UK on track to miss EU Renewables target by large margin

The UK Government is on course to undershoot the EU Renewables target by a large margin. The Government is committed to achieving production of 15 per cent of final energy from renewable energy (RE) by 2020. On the basis of a good guess based on current projections of current production and future progress the Government is unlikely to achieve more than 10 per cent, quite possibly even less - this means an undershoot of at least a third.

As can be seen in Table 1, in 2012 the UK produced around 4.2 per cent of its energy from renewables. If the current annual rate of expansion of about 0.4 per cent of UK energy from renewable energy (RE) is projected forward to 2020 then the UK is likely to achieve just 7.4 per cent of its energy from renewable energy, just less than half its target. It maybe that the rate of expansion will increase in the remaining years of the target period, but this is unlikely to bring the total anywhere near the 15 per cent target. The Government seems well behind its targets on all fronts. The Government proclaims that it is still on course to reach the 15 per cent target, but this claim rests on what I would describe as a piece of, as they say in the trade, smoke and mirrors, with progress towards the target being dependent on a very rapid acceleration of renewable energy generation occurring in the last three years of the target period. However, it seems unlikely that the projected acceleration will be anything like that which the Government has projected in its 'National Renewable Energy Action Plan' (NREAP) which it lodged with the EU, as required in the legislation establishing the EU Renewables Directive  that was promulgated in 2009.

Table One   NREAP for the UK - indicative targets and actual achievement in per cent of total energy

	NREAP	Actual
2009		3
2010	3	3.3
2011	4.08	3.8
2012	4.08	4.2
2013	5.15
2014	6.15
2015	7
2016	8
2017	9
2018	11
2019	13
2020	15

The Government expects to achieve a large slice of its target from generating renewable heat. Indeed, in its low carbon plan published in 2011 it projected 72 TWh per year as coming from renewable heat in buildings by 2020. In 2012 DECC figures say around 15 TWh of renewable heat was generated. However, the latest figures from DECC (May 2014) suggest that not much more than 1 TWh is being generated from renewable heat as a result of the government renewable heat incentive policies which it began in 2011. This figure is increasing, but few outside government seem to think it will rise to the sort of levels demanded by the Government targets. The Guardian covered this subject in March, and included the following passage:

 "We have to ramp up renewable heat to meet our carbon budget," said David Kennedy, chief executive of the Committee on Climate Change. However, he said a whole suite of policies were needed to encourage take up of renewable heat; the RHI subsidy was simply too small to create a mass market on its own.' See http://www.theguardian.com/sustainable-business/will-uk-warm-renewable-heat

The  10 per cent of transport fuel from renewables target may not be attained - progress has stalled in real terms, and only appeared to increase in the last period because of a change in the way the statistics were calculated. As DECC said about the 'increase':

'This increase was a result of the introduction of double counting which provided further support for the most sustainable biofuels derived from wastes' See https://www.gov.uk/government/publications/second-progress-report-on-the-promotion-and-use-of-energy-from-renewable-sources-for-the-united-kingdom, page 2

Government projections of 30 per cent of electricity being obtained from RE by 2020 also seem unlikely to be met, although really we would need more like 50 per cent of electricity from renewables to come within even a respectable distance away from reaching the EU target given the shortfall in other sectors.

NOTE! The EU target is for FINAL ENERGY consumption, not electricity consumption! This is a frequent source of confusion. Electricity production/consumption counts for about one sixth of total UK final energy consumption. Hence whilst we will get a lot more than 15 per cent of electricity from renewables, this will be a long way short of getting 15 per cent of total energy from renewables.

With only around 8GWe of offshore wind likely to be deployed by then added to just under 14 GWe of onshore wind and around 4 GWe of solar pv, and taking into account a further (since 2012) probably 3.7 GWe of coal fired capacity converted to be fuelled by biomass, we can expect around 26 per cent of UK electricity supplied from renewable energy in 2020. See some projections in Table 2 calculated in terms of TWh of electricity production.


