Renewable energy: an uncomfortable position

Ian Marchant

Ian Marchant FEI, Immediate Past President

I have been looking at how the UK is doing against its EU renewable energy targets. These set us a target of having 15% of all energy from renewable sources by 2020. The government would have us believe that all is well. It’s most recent report (published in January) took great delight in saying that we comfortably met the interim target up to 2013/14. But is that really the right measure? Interim targets are just that: interim, and it’s always tempting for them to be made easy to push trouble down the road to someone else’s term of office. So let’s look at where we actually are in terms of our final target, against the rest of Europe and against long-term requirements. As you might expect, this gives a far from rosy picture.

Firstly, let’s look at how we have done. The baseline for the new targets was 2004 and in that year we achieved a pathetic 1.2% of energy from renewables. After ten years and by 2014 it was 7%. Some simple maths puts this into context. We needed an increase of 13.8% in 16 years and we have managed 5.8% in ten years. In over 60% of the time, we have managed 42% of the target. If we carry on at the same rate, we will only hit 10.5% from renewables. In fact, according to leaked internal government correspondence, they privately think we may only get to 11.5%. I have seen some analysis looking sector by sector and technology by technology which gives a range of 10% to 11.5%. That doesn’t look at all comfortable.

Secondly, let’s see if the international picture gives any comfort. The EU actually has an overall renewable energy target of 20% and has agreed country by country targets within this, with the UK having a lower than average figure of 15%. The EU have recently published a progress report and nine countries have already achieved their final target (no interim target nonsense for them) and we are third furthest away from the end goal (only France and the Netherlands are further away). Despite the government’s trumpeting, our 7% only ranks us 24th out of 27. Outside of Europe we are behind most other countries including Canada, Mexico, Switzerland and even the US. We are level with Australia and ahead of Japan and Russia. Being near the bottom of international league tables doesn’t feel comfortable.

Thirdly, let’s think about where we are against the long term. I hear DECC ministers talking gleefully about the deal they secured in Paris. Leaving aside the UK’s role in securing anything, by 2020 we will be one third of the way from 2004 to the 2050 deadline by which time the global leaders expect the energy industry to be largely carbon free. I can’t see how that can be achieved without renewables contributing over 50% to the energy mix and, at the current rate of progress, even if it is maintained for another 34 years, that suggests we will only get to around a quarter. So the long term doesn’t provide much comfort either.

All three perspectives feel uncomfortable and whilst progress in 2015 may be quite good, this was before the current government’s attacks on onshore wind and solar. One final bit of analysis – it is possible to turn the UK’s likely shortfall into the electricity output measures of TWhours. On this basis, the shortfall will be between 50 and 70TWh (to provide context, the UK annual electricity demand is usually just over 300TWh ). There are obviously choices as to how the gap could be filled but the UK government has ruled out using more onshore wind and solar and expects to boost heat and offshore wind. Given the UK’s track record on heat (in 2014 we were bottom of the heat pile in Europe), I’m not optimistic and offshore wind, although it’s getting cheaper, will always be more expensive than onshore. I’ve calculated that for every 1GW of onshore wind that isn’t built but is replaced by offshore wind, it will cost the UK £100m every year (that’s 2.5TWh of output at a £40 per MWh cost differential). There’s probably another 6 to 10GW that could be built so the total cost could get to as high as a billion a year.

So we aren’t in a comfortable position at all, however you look at it, and we seem to be making things more expensive and difficult than they need to be. A classic case of not accepting the short term headlines.

Making heat ‘cool’

Professor Jim Skea CBE EI President

Professor Jim Skea CBE
EI President

Energy decision-making is widely varied. There are mega-decisions about nuclear reactors, gigawatt-scale offshore wind farms and interconnectors that criss-cross the North Sea. Then there are the literally millions of decisions, each modest in itself, which collectively shape energy needs and markets. Policymakers and headline writers love the big stuff. Nevertheless, it is the more humble things which will shape out the energy future and which really challenge policymakers.

“Heat” has become a catch-all term to describe all forms of energy use that are not electricity and not transport – and that’s a very large share of energy demand. There is a tendency to describe heat as a “sector”. Winston Churchill once famously said that India was no more a country than the equator was. Well India is certainly a country now but, in my view, heat is no more a sector than a kettle of boiling water is. And talking about heat markets is also bizarre. There may be some district heating schemes where heat is priced and traded but, for the moment, heat largely stays within the premises where it is generated and used.

It is also odd that the energy labelled “heat” in commercial buildings is more often used to keep us cool. Hence, the not entirely facetious title of this blog – we could really do with a catchy term, which covers the energy needed to keep us comfortable, whether it involves nudging temperatures up or down. “Heat” makes it sound as though policy is all DECC’s job. Something round “buildings” or “built environment” would make it clear that other government departments, notably Communities and Local Government who look after building standards have a rather important role to play.  Suggestions welcome!

One of the consequences of regarding heat as a sector on par with real sectors, such as electricity, is the temptation to mimic policy mechanisms that work well where there are functioning markets, c.f. the complexity of the Green Deal. Smaller consumers do not make decisions with the same degree of sophistication as finance officers in major utility companies – and nor should they. If we want to promote energy efficiency and renewable heat then simple, understandable rules and incentives are needed. I was talking to a Swede yesterday who pointed out that Scandinavians value simplicity in all things from furniture design to energy policy. They look with bemusement at the elaborate mechanisms that the UK uses to shape electricity markets and energy consumption patterns.

So where does this rather grumpy rant take us? First, I think we need a holistic approach to keeping people comfortable in indoor environments. It is basically about minimising energy use and maximising inputs from environmentally sustainable energy sources. Second, a joined-up vision of where we are going would help. Top-down views of UK low carbon energy futures suggest a big role for heat pumps for example – but it is fair to say many energy professionals remain sceptical.  Every time an old boiler is replaced by a modern combi boiler we lose the hot water tank – the cheapest form of energy storage for buildings – that would be needed to get heat pumps installed. Are we locking ourselves out of a low carbon future in the longer-term for more incremental gains in the short term? Finally, we need rules and incentives that match the needs of households and businesses and the way they make decisions. When DECC presses control-alt-delete on energy policy after the Spending Review is concluded, let’s hope “heat” is one of the areas that gets the attention it deserves.

The Heat Conference will be held on 25 November in London and is organised by the Association for Decentralised Energy and the Energy Institute.