Change Act, and together they plot a route to the 2050 target of an 80% reduction in emissions against 1990 levels. The Committee on Climate Change (CCC) has a statutory duty to advise ministers on the most cost-effective path to decarbonisation. In November 2015, they recommended a 57% reduction in emissions for 2028-2032.

The period of the fifth carbon budget coincides with when the EU’s 2030 emissions target must be met. At the Paris climate summit in December 2015, the EU committed to reducing carbon emissions by 40% by 2030 from 1990 levels. If the UK wants to fulfil this international obligation, therefore, it must ensure that the fifth carbon budget is compatible with what was agreed at Paris.

There has been considerable discussion among Conservative backbenchers about the fifth carbon budget. Two groups of Conservative MPs have written to ministers with contrasting views on the fifth carbon budget. One group has called for the Government to accept the CCC’s decision as soon as possible to send a clear signal to investors. Another has called for the Government to delay the decision to ensure other member states contribute fairly to the EU’s Paris commitment.

The Chair of the CCC, Lord Deben, wrote to the Energy Secretary, the Rt Hon Amber Rudd MP, in January 2016 advising that their recommendation for the fifth carbon budget would be sufficient to meet the EU’s agreed contribution. However, he has also warned that, in the long term, the targets in the Climate Change Act will have to be revised to fulfil the ambition in the Paris Agreement of reaching net zero global emissions by the end of the century. These conclusions were also reaffirmed in April 2016 by the cross-party Energy and Climate Change Select Committee.

Although the overall 2030 EU target has been agreed by national leaders, the country-by-country division is yet to be determined. This has prompted some to caution against the UK setting an overly ambitious domestic target in the fifth carbon budget. If the UK does more than its fair share, they argue, then others in the EU will do less. They add that this would deliver no additional benefit to the climate, and would damage the UK’s competitiveness.

Both of these arguments have been examined. The impact of carbon budgets on the UK’s competitiveness has recently been studied by LSE’s Grantham Institute. They find, firstly, that existing policies to reduce carbon emissions have not had a negative impact on businesses. Nor do they find evidence of ‘carbon leakage’, whereby carbon intensive industries just relocate to countries with less stringent climate change legislation. Secondly, they show that there are economic benefits for countries that take strong climate action, arguing that the UK in particular is well-placed to take advantage of the global low-carbon transition. This week, the Energy and Climate Intelligence Unit (ECIU) released a report showing that across a range of climate policies the UK is not significantly ahead of its EU competitors. They find in fact that the UK is sixth among the 28 member states, far behind the clear leader Sweden.

The CCC has examined what the likely implications of the EU 2030 target are for the UK. They find that the UK can be expected to be given a target of around 54%, within a range of 51% and 57%. This is compatible with their recommendations for the level of the fifth carbon budget. Internationally, the UK Government has long argued for larger, more developed economies to decarbonise at a faster rate. This is the reason why the UK’s share would in any case be larger than the overall EU target of 40% reduction by 2030 from 1990 levels. Moreover, given the EU and UK share the same 2050 target of reducing their emissions by 80% by 1990 levels, the CCC’s advice on the fifth carbon budget provides the most cost-efficient route to 2050, independent of the interim 2030 target.

The Government championed an ambitious deal in Paris last year, and has repeatedly affirmed its commitment to the Climate Change Act. In the same vein, ministers should agree the fifth carbon budget as soon as possible. Amber Rudd announced in her energy policy reset speech in November 2015 that the Government would set out new policies by the end of 2016 to ensure the UK meets its fourth and fifth carbon budgets. The focus should be quickly turned to establishing these new policies and giving investors a clear direction for future energy policy.

Sam Hall is a Researcher at Bright Blue

Can the anaerobic digestion industry survive with the reduced feed-in tariff?

Anaerobic digestion (AD) can play a role in meeting some of the UK’s environmental policy objectives. AD produces biogas, a renewable, low-carbon energy source, which displaces fossil fuels. It also has some important co-benefits. Harmful methane emissions are reduced by diverting waste from landfill. Moreover, the digestate that remains after biogas has been produced can be applied to agricultural land in place of an artificial fertiliser.

The Committee on Climate Change has identified anaerobic digestion as a technology that can reduce emissions in the agricultural and waste sectors. However, in cases where biogas is made using purpose-grown crops, carbon emissions can actually increase through changes to land use. For this reason, it is important that there are appropriate safeguards on the sustainability of the feedstock, if genuine carbon savings are to be achieved. This is a concern that the Government has recognised, by making public support for AD contingent upon developers meeting sustainability criteria.

The last few years have seen a significant increase in anaerobic digestion capacity in the UK. The most recent figures from the Anaerobic Digestion and Bioresources Association (ADBA) show that in August 2015 there were 411 anaerobic digestion plants operating in the UK, generating over 500MW of power, with 89 new plants built in 2014 alone. The UK now has the second largest biogas industry in the EU, second only to Germany, which has over 8,000 AD plants.