Table 2

Table 1 Likely annual RE production by end of 2020

Source                                                                        TWh

Biomass                                                                       41

Offshore wind                                                             25

Onshore wind                                                              32

Hydro                                                                              6

Solar pv                                                                           4

Total RE production                                                  108

UK electricity production                                         370

% RE in 2020                                                                   26 per cent

The failure to reach the UK’s EU target has little or nothing to do with the availability of RE – for example there is a copious cheap onshore quantities of wind and solar resource – but it does have a lot to do with changes in policies. This includes ‘rationing’ of money available to RE generators (from consumer energy bills) to top up  the payments they received for the energy they produce that was a consequence of the ‘Levy Control Framework’ (LCF) that was introduced in 2011, and also the Treasury’s decision, in the last budget, not to increase the carbon floor price. This failure meant that the money available under LCF will not be able to fund as many projects as if the carbon floor price had been increased in line with previous policy (announced in 2010). Eric Pickels’s much publicised action to ‘clamp down’ on onshore wind and ground mounted solar farms will not, in practice, do much to reduce the quantity of RE deployed, for the simple reason that the Treasury will not allow enough money to be spent to deploy the schemes already given planning consent.

It is true that there are declines in costs of onshore wind and solar pv, but such gains are counterbalanced by the fact that wholesale electricity prices are falling, meaning that the amount of money allowed to be spent on to support renewables from consumer energy bills will have to go further to support a given renewable energy output.

One solution to all of this that clearly appeals to many people in the UK is to withdraw from the EU. Good news for UKIP, bad news for the planet.

One cheer for the Government's community energy strategy

The Government has launched a discussion document aimed at ensuring that local people have the opportunity to gain shares or income from renewable energy developments, but in typically British centralising fashion it is ironic that this discussion seems to focussed on what the electricity majors want or are prepared to allow. The discussion documents can be seen at https://www.gov.uk/government/publications/infrastructure-bill-the-community-electricity-right

The proposals hinge on the form in which the big companies will give up to 5 per cent community interest in various ways (e.g. through share ownership) in renewable energy projects. Little attention is being paid to practical measures to encourage real community ownership through projects initiated and developed by local people, and as usual even the needs of independent (non-community) generators seem to be passed over in favour of the needs of the multinational companies.

Now of course I support investment by the big electricity companies in renewable energy. Indeed they should do more. Community renewable energy schemes, it must be emphasised are a necessary addition to, and in no way a substitute for investment by the major electricity companies, at least as far as the UK is concerned. But the electricity majors are not the ones to deliver a community renewables programme. Why should the system be tailored solely to their needs, even when, ironically, the object of the policy is in promoting 'community' renewable energy!

The received opinion is that local people just do not have the expertise to put up community renewable projects. However, this can never be more than a self-fulfilling prophecy and there is a growing number of examples, especially in Scotland, that undermine this judgement. Research already conducted (eg by SCENE Consulting and University of Edinburgh) demonstrates that such community renewable schemes have a very high rate of planning approval. A report by Smartest Energy reveals a rapid growth in renewable energy schemes organised by independent companies of various sorts in Scotland. See http://www.scotsman.com/news/environment/independent-renewables-can-power-for-million-homes-1-3463289 Outside of Scotland there are some (relatively) large schemes, in particular the now well known 6.5 MW Westmill project brought into being by Adam Twine and Energy4All, and still awaiting development, the 4 MW Awel Aman Tawe project which has gained planning consent against the odds in a long running planning saga.

The Scottish Government has established the CARES system wherein local community groups can be loaned up to £150,000 to deal with planning applications. Why cannot Westminster set up a similar scheme? But a lot more could be done for no extra cost to the taxpayer or electricity consumer to help community renewable projects. So what should DECC be spending more of its time doing rather than having longwinded discussions with the (community-reluctant) big companies?

I would suggest that DECC draw up a list of genuine measures to promote community renewable energy schemes. These will include:

• set up a community renewable energy loan fund similar  to that run by the Scottish Government to cover England and Wales (the latter in collaboration with WAG)
• Legislate to ensure that farmers who have signed away their renewable energy development rights to companies that do nothing about them can be released so that they can agree options with community schemes
• Give decent premium power rates to community renewable schemes and to independent renewable energy projects in general - under Electricity Market Reform only the electricity majors/electricity suppliers who can trade on the electricity wholesale markets can get the premium rates whilst community schemes over a a few hundred kWs of generating capacity will effectively be paid around 30 per cent less than a multinational corporation per MWh generated  
• Give Scotland energy devolution so that a Scottish Energy Regulator could allow the network electricity distributors to be more proactive in upgrading weak rural electricity networks - thus reducing grid connection costs for community renewable energy schemes  - preferably this regulatory reform could be applied to the UK as a whole as well 

Only when I see some action on items such as these which will give real extra opportunities to community renewable energy schemes will I be prepared to give more than one cheer for the Government's so-called community energy strategy.

