From yesterday’s Observer:

In fact, Sellafield is a classic illustration of the failure of British industry. We were pioneers of nuclear power but in our desire to build our own atomic weapons, failed abysmally when it came to developing and managing our own civil reactors and reprocessing plants.

As a result, we have been left with a multibillion-pound clean-up bill and the prospect of buying either American or French reactors for our next generation nuclear plants. The lesson of Sellafield is not so much that nuclear power is dangerous but that Britain seems incapable of implementing any long-term engineering plan that comes its way, from high-speed trains to wind turbines or rocket launchers.

After years of being shoehorned into BERR and Defra, the BBC is reporting that energy and climate issues are to be tackled by a new ministry led by Ed Miliband. Very sensible move and I’ll be keen to see how effective it will be in tying together the different policy threads.

The Energy White Paper was released today and there must be a lot of interest in it; it took about six hours to actually get a decent connection to the DTI’s website and download a copy. I haven’t had a chance to go through it all yet but a couple things have jumped out from skimming the executive summary and news coverage.

1. The big story over at the BBC is nuclear power. The white paper reiterates that nuclear could play a major role in reducing carbon emissions and improving energy security; indeed a consultation document on new nuclear stations was released at the same time. It should make for interesting reading: what will the government do if the private sector decides it’s not economic?
2. Energy policy is about more than electricity supply though and it’s good to see that the white paper starts with demand reduction.
   

   “The starting point for our energy policy is to save energy. It is often the cheapest way of reducing carbon emissions, certainly in the short-term. It can also contribute to security of supply, for example by reducing our need for energy imports, and reduce fuel poverty through lower bills.”

   I’ll have to check but this may be the first time that the importance of the demand side has been stated so clearly.

3. As an example of this interest in demand reduction, the white paper has confirmed the earlier rumours about home energy monitors. All new electricity meters starting next spring will have displays showing consumption (e.g. kWh) and cost. Apparently not everyone’s happy with this move but it’s certainly a step in the right direction.

As with anything, the devil will be in the details and it’s worth remembering that the 2003 white paper made many of the right noises too. In fact, a cynic might say that the whole purpose of the new white paper was to lay the groundwork for new nuclear power stations. But the nuclear issue shouldn’t overshadow the wider themes of the white paper, that a renewed effort in all sectors – industrial, transport, domestic, and so on – is needed to deliver a sustainable energy policy for the UK.

Earlier this week, Ofgem released a decision document on the regulatory implications of microgeneration. Although the report does address some of the specific questions raised by last April’s original consultation, it has a much wider scope. By considering parallel issues such as supply licence proposals and metering innovation, the report is really a big picture assessment of the regulatory situation facing UK microgeneration.

The report concludes that, while many regulatory barriers to microgeneration have been removed, some obstacles still remain. For example, many grid-connection and metering issues have been clarified, thus facilitating the basic installation and operation of a microgeneration system. However initiatives to encourage the more complete integration of microgeneration into the elecitricty system, such as the use of agents to make the collection of ROCs easier, still need work and further consultations are planned. A few radical changes are proposed as well, including the removal of the 28-day rule* and the requirement to inspect meters every two years. It is hoped that these changes will encourage electricity suppliers and network operators to implement innovative new services for microgeneration consumers.

In light of this report, it’s useful to step back from the regulatory minutiae and think about how microgeneration has advanced overall in recent years. On the policy front, things are looking quite good. When I began my doctorate in 2003, microgeneration barely featured on the policy agenda. However as evidenced by Ofgem’s work, government grants, increased research and media attention, microgeneration is now a major part of UK energy policy debates (especially in the domestic sector). With approximately 82,000 microgeneration installations in the UK, microgeneration is becoming more common on the ground too. However if the UK is to achieve its climate change goals, research suggests that on average two microgenerating devices will need be present in every home by 2050. Clearly then, much still has to be done to move microgeneration from rhetoric to reality.

In the next entry, I’m going to talk about an issue that intersects both the regulatory changes discussed here and the larger picture for growth in microgeneration: how to ensure that households receive a fair payment for the output of their microgeneration system.

