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Diesel Generation Subsidies Receiving Almost £500m of UK Taxpayer’s Climate Funding

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Diesel Pump by Indi Samarajiva via flickr

InfluenceMap have released new research indicating the creation of highly-polluting, diesel-fueled generating companies, of which twelves could receive up to £500m in capacity market payments created for the decarbonisation of Britain’s power generation.

New research by InfluenceMap points to the emergence of small-scale, highly polluting, diesel-powered generating companies, the twelve largest of which could stand to receive close to £500m in capacity market payments designed to decarbonise Britain’s power generation.

Alan Whitehead, UK Member of Parliament, Shadow Minister for Energy and Climate Change, Labour Party:

“This first-rate report clinically demonstrates just why the emergence of diesel powered gensets as a significant component of power supply procured through the capacity market mechanism is such a worrying development. Not only have diesel sets cleaned up on almost £200 million in underwriting per auction so far, and threaten to add more in forthcoming auctions, but the existence of the tax breaks and allowances that investors were able to deploy depressed bid prices to their advantage. The limited and tardy response of the department to this massive unintended consequence of the bidding system is also laid out for examination. Consulting on possible emission level changes for 2019 is clearly insufficient. We surely now ought to be urgently looking at ways to remove these diesel sets from auctions now, and if possible claw back some of the money that has already gone out of the window in their direction.”

The study outlines the evolution of the capacity market mechanism in the last few years and how narrow vested interests have distorted it to their advantage. It concentrates on twelve special purpose diesel start-ups that will receive on average of £40m each over the next few years in capacity payments designed to ensure security of electricity and support the UK’s transition to renewable energy. Many of the same companies also benefit from investment tax relief status, thus lowering cost of capital and resulting in a “double subsidy” for a sector that is already distorting the proper functioning of the energy market.

Caroline Lucas, UK Member of Parliament, Green Party:

“At a time when we need to rapidly phase out fossil fuels – to both clean up our air and avoid the worst of the climate crisis – it is simply extraordinary that the government is supporting this highly polluting form of electricity generation. The fossil fuel industry receives £6bn a year in subsidies from this government whilst support for clean energy has been slashed over recent years. This report raises serious questions about who is benefiting from these hand outs – it’s certainly not the taxpayer, including the many thousands of people struggling to keep their homes warm this winter.”

The Department of Energy & Climate Change (now BEIS), despite recommendations from leading power companies and a host of independent energy experts[2], has not closed a loophole that effectively allows a highly polluting power sector to flourish at taxpayer’s expense and against the top line policies of the government on climate and energy. The study reveals a complex web of companies, front companies and beneficiaries behind the diesel companies, some of which ultimately lead to offshore entities registered in tax havens.

Ken Huestebeck, Lawyer, EU Energy and Coal, ClientEarth Brussels:
“With the tax incentives these venture capital schemes might create an additional, indirect advantage for the capacity providers, which could contravene EU state aid rules. Therefore, increased transparency as created and demanded by InfluenceMap’s paper is indeed called for.”

Energy

Are the UK Governments Plans for the Energy Sector Smart?

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The revolution in the energy sector marches on, wind turbines and solar panels are harnessing more renewable energy than ever before – so where is it all leading?

The UK government have recently announced plans to modernise the way we produce, store and use electricity. And, if realised, the plans could be just the thing to bring the energy sector in line with 21st century technology and ideologies.

Central to the plans is an initiative that will see smart meters installed in homes and businesses the length and breadth of the country – and their aim? To create an environment where electricity can be managed more efficiently.

The news has prompted some speculation about how energy suppliers will react and many are predicting a price war. This could benefit consumers of electricity and investors, many of whom may be looking to make a profit by trading energy company shares online using platforms such as Oanda – but the potential for good news doesn’t end there.

Introducing New Technology

The plan, titled Smart Systems and Flexibility is being rolled out in the hope that it will have a positive impact in three core areas.

  • To offer consumers greater control by making smart meters available for all homes and businesses by 2020. Energy users will be able to monitor, control and record the amount of energy they use.
  • Incentivise energy suppliers to change the manner in which they buy electricity, to offer more smart tariffs and more off-peak periods for energy consumption.
  • Introduce new standards for electrical appliances – it is hoped that the new wave of appliances will recognise when electricity is at its cheapest and at its most expensive and respond accordingly.