See some comment on community energy by Jonathon Porritt at http://www.theguardian.com/social-enterprise-network/2014/jul/01/energy-community-carbon-cooperative-renewables?CMP=twt_gu

Could English electricity prices increase if Scotland becomes independent?

As part of a general tactic of promoting fear and uncertainty in Scotland the UK Government has implied that Scottish electricity consumers will face hefty increases in their electricity bills if Scotland becomes independent. What has escaped notice is that if the UK Government made good its implied threat that they would stop incentives being paid for renewables that have already been installed in Scotland (and not just ones that might be installed after independence), then the outcome would almost certainly be significant increases in English electricity bills. At worst there could be a breakdown in the British electricity system and blackouts.

The UK Government plans to hold 'capacity auctions' in December 2014 to ensure that there is sufficient electricity generating capacity in place to ensure that the UK electricity system can buttress its currently marginal surplus available generating capacity margins by 2018. The British electricity industry will, in the event of a 'YES' vote in the Scottish Referendum taking place in September, expect a pretty rapid reassurance from the UK Government  that the incentives will continue to be paid in respect of existing renewable energy schemes. They will want, what is known in the trade as, 'grandfathering' of Renewable Obligation Certificates (ROCs) for existing Scottish investments, at least, and probably, all schemes installed prior to independence.

Failure to provide such assurances would, in pretty short time, plunge the British electricity system into crisis, if not disaster. If the UK Government did cut off the incentives through the Renewables Obligation (RO) paid to owners of existing Scottish renewable projects (mainly windfarms) the people who would suffer directly would the owners of those installations. These are particularly Scottish Power (owned by Iberdrola, a Spanish based multinational) and SSE, but also others whose business is mainly south of the border. Both Scottish Power and SSE, of course, have extensive holdings and planned power station investments in England and Wales.

These companies, who would thus face major financial issues, would no doubt be consulting their lawyers about suing the British Government about retrospective action to deprive them of their assets. They (and, no doubt, other major potential power plant developers) would also be distinctly under-impressed about investing in the new power stations that the British Government expects the electricity industry to deliver very quickly. The Scottish Government could well retaliate by insisting that Scottish power stations would have to pledge their capacity for Scotland rather than enter any binding capacity agreements with the South.

The result could be that the UK Government would have to postpone the capacity auctions. Alternatively  the prices the (r)UK system would have to pay bids for the extra capacities would increase dramatically as the amount of generation offered would be significantly reduced, both by the cancellation of plans to build new power stations and reductions in offers  from existing power plant. Some companies would fear they could no longer afford the investments and the Scottish power plant would be withdrawn from the British electricity mix. Scotland actually has a much more healthy generation capacity margin compared to England, something that is grudgingly recognised by even the UK Government in their anti-independence reports.

Postponing the capacity auctions would only make the situation worse, as the National Grid would become increasingly unable to balance generation and supply, leading to them having to pay out larger and larger sums to industry and business to stop consuming electricity during peak periods. That would also increase electricity prices and make real blackouts more likely.

Probably the Scottish Government would not actually have to formally warn the electricity industry against engaging in the UK Government's capacity auctions. This is because the British Electricity Trading and Transmission Arrangement (BETTA) would have to be cancelled by the UK Government to stop Scottish consumers simply switching their suppliers away from Scottish Power and SSE to other suppliers operating mainly in England and so having the same market choices, and the same prices, as English electricity consumers. The British electricity system would thus be split into two as part of the UK Government's efforts to cut off its Scottish (power station) nose to spite its face.