*To quote from an earlier Ofgem note to editors:

“The ‘28 Day Rule’ requires all energy supply contracts to be terminable on 28 days’ notice. Some suppliers have argued that relaxing this rule and proving consumers with the option of having longer term contracts could enable energy suppliers to provide more energy efficiency services to domestic consumers, and the trial will test this, and whether customers can be adequately protected without the right to switch supplier.”

Ken Livingstone yesterday set out plans to double the on-site renewables requirement for new London developments from 10 to 20%. The plans are still at the consultation stage so things may yet change but it’s certainly a promising sign.

For some reason, 20% seems like much more than double 10%. I think this is because you initially think: “Right – 10% on-site renewables. That’s a turbine on the roof” and therefore 20% must mean two turbines. Of course, this isn’t the case at all. One microgeneration installation can easily meet this requirement: for example, an average PV installation will provide about 30% of a household’s annual energy needs. What’s more, the primary goal of these policies is arguably to build efficient buildings which, p.s., then have a percent of their (now much smaller) energy needs met by microgen. In other words, the benefit to microgeneration from this policy is unlikely to be as great as some might hope.

There’s another interesting thing with this bit of news though, as shown by the following quote:

“No public money would be invested in new housing developments in the capital that are not designed to be carbon neutral over their lifespan.”

How sensible. If governments want to demonstrate their commitment to fighting climate change, acting through their procurement policies is a great way to do it. Comparing this statement with the abysmal performance of central government in its own estate, it once again seems that local government is the place for tangible microgeneration and energy-efficiency policy. Of course, it is just a statement. Who knows how things will work out in practice.

I’ve been revising for my viva and was flipping through the DTI microgeneration strategy when I noticed a little mismatch, re: Ofgem’s demand reduction pilot (PDF). The original strategy says:

DTI will be investigating the possibility of a field trial that brings together smart meters and microgeneration to the effectiveness of smart meters combined with microgeneration technologies.

It’s a bit confusing but I would interpreted that as saying “We’re going to have a pilot looking at smart meters and microgeneration technologies working together”. To which, I’d say – great! Fantastic idea.

But when I looked at the Ofgem tender call a little more closely the word microgeneration doesn’t even appear. It’s very clearly about domestic demand reduction but the role of microgenerating households is unclear. This doesn’t mean that such a programme won’t eventually happen but it makes me wonder if, from a regulatory point of view, Ofgem is taking a strictly additive approach. That is, if they treat the benefits of microgeneration and smart metering/display monitors completely separately, they could look at a microgenerating household and a) determine that the household should get x renewable obligation certificates from their microgen and b) use the smart metering pilot to say, “Oh you’ve got a consumption monitor as well – your electricity supplier can now claim some energy-efficiency commitment credit and reimburse you accordingly”.

It’s still early days and perhaps one of the tender bids will propose to investigate the demand reduction potential of microgeneration households specifically. But I think there’s a small risk that by considering demand reduction and microgeneration separately, any benefits from the interaction of the two will be lost. In other words, the 6% electricity saving that I saw in the PV households I studied (primarily arising from the use of a microgeneration generation-performance monitor) would fall between the regulatory cracks. Have to wait and see I guess!

It’s all kicking off. The government’s energy review is due to be published later today and then the country’s worst kept secret will be official. Nuclear power will continue to play a significant part in the UK’s electricity supply.

One can argue whether or not nuclear power is inherently a bad thing. Despite the downsides (waste management, decommissioning costs, terrorism, unproven new reactor designs, uncertain sources of uranium…), these facilities do provide carbon-free electricity. But the politics behind the decision is the most interesting question. On the surface, there are suspicions about the personal connections between Labour and the nuclear industry. Dig deeper though and the real issue is what is the government willing to do to ensure that nuclear gets built?

Ever since the review began, the government has stressed that nuclear must pay for itself. As the energy minister Malcolm Wicks noted this morning on BBC FiveLive, the government’s role is merely to provide the framework within which the market will deliver. Since there’s nothing currently stopping the private sector from building more nukes (except terrible economics), the review is arguably designed to realign this ‘framework’ in such a way that nuclear investment is more attractive. Rumour has it that the review will do this with two measures:

• By providing more confidence in the planning system, i.e. removing delays in planning from local councils who claim that nuclear facilities are ‘not necessary’; and
• By ensuring that the price of carbon rises, by tightening up the EU emissions trading scheme

I strongly doubt that those measures will be a) achievable or b) effective. Sure the planning thing can be forced through Parliament and the unhappy councils will probably just have to deal with it. But placing tougher caps on the EU trading scheme will be tough, since it has to be negotiated with 25 countries, some of whom (like Germany) aren’t keen on setting tougher targets.

