Although we are out of the recession, job losses, cut backs and rising levels of debt have all added up to the feeling that we should still be tightening belts and putting all thoughts of growth to one side. However, the microgeneration industry has reasons to be excited.
The realisation that we need to move to a low carbon economy has taken hold, with legally binding EU carbon emissions and renewable targets to be met by 2020, new energy efficiency building regulations to be introduced in 2010 and 2013 and the stated ambition that carbon emissions from all homes by 2050 should be virtually zero. Microgeneration and community decentralised energy solutions will have a large part to play in the UK meeting these targets. The question is how do we keep this burgeoning sector going during the current economic climate so that it can capitalise and deliver the mass market industry foreseen post-2012?
Micropower technology includes the generation of sustainable heat and electricity on a small scale, often within the household but sometimes at the multi-occupier scale. Commercially available technologies include biomass heating systems, solar installations (both electrical and heating), small-scale wind turbines and heat pumps that extract and magnify the residual warmth on the water, air or ground for use in the home. There are also a range of technologies that are nearing market readiness, including micro combined heat and power (micro CHP) units which produce highly efficient electricity and heating often from gas. But the small scale of the industry and the innovative nature of the sector has meant up-front costs remain prohibitively high and a major barrier to householders.
The economic case for installation microgeneration in our homes and businesses is constantly being made by the fuel price volatility experienced over the last few years. In 2008 crude oil prices oscillated by over $100 per barrel and inflation on utility bills went into double digits, forcing more households into fuel poverty. In 2004, the number of households suffering from fuel poverty was one million, but that figure has now reached over five million.
Microgeneration technologies can have a substantial impact on household and small businesses reducing their reliance on external energy sources. For example, research due to be published by the fuel poverty group National Energy Action (NEA) found that in fuel-poor homes not linked to the UK gas grid, air source heat pumps could reduce the cost of electricity by up to 70% and reduce carbon emissions by as much as 75% when displacing electric storage or solid fuel energy sources. A solar hot water system may provide between 50 and 70% of a household’s hot water requirements, even in the UK!
This does not however tackle the problem of the initial high up-front cost of installing the technology. The Government is committed to introducing a feed-in tariff (FiT) in April 2010 which will make payments to microgenerators who produce their own electricity. A heat equivalent, the renewable heat incentive (RHI) is due to be introduced in April 2011. There is also a proposal under the Government’s new Community Energy Saving Programme (CESP) initiative to deliver whole house energy solutions to seven million homes by 2020. This package can include microgeneration installations alongside more traditional energy efficiency measures such as cavity wall insulation. Both the new incentive schemes and the wider CESP framework should be utilised to remove the up-front cost barrier and allow more people to benefit from microgeneration technologies.
Another major benefit of micropower technologies is that of consumer engagement with climate change and energy consumption. The presence of a micro-wind turbine or a solar panel can help to inform the consumer about the relationship between energy generation and consumption. The novel installations fuel an interest in, and a realisation of, just how much electricity the kettle needs to boil enough water for a pot of tea. This engagement can lead to behavioural change, the switching off of appliances on ‘standby’ or turning down the thermostat. Those working in the field of climate change recognise that one of the biggest issues is public engagement and behavioural change. If micropower can help generate such change then the carbon savings apparent from generation alone may only be a part of the story.
The micropower industry does not only benefit the individual consumer. The ailing UK economy is in need of high growth industries and increased manufacturing. At a time of slowdown in many sectors, the energy efficiency and micropower sectors are growing, providing valuable technical ‘green collar’ jobs. As with President Obama, the Government has expressed its backing for a growth in green jobs. Following the publications of unemployment statistics in September 2008 the Prime Minister stated that: “We also want to create a number of job opportunities, particularly in dealing with the problems of the environment and climate change, in insulation and draft-proofing ...” Furthermore, a report from the now merged Departments for Innovation, Universities and Skills (DUIS) and Business, Enterprise and Regulatory Reform published the UK Manufacturing Strategy which contained the target of ‘at least a million jobs in the green sector by 2030’.
Micropower technologies will also be needed if the Government is to keep to its ambitious zero carbon homes and building objectives. Late last year the Government published its consultation on the definition of zero carbon homes and non-domestic buildings. This document introduced the concept of the carbon compliance level, which is ‘the level of CO2 savings achieved through energy efficiency measures, on-site energy supply and/or connections to low-carbon heat’. The Government has announced that the level will be set at 70% above the current requirements for buildings. Achieving such CO2 savings will be facilitated through the installation of micropower technologies in new homes from 2016 and even if all the equipment is not manufactured in the UK (and some certainly will be) installation and maintenance will secure and generate UK jobs.
Unless more is done now to assist the sector, we may not be around to take advantages of the FiT, RHI, CESP or changes to the building regulations. The last Budget was welcome in that it allocated an additional £75 million to small and community scale generation projects. In addition, £100 million was also allocated to improve insulation for 150,000 homes in the social sector through the Decent Homes programme and a further £100 million to fund new higher energy efficiency social housing, to be delivered by local authorities.
New pots of money, whilst welcome, cannot solve all the problems. Red tape continues to plague parts of the industry. Planning barriers are not only obstructing large scale renewable projects, but small scale renewables as well. Despite the Government stating that they would remove this particular obstacle as far back as 2006, and doing so for most microgeneration technologies in April 2008, thousands of householders are being left frustrated and angry at planning red tape as they attempt to install micro wind and air source heat pump technologies.
The method of evaluating and certifying microgeneration products also needs streamlining. The current system places an undue burden of testing and inspection on new technologies, often duplicating requirements already needed under EU and UK law. This additional burden adds to the cost of bringing these products to market, and subsequently raises costs for consumers. This situation is often made worse by the extremely conservative carbon reduction scores allocated to microgeneration technologies which often place them at an unfair disadvantage when competing against more traditional heating and power technologies.
If planning barriers, product certification issues and issues associated with the ease of access to support through the FiT, RHI and/or CESP schemes there would still remain a major obstacle to a mass market microgeneration industry in the UK. That obstacle is the workforce needed to deliver the installations. Thousands of installers will be needed to meet our aspirations and, unless we put in the right training and qualification framework in place, the UK will miss out on a tremendous opportunity to create thousands of local green jobs and businesses. The Chancellor of the Exchequer earmarked £1.7 billion in his Budget to prevent long term unemployment. That is a positive start; this money must not be squandered on industries with a limited future, or schemes which do not provide the workforce we need. A structured career path as an energy efficiency and microgeneration installer can provide the framework of creating long lasting job opportunities to communities across the country.
There is still much work to be done but the Micropower Council and the whole sector remain quietly confident. Last year a study by Element Energy, the largest piece of independent consumer research ever conducted into the market potential of microgeneration, concluded that as many as nine million microgeneration installations could be in place in the next twelve years if an ambitious policy support framework were in place. Along with the Government, we can envisage a genuine mass market industry, providing tangible carbon savings and renewable energy, as well as diversifying UK energy supplies, alleviating fuel poverty and creating thousands of local jobs. The challenge is to ensure that the UK has a microgeneration sector still left to prosper.
For further information, contact the Micropower Council on Tel: 01564 732790, E-mail: info@micropower.co.uk or visit: http://www.micropower.co.uk/
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Author: Dr Tim Rotheray, Policy Officer, Micropower Council