I am sure the public would become rather angry with the politicians as this situation became more apparent. Pressure on the UK and Scottish Governments to reach an accommodation would intensify. Since the Scottish electorate would not countenance an outcome that involved significant increases in their power bills, the plausible outcome would be an agreement that ensured 'grandfathering' of ROCs by the UK Government, one assumes, at least for schemes already installed and most likely installed up until independence itself. The issue of meeting the EU Renewables target would be a card that would be played by the Scottish Government, regardless of how quickly it would join the EU. On top of this the British electricity industry would be bearing down with their lawyers and public opinion on the Westminster Government to act to ensure as near as possible to a 'business as expected' situation - this includes the UK Government not changing laws with retrospective consequences for existing renewable energy investments.

For these reasons, the UK Government's efforts to sow uncertainty over electricity prices seem implausible. Uncertainty would multiply on both sides of the border. If the UK Government did decide to carry out its implied threat the consequences would be both expensive and potentially disastrous for electricity consumers in England and Wales.
You can see myself and others discussing these and related issues at a recent meeting of the Economy Energy and Tourism Select Committee of the Scottish Parliament at http://m.youtube.com/watch?v=OBVr08JYHgM

Thorium and fast breeder fantasies - back to the past?

It is incredible for nuclear-sceptical analysts who grew up in the 1970s to see thorium and fast breeder reactors positioned today as 'new' and 'promising' technologies given that the technologies  formed a lot of the truly horrific nuclear futures opposed by the anti-nuclear movement at the time. It is remarkable to see some high profile greens actually suggesting we ought to support research into these options.

Partly people do it because of the sheer cost and unappealing nature of schemes like Hinkley C. They seem to think  that  thorium and fast breeder reactors are supposed to be a 'modern' and 'better' alternative, and appearing to not reject all nuclear options seems to be a good way to appeal to the dominant (outdated) pro-nuclear fantasies of the British scientific and engineering establishment.

Oh Dear! Us oldies have got a lot to learn from the young'uns and their new IT, battery and solar electric car visions and efforts, but sometimes it is the other way around. People who seriously think that thorium and fast breeder reactors are somehow an alternative to the fading 'conventional' nuclear power technologies of today ought to revisit some of the histories written in the 1970s and 1980s.

Fortunately we still have some analysts who are prepared to revisit some of the arguments, history and inconvenient facts about these failed, awful, technologies. See the Bulletin of Atomic Scientists analysis, for example on http://thebulletin.org/thorium-wonder-fuel-wasnt7156

DECC survey reveals massive support for onshore wind compared to nuclear and fracking

The so-called 'wave 9' survey of public attitudes to energy technologies published today by the Department of Energy and Climate Change (DECC) shows just how out of step with the public the Conservatives have become in their policies. As detailed below, the Government's survey shows that the public is much more supportive of onshore wind - the technology they are determined to curb - compared to the technologies to which they want to give incentives, namely nuclear power and shale gas. The Conservatives want to stop premium price contracts being given to onshore wind and are busy stopping local authorities giving windfarm proposals  planning permission.  Yet onshore wind is, under Electricity Market Reform (EMR), until 2020, being given much lower incentives compared to nuclear power. So it is not as if the country cannot afford windfarms compared to nuclear power in particular, and shale gas cannot be a cheaper way of reducing carbon emissions!

When it gets going (they say in 2023) Hinkley C nuclear power station will be paid £92.50 for each MWh of electricity production for 35 years, and receive massive loan guarantees to boot, while onshore wind will, under EMR,  receive its £90 per MWh worth incentives for only 15 years and get no loan guarantees - and after 2020 according to the Conservatives onshore wind will get no premium rates at all. On top of all of this, the planning system will be reformed to be biased against wind power compared to nuclear power and shale gas!

Given that onshore wind power is much cheaper than nuclear power, and evidently by the Government's own reports it is much more popular, why on earth is the Government, after 2020, going to give massive quantities of incentives to nuclear power, various tax breaks to shale gas and at the same time cut off the much smaller incentives that are being given to onshore wind?

The answer of course is that the Conservatives think only of competing for votes with UKIP. Little else seems to matter. UKIP are promoting a virulent anti-renewables campaign, although this seems to connect up much more with a few of their own activists than with the public at large. The Conservatives, who so assiduously courted the centre ground at the 2010 election, are now abandoning the centre. Does this look like a Party that is heading for a majority government? I think not.