So if these measures (and whatever else the energy review comes up with) fail to make nuclear attractive to the private sector, the real question is what will the government do? Having invested a lot of political capital in saying that it’s a necessary part of the energy solution, there will be a lot of egg on Blair’s face if the private sector walks away from nuclear. And I won’t be one bit surprised if the government then turns around and offers guaranteed electricity prices, insurance premiums, and underwrites waste and decommissioning liabilities – in other words, subsidies. Subsidies which weren’t discussed in the energy review. Subsidies which weren’t analysed against other investment opportunies (energy efficiency, microgeneration, etc.).

Perhaps I’m being a bit cynical but stranger things have happened.

Tony Blair is giving a big speech tonight to representatives of British industry and is taking the opportunity to less-than-subtly hint that nuclear power is back on the agenda. The reaction from green groups has been predictably critical and it’s certainly easy to be cynical about whether or not the Energy Review was a done-deal from day one.

The Number 10 website has a few key slides (PDF) to back up the speech and quite rightly they should scare a prime minister into action. There is going to be a large supply side gap once aging nuclear plants close and increased dependence on foreign gas supplies isn’t a great idea either. But this gap could much smaller, if not zero, if more effort was placed on the demand side. Instead the graphs show a ‘if we build it, they will come’ type logic, suggesting that demand will be x and policy must build appropriate supply.

Indeed, only after nuclear and renewables does Blair’s speech mention even energy efficiency – this is completely backwards. Demand side should come first. For example, projects like the 40% House show that the energy and carbon gaps can be all but closed through the use of existing energy-efficiency and microgeneration technologies. Whether or not government still decides to replace existing nuclear power stations is a valid question (which will probably get completely lost in the upcoming media furore), but it should only be considered after a serious effort to reduce demand. After all, “waste not, want not”.

Edit: A great interview at the Guardian with an ex-minister about the importance of demand side management and some great insight into the government’s poor grip on the economics of nuclear:

“The reality is that economically the risks are great and the returns are low. No private-sector company is going to take on the long-term risks, the costs of decommissioning, the storage, reprocessing and the responsibility for the waste.”

Looks like I’m not the only one who thinks the microgen strategy is a bit wishy-washy.

And nuclear clean-up will cost more than expected. Quel grande surprise.

There’s an interesting article in the Guardian this morning about the budget sounding better than it actually is for microgeneration and sustainable energy. The general impression is that the amounts being put forward are not enough: Jeremy Leggett from Solar Century suggests it needs to be “billions, not millions”. While this may be hyperbole, the government certainly could be doing more on climate change and this discrepancy makes the PM’s recent claims that he wants a “technological revolution” to help solve the problem sound a bit disingenuous.

If technology is the way forward, there are arguably two options. First you can do like Germany, US, and Japan have done for their PV industries and provide support to encourage the market to adopt a current technology. Market demand can encourage innovation but more importantly, this approach gives the benefit of practical experience in installing and operating these technologies (e.g. getting the regulatory framework right and so on). The second route seems to be what the UK is following, by providing £1bn for a new energy R&D institute (which some argue may be largely for the benefit of nuclear).

Which approach will yield better results? I think that the market approach is the best way forward, allowing technologies to develop and evolve alongside the needs of consumers. In contrast, designing a revolutionary technology in a lab and trying to plop it into society is very difficult. Researchers like Elizabeth Shove have noted that although “deeply flawed”, policy makers often hold the belief that technologies can simply be created and then transferred to an adoring public.¹ The UK approach of combining R&D with small market incentives might work, but I think it will take much longer for any results to be seen.

¹ Shove, E. (1998) “Gaps, barriers and conceptual chasms: theories of technology transfer and energy in buildings” Energy Policy 26(15): 1105-1112.