Government Policy

November 18th, 2011

Cuts, cuts, cuts! How to Halt a UK Solar Boom

London -

Back in April 2010, the UK government introduced the feed-in tariff (FIT); a new scheme to incentivise uptake of distributed renewables throughout the country. A set tariff (different for each technology and size) is given to the generator. For example the smallest scale solar pv tariffs were set just above 40 pence per kilowatt. These are planned to gradually decrease over time, in line with a falling cost of technologies. Recent announcements indicate the cost of solar in the UK has fallen by 30% since 2010, in line with a global fall of 70% since 2008.

On an average home installation of 2.5 kW, this translates to around £1,000 untaxed, index linked income guaranteed for 25 years to the home owner. Installations of this type typically cost £10,000, so one would expect the average installations of this type to provide 15 years of income. An interesting proposition, no?

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June 27th, 2011

Unpacking Fuel Poverty

London -

There are around 3,750,000 households in England alone that are classed as ‘fuel poor’ – spending 10% or more of their total income on energy. It is estimated that 50% of the most severe cases of fuel poverty are located in rural area with 1 in 4 rural households struggling to keep their homes warm. Volatile oil and gas prices, and a commitment to reduce CO2 emissions by 2050 is leading to rising energy costs; which are forecast to increase by 60% by 2016. The Feed-in Tariff (FiT) and imminent Renewable Heat Incentive (RHI) policies are anticipated to transform the domestic energy market by enabling a greater number of households the possibility to generate their own heat and power. These also present an opportunity for those in fuel poverty to improve the standards of their homes whilst reducing vulnerability to wider market forces.

The FiT is limited in its ability to tackle fuel poverty, with its key attribute enabling reduced energy prices. On the other hand the RHI tackles household income, building stock upgrades and managing energy prices, and is therefore the more effective of the two policies in improving fuel poverty. Primarily, this is due to it (RHI) addressing heat and rather than electricity. More pressing an issue in low income households is an ability to remain warm, rather than being able to ‘keep the lights on’. In many fuel poor households this is an essential consideration, especially where the more vulnerable, children, elderly and sick are concerned.

The move to incentivise micro-generation via the FiT and RHI is a step in the right direction for tackling not only climate change and energy security, but the ability for individual households to move out of fuel poverty. However, as with many schemes, it is cost that places the most vulnerable at a disadvantage. In the long term the UK’s existing system requires many infrastructures (and other) changes but in the short term, greater assistance is required for those in fuel poverty. With wider circles of advice, government must develop a cohesive and cross-party strategy that sets a path for reducing the number households in fuel poverty.

As part of this strategy there may be an opportunity to create more pronounced links between the FiT, RHI and the Green Deal (GD), which aims to improve fuel efficiency in households and small businesses. Coordination between these policies to develop a clear and decisive strategy could be the key to making real inroads into fuel poverty over coming years. Issues to address are high upfront costs, long payback times, the ‘hassle factor’, and general lack of awareness.

The FiT was intended to provide certainty to the micogen electricity market, however commercial certainty is in danger of being undermined by political uncertainty with the recently announced early review. The RHI will add value to the microgen market by enabling more points to be addressed, over and above energy pricing. Changes to the GD to wrap up energy efficiency through making it more accessible are also a vital factor in dealing with fuel poverty. However, a coordinated strategy between these policies is surely to involve the Green Investment Bank as a way to show support for, and lead to greater uptake of microgen technologies (both heat and electricity) and energy efficiency solutions. Fuel poverty is a multifaceted issue which requires a combined and coordinated solution.

See the National Right to Fuel Campaign for more information.

April 6th, 2011

Geeks and Geysers: How to Maneuver Around UK Clean Energy Policy

London -

Earlier this month I attended some industry events including the first Cleantech Cluster event outside London (in Bristol); the Economist Sustainable Business Summit; the Future of Utilities conference and a Lord Stern lecture among others. I’d like to give you a brief snapshot of some of the big picture discussions as well as how future UK cleantech prospects were presented at these events.