The DECC survey suggests the following results in public support or opposition to these different technologies, all in per cent (don't knows excluded):

                                 Support   Oppose

Onshore wind                 70       12
Offshore wind                77        7
solar power                    85         5
nuclear power                42        20
shale gas                        29        22

You can see the full results at:
https://www.gov.uk/government/publications/public-attitudes-tracking-survey-wave-9

Will Hinkley C be approved by the European Commission?

Stories of desperate lobbying by Department of Energy and Climate Change (DECC) Minister Michael Fallon are emerging as he struggles to justify the Hinkley C deal to the European Commission. In recent times Michael Fallon has variously been reported annoying both renewable energy interest groups by asking them to support the application to the EU Commission for state-aid to Hinkley C and annoying the Scottish Government. See
http://www.thesundaytimes.co.uk/sto/business/Companies/article1387859.ece and also http://www.heraldscotland.com/politics/wider-political-news/minister-sought-to-dissuade-msp-from-role-in-eu-inquiry-inquiry.239147%3Chttp://www.heraldscotland.com/politics/wider-political-news/minister-sought-to-dissuade-msp-from-role-in-eu-inquiry-inquiry.23914772 Indeed Alex Salmond has written to David Cameron to complain about being leant on by his Government. See file:///C:/Users/User/Downloads/Letter%20from%20FM%20to%20PM%20re%20Hinkley%20Point.pdf

Both sets of interests (renewables and the Scottish Government) have reason to fear the Hinkley C deal as it would plainly greatly reduce incentives available to renewable energy after 2020 given that the Treasury employs a formula called the 'Levy Control Framework' to reign in low carbon support payments. The Scottish Government fears that the Hinkley C deal would allow nuclear power to compete unfairly with renewables. Given that Hinkley C involves contract lengths that are more than twice as long as those to be offered to renewable energy and involve loan guarantees that will hardly, if at all, be available to renewable energy schemes, such arguments are very plausible to many observers.

Then again, Conservative policy (with the Liberal Democrats being carried a long way with them), seems to be turning green politics-as-we-know-it in the rest of the world on its head. Nuclear power is now 'green' according to Britain, whereas, according to the Conservative Party onshore windfarms 'are no longer environmentally friendly'. See http://www.telegraph.co.uk/earth/energy/windpower/10752424/Wind-turbines-are-no-longer-environmentally-friendly-says-Tory-chairman.html

Incentives for onshore windfarms will be scrapped just as they start for Hinkley C in the early 2020s (if all goes well for the constructors), according to Conservative Party policy.  Conservatives claim that onshore windfarms are 'unpopular' - although opinion polls have suggested they are still more popular than either new nuclear power or fracking which the Conservatives support, and the Hinkley C deal was hardly received by public opinion as a major triumph. Conservatives seem open to promoting offshore windfarms in theory, although there is great doubt whether they will provide sufficient incentives to get many (or any) more built after 2020. Similarly they are supportive of solar panels on rooftops, but not so much on the cheaper ground based solar farms. Tory policy is vulnerable to the charge that it stops cheaper renewable schemes on the grounds that they are 'unsightly', yet greatly limits offshore and rooftop systems because they are too expensive, and yet again the 'economic' objection does not extend to new nuclear power stations.

Meanwhile metaphorical trench warfare has erupted around the efforts by the UK Government to get the Hinkley C deal approved by Brussels. Among the objections sent in by British groups are the 'Nuclear Consulting Group' (to which I am a signatory) and also Friends of the Earth. See http://www.climatenewsnetwork.net/2014/04/nuclear-subsidy-deal-will-kill-renewables/

A commentary in 'Nuclear Energy Insider' gives a detailed account of some of the issues in the negotiations. See
http://analysis.nuclearenergyinsider.com/new-build/guarded-optimism-surrounds-hinkley-point-c-probe-outcome

Meanwhile renewable energy interests are held hostage to the application since the Government decided to submit the applications for the Hinkley state aid application and the renewable energy state aid application concurrently. The renewable energy application would not be subject to such delays if it was submitted separately.

