The past year has been the most challenging the renewables industry have faced. At the REA we have grown with the industry. Set up in 2001, we have seen the evolution of ‘alternative energy’ through to the mainstream. From a cottage industry spoken about in fantastical terms to standing on the precipice of delivering energy cheaper than fossil fuels. The economic direction is clear, last year saw the tipping point of renewables attracting more investment than traditional fuels worldwide.
The renewables industry should be a point of national pride, an area of real success, showcasing British ingenuity and innovation. We made ground-breaking strides forward in wind turbines during the eighties yet gave it away, for the past decade we have had the intellectual jump on the rest of the world in terms of marine energy and are in real danger of doing the same thing.
Solar is another area we have innovated. The drastic cost reductions seen in solar are only in small part due to cheaper panels, with EU tariff protection capping the cost of cheaper global prices. The British solar industry has driven down costs in the same way the British cycling team has revolutionised their sport, through the “aggregation of marginal gains”, a thousand minute improvements that are the difference between winning and losing. At a time when nuclear is going up in cost, coupled with doubts over deliverability, solar costs are still dropping and can be deployed quickly, cleanly and sustainably.
The cost of new renewables may now in fact be cheaper than those for new fossil fuel generation. I say in fact because there is no way of knowing. No new gas station has been commissioned in last 4 years, and the last plant to open in 2012 started construction in 2008.
The nearest viable new gas generation we have is Trafford, who quote they need £72MWhr to complete. The current wholesale price is around £35MWhr, leaving a £37 gap that needs to be plugged if the UK is going to get our new capacity from fossils. For reference, the last round of renewable contracts, solar and wind both came in at around £79. However, that was in February 2015 so the costs will have certainly have reduced further.
But in a twist of events, 2016 will see new gas subsidised, the Hinkley deal guaranteed at £92.50MWhr and even more bizarrely, diesel is receiving subsidy. Yet arguably the cheapest of all new generation options, wind and solar, will be blocked from having access to any market. So, government policy now subsidises diesel, but blocks the cleaner more cost effective choice.
How did we get here? It is undoubtedly exacerbated by low gas prices, making new capacity unattractive for energy companies, in addition to subsidies costing more due to the drop in the wholesale price. But whilst the low wholesale price is out of the government’s hands, the assault on renewables is not.
The industry has to move on from the last year and look to the new government agenda. The overall direction of renewables is clear and is an unstoppable global movement. Whilst we may have to spend a couple of envious years looking towards our partners in other countries longingly, wishing for their apparent ease, we need to get back to doing what we have already shown we are capable of, namely of innovation and finding UK solutions to UK problems.
Whilst the era of subsidies is coming to a early and abrupt end, renewables and new technologies can still find a use in some of the biggest policy problems we face in one of the oldest and most complex energy markets in the world.
Some of these problems are merely of an aging infrastructure. Last September, the then Chief Executive of the National Grid, Steve Holliday, summed up the shift in thinking that is going to have to happen.
“The idea of baseload power is already outdated. I think you should look at this the other way around. From a consumer’s point of view, baseload is what I am producing myself. The solar on my rooftop, my heat pump – that’s the baseload. Those are the electrons that are free at the margin. The point is: this is an industry that was based on meeting demand. An extraordinary amount of capital was tied up for an unusual set of circumstances: to ensure supply at any moment. This is now turned on its head. The future will be much more driven by availability of supply: by demand side response and management which will enable the market to balance price of supply and of demand. It’s how we balance these things that will determine the future shape of our business.”
This is a business case for renewables that doesn’t rely on targets or subsides, but of economic and consumer terms. There is a very real problem with the old way of thinking that is no longer suited to modern realities, and renewables offer part of that practical solution in a more decentralised grid.
The second is the financial environment we inherit. The old model of ‘big pieces of kit’ is increasingly unrealistic. In a nationalised system it would still perhaps be practicable to fund power generation in the billions for a single project, but as demonstrated with Hinkley Point C, it is proving hugely difficult to raise capital and underwrite the risk and is certainly added to the overall cost. Gas plant is also proving difficult, with policy uncertainty playing its part and the low wholesale price too. But large energy companies are also sitting on reduced reserves with little incentive to risk hundreds of millions in a new asset.
Smaller, easier to fund projects are looking much more attractive and can have much lower financing costs.
Thirdly, the inherent problem of renewables variability is soon to be turned into a positive when coupled with energy storage. With energy storage, the instant dispatchability is in stark contrast to the unresponsive and inflexible nature of baseload. For many, energy storage is a green pipedream still decades away. This is now demonstrably wrong, with companies around the world already operating energy storage plants. Even better, they’re operating energy storage projects without subsidy. California is undoubtedly leading the way but the UK is looking to catch up quickly. Kilroot in Northern Ireland is a 10MW plant recently opened, with plans to extend to 100MW. National Grid announced their tender for 200MW of enhanced frequency response capacity its resulted in 68 project submissions totalling 1.3 GW. Energy storage is already viable, and we are going to see a lot more of it.
The energy sector is going to have a revolution in the coming years. Smart businesses and markets have already woken up to that fact, now is the time for the UK government, and some in the energy market clinging to the old broken models, to do the same.
By James Court, Head of Policy & External Affairs, REA
This article first appeared in the Guide to Clean Energy
Is Wood Burning Sustainable For Your Home?
Wood is a classic heat source, whether we think about people gathered around a campfire or wood stoves in old cabins, but is it a sustainable source of heat in modern society? The answer is an ambivalent one. In certain settings, wood heat is an ideal solution, but for the majority of homes, it isn’t especially suitable. So what’s the tipping point?