From Policy and Financing to Engagement and Collaboration

Many of the event speeches  were directed towards recent and imminent policy developments such as the Renewable Heat Incentive, Green Deal, Green Investment Bank, Electricity Market Reform, as well as outspoken, though in my opinion over stated, ‘failure’ of the Feed-in Tariff. Almost all debates made reference to how these policy developments are influencing the financing of innovations and organisational strategy. This really elucidated the fundamental current state of the cleantech industry’s reliance on politics and ensuing effect on the fragility of financing. As politicians are in office for bouts of up to 5 years whereas a typical investment lasts for 5, 10, 15, 20+ years, stakeholders are becoming increasingly frustrated with continual moving goal posts. To the extent that one investor stated to a room full of expectant entrepreneurs ‘early stage [cleantech] funding in the UK is in tatters due to a disincentivised VC community’. I think he most likely ruined their evenings but this is an understandable yet worrying sign.

There was also a surprising amount of discussion on consumer engagement and collaborations / partnerships. Something I was not expecting but theses issues are vital for transferring knowledge, within the industry but more importantly to those external to it, i.e. the public. Of the people I met at these events Siemens (the world’s largest clean tech investors) were championing their role in engaging with the industry very effectively and were also working on many successful partnerships, providing a model others should follow.

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March 24th, 2011

Towards a Greener Britain: Is There a Winning Technology?

London -

A few weeks ago, I attended an Economist debate between a diverse spectrum of speakers including, Shell, Academics, and Greenpeace to name a few. Despite their differences there as one point that gathered a consensus. There is not going to be one winning technology, but instead a mosaic of technologies.

The general theme was that green technology divides into roughly two aspects, energy and transport. Arguments were made for and against all the usual suspects within these categories, and rather than try and make the case for and against the many different combinations of technologies – I am going to pick out a few questions that were answered and other points of interest.

Q. What contribution is wind energy going to make in the U.K.?

A. Although the wind sector has been widely heralded, the general consensus was that growth after 2030 might not keep pace. It was also advocated that wind must be pursued fully, changing strict U.K. planning laws to allow onshore to be developed faster.

How to encourage the right technologies – It was suggested that the best way is to let the market decide the clean technologies. It was also proposed that the fair market enabling carbon price won’t be seen until 2030, but it will be too late by this point. If the market theory that government cannot choose the right technologies to be supported then how can we expect the best technologies to appear? It made me think of a book I read 18 months ago Structuring an Energy Technology Revolution a must read for energy policy maker, while based on the US it is applicable and critical for that every country takes note.

Exportation of technologies – An example was made about a U.K. electric van maker that has just gone insolvent, and that government procurement policies should be more supportive to U.K. firms similar to other European countries. Another speaker replied that we should just buy them (the Vans) from Renault. The original speaker made a retort that resonates with me, if a country imports all its green technologies it is missing out on a huge opportunity to develop skills and be able to export technologies around the world.

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March 3rd, 2011

Why should Mass cleantech companies take a vacation to Costa Rica?

BOSTON -

I sat in on a webinar recently where the U.S. Ambassador to Costa Rica spoke at length about the amazing opportunities for US clean-tech companies to exploit. Given how gorgeous Costa Rica is and their ongoing strides to create an eco-tourism economy, why the hell not?! It is the perfect spot for expansion, plus a great employee perk.

Kidding/vacation fun aside, the country is attempting to make itself investment friendly and currently has a lot of backing from the US government. Costa Rica is attempting to double the per-capita income of its citizens and in order to do that, the government needs to create jobs and slash spending.

The country has no fossil fuels of its own, so there has been a large focus on renewables, particularly hydro. The government is looking to add more than 2,000 MGW of energy production over the next ten years. This provides a great opportunity for US companies involved with hydro, geothermal and wind production to tap into a market for which their services are a necessity. Solar is being entertained but is generally considered too expensive. Here to is an opportunity for a US business to experiment with new business models that defray the cost of investment in solar. Similarly, Costa Rica is a good market for those exporting equipment for clean energy projects, involved in construction and installation, and/or engineering services.

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