What is the likely outcome? Certainly it is obvious that Michael Fallon is sufficiently uncertain about the outcome that he is pulling out all of the stops to get the Hinkley C state aid application approved. Certainly it has always seemed apparent that the Hinkley C application would take a long time to be resolved by the Commission. Personally, my own impression is that the usual horse-trading in Brussels would see the UK Government get the deal in exchange for a concession on another issue, although the somewhat strained public relations between the Commission and the UK Government may, superficially, at least, make this look problematic. A complete rejection of the Hinkley C state aid application seems unlikely. What still may be possible is that, initially at least, the Commission could ask the UK Government to think again about the length of the (35 year) contract. That would indeed be a deal-breaker, but for that reason, if no other, even this is less likely to stick. I suspect that Michael Fallon has a slightly easier wicket to play on than one infers from his 'desperate' efforts. The depth of  concern in DECC may be much to do with efforts to impress other parts of the UK Government to smooth the path towards acceptance and also in terms of 'expectation management' to bolster the department's claim to brilliant statecraft skills in the event of the likely approval of Hinkley C.

But we continue to live in hope that the deal will fall apart and that renewables funding will benefit as a result. However hope, in terms of what green groups wish for in British energy policy, is now in relatively short supply.

Are Tory plans to curb onshore wind a boost for Scottish Yes Vote?

You would almost think that the Government's, especially the Conservative's, succession of energy policy announcements over the past 10 months were almost designed to boost the 'Yes' campaign in the Scottish Referendum on independence. More support for the policy that the Scottish Government does not like (new nuclear power) and less support for the policy they want (renewables). What timing as well!

First, in the summer of 2013 came an announcement of 'strike prices' for renewables that were underpinned by a significant reduction in support because of the reduced contracts length (15 rather than 20 years) and inferior inflation proofing (CPI rather than RPI). It was bad news for offshore renewables in particular.

Then in October came the Hinkley C  announcement of what would have seemed inconceivable in previous times - guaranteeing to give the project more than twice as much incentives per unit of energy generated than is to be guaranteed to onshore wind (over 35 years) with a 65 per cent loan guarantee on top. This is directly against the non-nuclear Scottish policy. Previously people like me had been predicting that Scotland would have to pay much higher prices to reach its 100 per cent renewable energy target in an independent state compared to staying in the union. But now, the UK Government were predicting three twin reactor projects by 2030, most likely with similar incentive support as Hinkley C, and this will put up electricity prices by around 10 per cent for 35 years. On the other hand, with relatively cheap onshore wind deployment in Scotland going ahead at a rapid pace, it looked like Scotland could actually reach their 100 per cent renewable energy target more cheaply under independence if it relied on onshore wind to reach most of its target. The fact that the UK Government were now unlikely to fund much Scottish offshore renewables would not seem to make much difference to whether the Scots could reach their renewable energy target.

But things got worse. The Government has refused to come up with any ideas of how renewables will be funded beyond 2020 (certainly no renewables target for 2030). Then came the budget announcement that the carbon floor price would be 'capped'. The carbon levy itself makes little difference (it is mainly  tax revenue for the Treasury and a boost to EDF's nuclear income), but the problem for renewables is that the amount of money that will be paid to renewables is fixed by the Treasury, so the fact that the price of wholesale electricity will be less than expected (because of the cancellation of planned increases in the carbon floor price) means that there will be fewer incentives for renewables. This means less windfarms.

The final cut (to date) is of course the Tory promise that they will stop more onshore windfarms after 2020. Just in time to throw UKIP another sop before the local elections. This means that in the space of one year the renewable energy case for Scotland has gone from it looking like independent Scotland would face much higher power prices to fund their renewables targets to one where if they stay within the union they will have to pay much higher electricity prices to pay for nuclear power and will not achieve their renewable energy targets anyway!

Now don't get me wrong, I don't want Scotland to vote 'Yes'.  I would prefer a 'No' vote because of the rightward political shift that Scottish independence would mean for the rest of the country, and also because I believe there are too many nations and nationalisms in the world today as it is without adding one more. Alas, it now seems that David Cameron, a nice man really, may well go down as the man who not only 'lost' Scotland from the UK but who also paved the way for a referendum in 2017 that sees the UK exit from the EU. Cameron and the Conservatives have decided that it is much more important to listen to UKIP policies than to worry about the effect on Scotland or to risk the future of the UK in the EU. That indeed is the road to a literal little England, upon which the Conservative policy on windfarms is but a small, but very indicative, marker.