Wood heat is ideal for small homes on large properties, for individuals who can gather their own wood, and who have modern wood burning ovens. A green approach to wood heat is one of biofuel on the smallest of scales.
Is Biofuel Green?
One of the reasons that wood heat is a source of so much divide in the eco-friendly community is that it’s a renewable resource and renewable has become synonymous with green. What wood heat isn’t, though, is clean or healthy. It lets off a significant amount of carbon and particulates, and trees certainly don’t grow as quickly as it’s consumed for heat.
Of course, wood is a much less harmful source of heat than coal, but for scientists interested in developing green energy sources, it makes more sense to focus on solar and wind power. Why, then, would they invest in improved wood burning technology?
Solar and wind technology are good large-scale energy solutions, but when it comes to small-space heating, wood has its own advantages. First, wood heat is in keeping with the DIY spirit of homesteaders and tiny house enthusiasts. These individuals are more likely to be driven to gather their own wood and live in small spaces that can be effectively heated as such.
Wood heat is also very effective on an individual scale because it requires very little infrastructure. Modern wood stoves made of steel rather than cast iron are built to EPA specifications, and the only additional necessary tools include a quality axe, somewhere to store the wood, and an appropriate covering to keep it dry. And all the wood can come from your own land.
Wood heat is also ideal for people living off the grid or in cold areas prone to frequent power outages, as it’s constantly reliable. Even if the power goes out, you know that you’ll be able to turn up the heat. That’s important if you live somewhere like Maine where the winters can get exceedingly cold. People have even successfully heated a 40’x34’ home with a single stove.
Benefits Of Biomass
The ultimate question regarding wood heat is whether any energy source that’s dangerous on the large scale is acceptable on a smaller one. For now, the best answer is that with a growing population and limited progress towards “pure” green energy, wood should remain a viable option, specifically because it’s used on a limited scale. Biomass heat is even included in the UK’s Renewable Heat Initiative and minor modifications can make it even more sustainable.
Wood stoves, when embraced in conjunction with pellet stoves, geothermal heating, and masonry heaters, all more efficient forms of sustainable heat, should be part of a modern energy strategy. Ultimately, we’re headed in the direction of diversified energy – all of it cleaner – and wood has a place in the big picture, serving small homes and off-the-grid structures, while solar, wind, and other large-scale initiatives fuel our cities.
7 Benefits You Should Consider Giving Your Energy Employees
As an energy startup, you’re always looking to offer the most competitive packages to entice top-tier talent. This can be tough, especially when trying to put something together that’s both affordable but also has perks that employees are after.
After all, this is an incredibly competitive field and one that’s constantly doing what it can to stay ahead. However, that’s why I’m bringing you a few helpful benefits that could be what bolsters you ahead of your competition. Check them out below:
One benefit commonly overlooked by companies is offering your employees financial advising services, which could help them tremendously in planning for their long-term goals with your firm. This includes anything from budgeting and savings plans to recommendations for credit repair services and investments. Try to take a look at if your energy company could bring on an extra person or two specifically for this role, as it will pay off tremendously regarding retention and employee happiness.
While often included in a lot of health benefits packages, offering your employees life insurance could be an excellent addition to your current perks. Although seldom used, life insurance is a small sign that shows you care about the life of their family beyond just office hours. Additionally, at such a low cost, this is a pretty simple aspect to add to your packages. Try contacting some brokers or insurance agents to see if you can find a policy that’s right for your firm.
Dedicated Time To Enjoy Their Hobbies
Although something seen more often in startups in Silicon Valley, having dedicated office time for employees to enjoy their passions is something that has shown great results. Whether it be learning the piano or taking on building a video game, having your team spend some time on the things they truly enjoy can translate to increased productivity. Why? Because giving them the ability to better themselves, they’ll in turn bring that to their work as well.
The Ability To Work Remotely
It’s no secret that a lot of employers despise the idea of letting their employees work remotely. However, it’s actually proven to hold some amazing benefits. According to Global Workplace Analytics, 95% of employers that allow their employees to telework reported an increased rate of retention, saving on both turnover and sick days. Depending on the needs of each individual role, this can be a strategy to implement either whenever your team wants or on assigned days. Either way, this is one perk almost everyone will love.
Even though it’s mandated for companies with over 50 employees, offering health insurance regardless is arguably a benefit well received across the board. In fact, as noted in research compiled by KFF, 28.6% of employers with less than 50 people still offered health care. Why is that the case? Because it shows you care about their well-being, and know that a healthy employee is one that doesn’t have to worry about astronomical medical bills.
Unlimited Time Off
This is a perk that almost no employer offers but should be regarded as something to consider. According to The Washington Post, only 1-2% of companies offer unlimited vacation, which it’s easy to see why. A true “unlimited vacation” program could be a firm’s worse nightmare, with employees skipping out every other week to enjoy themselves. However, with the right model in place that rewards hard work with days off, your employees will absolutely adore this policy.
A Full Pantry
Finally, having a pantry full of food can be one perk that’s not only relatively inexpensive but also adds to the value of the workplace. As noted by USA Today, when surveying employees who had snacks versus those who didn’t, 67% of those who did reported they were “very happy” with their work life. You’d be surprised at how much of a difference this could make, especially when considering the price point. Consider adding a kitchen to your office if you haven’t already, and always keep the snacks and drinks everyone wants fully stocked. Doing so will increase morale tremendously.
Compiling a great package for your energy company is going to take some time in looking at what you can afford versus what’s the most you can offer. While it might mean cutting back in other areas, having a workforce that feels like you genuinely want to take care of them can take you far. And with so many different benefits to include in your energy company’s package, which one is your favorite? Comment with your answers below!