The Government recently capped the amount of subsidy available through the feed-in tariff scheme and introduced a degression rate to encourage the industry to keep cutting its costs. For now, however, demand for new AD projects is strong. Within 15 minutes of this quarter’s scheme being opened, the cap for new AD generating capacity had been exceeded. DECC is forecasting an additional 17 new plants this year under the reduced subsidy regime. As the degression rate cuts the level of subsidy, projects supported through the feed-in tariff will likely become less economical and  harder to finance.

The Renewable Heat Incentive (RHI) also provides a subsidised revenue stream both for biogas and biomethane, an enhanced biogas that is injected into the gas grid. Following confirmation of funding for the RHI in last year’s Spending Review, DECC is now consulting on reforms to the structure of the scheme. Their consultation document sets out an ambition for an annual deployment of 20 biomethane plants by 2021 through the RHI. The Renewable Energy Association (REA) has found that, by the end of 2016, there will be enough UK biomethane capacity to replace four 60,000-tonne LNG tankers, with potential for this to rise to 45 tankers’ worth by 2035. This would reduce our LNG imports by a quarter and offer significant carbon savings.

One of the keys to the industry’s long-term future will be further cost reductions. In our Green and responsible conservatism report last year, we called on the Government to set out clear trajectories for phasing out subsidies for renewable energy technologies. The Government does not want to subsidise green industries in perpetuity through consumers’ energy bills. Subsidies are to be a temporary measure while supply chains and technologies develop, and costs fall.

There are signs that the industry is willing and able to meet this challenge. ADBA has recently launched a cost-competitive taskforce, which aims to bring down the levelised cost of energy to the same level as Hinkley Point C by 2020. The REA believes that the industry could also be helped by greater levels of food waste collection from households. Policy Exchange also called for mandatory food waste collection in their 2009 report on this subject. A report from the Green Investment Bank last year argued that greater consolidation of the number of operators in the AD market could also improve the economic feasibility of new projects.

Anaerobic digestion is still a developing industry, with some important challenges to be resolved. However, the changes to the Government’s subsidy regime will allow a small but successful UK industry to grow.

Sam Hall is a Researcher at Bright Blue

This article originally appeared in the May/June edition of Bioenergy Insight and can be viewed by subscribers here.

How smart is the smart meter rollout?

The main installation phase of the Government’s programme to offer smart meters to every household by 2020 is set to begin this year. The meters are provided by energy suppliers, who pass on the costs of implementation to consumers in energy bills.

Smart meters send information to suppliers about consumers’ energy consumption, ending the practice of estimated bills. They also enable consumers to better track and thus manage their energy usage so they can save money on their bills.

The smart meter rollout, however, has already received some trenchant criticism. Both the House of Commons Public Accounts Committee and the Energy and Climate Change Committee in the last Parliament raised significant concerns about the policy. Influential groups such as the Institute of Directors and Which? have both called for the rollout to be halted or scrapped altogether. This blog will examine some of the most frequent objections.                                         

Timeline

The scheme is already behind schedule. The main installation phase should have started in 2015, but was subsequently delayed to 2016. Even in the foundation stage, there have been problems keeping suppliers on the timetable. For instance, in November 2015, E.On was fined £7 million for missing their 2014 target to supply smart meters to all their business customers. By the appointed deadline, just 65% of their eligible businesses had been provided with a smart meter.

Last year, the Energy and Climate Change Committee concluded that the full rollout would not be complete by 2020. In support of this prediction, they cite: a lack of trained installation engineers; the delay in the launch of the Data Communications Company (DCC) to control consumers’ energy information; and persistent, unresolved problems with interoperability. According to DECC’s latest progress report last summer, around 1.2 million smart meters had already been installed in the foundation stage. This figure represents just 2.5% of all domestic meters, demonstrating the scale of the remaining task.

Cost

The Government’s official impact assessment has forecast that the scheme will cost £10.9 billion. In return, it will yield a total of £17.1 billion of benefits for both consumers and suppliers. Consumers will save money through reduced energy consumption, while suppliers will avoid costs of site visits and reduced customers’ enquiries.

Yet some important voices in the debate have been sceptical of these figures. The Chair of the British Energy Efficiency Federation expresses some doubt in a recent article, pointing out that the German government’s impact assessment found no net benefit for consumers of smart meters. The National Audit Office report in 2014 cautioned that the estimated benefit of the scheme was contingent on near universal take-up of smart meters. Energy suppliers may need to spend money engaging with reluctant customers to convince them of the merits of the devices. Similarly, the Institute of Directors argues that DECC’s calculations are not at all transparent, with earlier impact assessments showing a net negative benefit to consumers and key pages missing from current documents.

The Government’s primary method for controlling the cost of the rollout is competition between different suppliers. In theory, customers will be able to switch suppliers away from companies that increase their bills by more than their competitors. However, in its 2014 report, the Public Accounts Committee said that this would be insufficient to protect consumers. The very fact that Ofgem referred the energy market to the CMA shows there is currently a deficit of competition. While the dominance of the Big Six has fallen from 99% of market share at its peak to 85% now, the Government still acknowledges that further competition is required. This concern was also expressed in the Centre for Sustainable Energy’s report in 2011. They recommended the Government adopt a more interventionist approach to regulating the cost of the smart meter rollout.