How the Plans Will Affect Solar Energy

Around 7 million houses in the UK have solar panels and the government say that their plan will benefit them as they will be able to store electricity on batteries. The stored energy can then be used by the household and excess energy can be exported to the national grid – in this instance lower tariffs or even payment for the excess energy will bring down annual costs significantly.

The rate of return on energy exported to the national grid is currently between 6% and 10%, but there are many variables to take into account, such as, the cost of battery storage and light levels. Still, those with state-of-the-art solar electricity systems could end up with an annual profit after selling their excess energy.

The Internet of Things

Much of what the plans set out to achieve are linked to the now ubiquitous “internet of things” – where, for example, appliances and heating systems are connected to the internet in order to make them function more smartly.

Companies like Hive have already made great inroads into this type of technology, but the road that the government plans are heading down, will, potentially, go much further -blockchain technology looms and has already proved to be a game changer in the world of currency.

Blockchain Technology

It has already been suggested that the peer to peer selling of energy and exporting it to the national grid may eventually be done using blockchain technology.

“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”

Don and Alex Tapscott, Blockchain Revolution (2016)

The upshot of the government’s plans for the revolution of the energy sector, is that technology will play an indelible role in making it more efficient, more flexible and ultimately more sustainable.

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Energy

4 Case Studies on the Benefits of Solar Energy

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Demand for solar energy is growing at a surprising rate. New figures from SolarPower Europe show that solar energy production has risen 50% since the summer of 2016.

However, many people are still skeptical of the benefits of solar energy.Does it actually make a significant reduction in our carbon footprint? Is it actually cost-effective for the company over the long-run?

A number of case studies have been conducted, which indicate solar energy can be enormously beneficial. Here are some of the most compelling studies on the subject.

1.     Boulder Nissan

When you think of companies that leverage solar power, car dealerships probably aren’t the first ones that come to mind. However, Boulder Nissan is highly committed to promoting green energy. They worked with Independent Power Systems to setup a number of solar cells. Here were the results:

  • Boulder Nissan has reduced coal generated electricity by 65%.
  • They are on track to run on 100% renewable energy within the next 13 years.
  • Boulder Nissan reduced CO2 emissions by 416,000 lbs. within the first year after installing their solar panels.

This is one of the most impressive solar energy case studies a small business has published in recent years. It shows that even small companies in rural communities can make a major difference by adapting solar energy.

2.     Valley Electric Association

In 2015, the Valley Electric Association (VEA) created an 80-acre solar garden. Before retiring from the legislature, U.S. Senate Minority Leader Harry Reid praised the new project as a way to make the state more energy dependent and reduce our carbon footprint.

“This facility will provide its customers with the opportunity to purchase 100 percent of their electricity from clean energy produced in Nevada,” Reid told reporters with the Pahrump Valley Times. “That’s a step forward for the Silver State, but it also proves that utilities can work with customers to provide clean renewable energy that they demand.”

The solar energy that VEA produced was drastically higher than anyone would have predicted. SolarWorld estimates that the solar garden created 32,680,000 kwh every year, which was enough to power nearly 4,000 homes.

This was a major undertaking for a purple state, which may inspire their peers throughout the Midwest to develop solar gardens of their own. It will reduce dependency on the electric grid, which is a problem for many remote states in the central part of the country.

3.     Las Vegas Casinos

A number of Las Vegas casinos have started investing in solar panels over the last couple of years. The Guardian reports that many of these casinos have cut costs considerably. Some of them are even selling the energy back to the grid.

“It’s no accident that we put the array on top of a conference center. This is good business for us,” Cindy Ortega, chief sustainability officer at MGM Resorts told Guardian reporters. “We are looking at leaving the power system, and one of the reasons for that is we can procure more renewable energy on the open market.”

There have been many benefits for casinos using solar energy. They are some of the most energy-intensive institutions in the world, so this has helped them become much more cost-effective. It also helps minimize disruptions to their customers learning online keno strategies in the event of any problems with the electric grid.

4.     Boston College

Boston College has been committed to many green initiatives over the years. A group of researchers experimented with solar cells on different parts of the campus to see where they could produce the most electricity. They discovered that the best locationwas at St. Clement’sHall. The solar cells there dramatically. It would also reduce CO2 emissions by 521,702 lbs. a year and be enough to save 10,869 trees.

Boston College is exploring new ways to expand their usage of solar cells. They may be able to invest in more effective solar panels that can generate far more solar energy.

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