Data-sharing

The data-sharing aspect of smart meter technology has also proved a concern. A recent academic study found that, because of data-sharing, smart meters, and demand-side management technologies in general, are likely to be supported only by people concerned about climate change, and not by those worried about high energy costs. This research suggests that many will be uncomfortable about large energy suppliers having access to their personal data. Some security issues have been identified already, demonstrating the validity of this anxiety about data sharing. For example, the FT reported in March 2016 about how GCHQ intervening in the programme to add extra encryption on smart meter data to protect households from hackers.

Conclusion

Smart meters offer exciting opportunities for the future energy system. As part of the smart meter installation process, consumers will be given advice about how to improve the energy efficiency of their homes. Moreover, by seeing near-real time data of their energy usage, consumers will be able to observe inefficiencies in their homes’ energy consumption. This feature of the scheme may enable some much-needed progress on improvements to domestic energy efficiency.

The smart meter rollout undoubtedly has some serious challenges, however, particularly around staying on time and on budget. To an extent, that may be inevitable given the scale of the programme, whose aim is to install 53 million appliances in people’s homes. Close monitoring and constant reviewing from DECC will be essential as the main stage of the rollout commences.

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.

Electric vehicles: driving future growth

Greater uptake of electric vehicles (EVs) will be important for decarbonising Britain’s transport sector, since it will mean a reduction in the use of petrol and diesel cars. Air quality will also be improved as harmful emissions such as particulate matter and nitrogen dioxide are reduced.

In addition to these environmental and health factors, there has been a number of recent studies about the economic impact of EVs on the UK. One of the aims of Bright Blue’s Green conservatism project is to advocate green policies that enhance Britain’s prosperity. This blog will examine the potential for EVs to contribute to jobs and growth in the UK economy.

Current performance

The electric car industry is currently enjoying phenomenal growth in the UK. There are two main types of EV: a plug-in hybrid, which has both an electric motor and an internal combustion engine, and a pure EV, which just has an electric motor. According to the Society of Motor Manufacturers and Traders (SMMT), 2015 saw a 50% increase in sales for pure EVs compared to the previous year. Tesla’s new model of electric vehicle received 276,000 pre-orders in three days of launching. Last week, Nissan Europe reported record sales of EVs in 2015, an increase of 45% in the previous year. They ascribe much of this increase to businesses looking to decarbonise their vehicle fleets.

There is still a long way to go before EVs properly penetrate the automotive market, however. Large percentage gains mask the fact that EV sales are starting from a very low base. Even among new car sales, EVs make up just over 1%. They are also still very dependent upon government subsidy to compensate buyers for the greater upfront cost. In December 2015, the Government committed to spending £600 million on the plug-in car grant system over the next five years. Under the revised scheme, buyers of pure EVs receive a subsidy of £4,500, while new owners of plug-in hybrid vehicles get £2,500. The Department for Transport’s target is for 100,000 drivers to benefit from this support.

Future success

In its report on the fifth carbon budget, the Committee on Climate Change has said that EVs need to constitute 9% of new vehicle sales in the UK by 2020 and around 60% by 2030, if the most cost-effective path to carbonisation is to be achieved. This is very ambitious growth, and will require significant reductions in the upfront cost. There is evidence that this will be achievable. The CCC’s finding that EVs will become cost-effective in the mid-2020s is supported by Bloomberg New Energy Finance's recent analysis of this market. They studied particularly the costs of batteries, which are one of the main factors driving the price of EVs. Lithium-ion batteries have fallen in cost by 65% since 2010, with costs expected to fall further to around a third of their current level by 2030. Their report found that 2025 was the year the cost of EV ownership fell below that of conventional vehicles.

Green jobs

This boom in EV sales with have a major impact in the UK, both in the automotive industry and the wider economy. A study published this month by Loughborough University found that the electric vehicle industry in the UK could support 320,000 jobs and generate £51 billion of economic activity by 2030. This is contingent on further government investment in electric vehicle infrastructure and training of skilled mechanics. Cambridge Econometrics has also tried to quantify the direct economic benefits of EVs. In a report from 2013, they forecast that there would be 7,000 to 19,000 net additional jobs by 2030 under a low-carbon transport transition. This is because the UK petroleum industry is not very job-intensive. Moreover, as the UK is now a net importer of oil, the switch to powering vehicles with British-produced electricity will accrue more revenue for UK energy companies.

Because of the importance of the price of oil to the wider economy, the increased uptake of EVs in the UK will have an impact beyond the automotive sector. Last week's report by Cambridge Econometrics found that policies to tackle climate change, including the transition away from combustion engine vehicles, will reduce demand for oil across the EU and therefore lower the price compared to what it otherwise would have been. They find that this lower price will increase real incomes and enable more consumer spending on UK-produced goods and services. This model of course is predicated upon a number of assumptions, but it provides confidence that the transition will be broadly economically positive.

The UK automotive industry has enjoyed a renaissance in recent years. If this important sector, and the jobs that depend on it, is to thrive in the low-carbon economy, the UK must ensure it become a world leader in electric vehicles.

Sam Hall is a Researcher at 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.