Markets rule

I was asked last year to write a commentary piece for the Shell-backed ‘visions’ web site, focusing on ‘how to support innovation’ in the sustainable energy field. I decided to take a wide-ranging approach. See what you think - from this slightly edited version:

"Given the urgency of responding to climate change, the move to low carbon energy seems unstoppable, even by the recession, but how do we best proceed to develop and deploy the appropriate technology?
When it comes to deciding on which technologies to support, and how best to support them, there is basically an ideological split in views.
While those from the left of centre see a key role for government direction and often tend to favour renewables over nuclear, right of centre free-market competition enthusiasts are basically after a system in which targets are removed and markets, perhaps suitably modified by carbon or energy taxes, decide on technologies – which to develop and which to deploy.
The trouble is that, as we have seen with the EU Emission Trading System, unless very tight carbon caps can be imposed (which is politically hard across the complete EU, especially in a recession), trading can be very lucrative (and even corrupted), but not many emissions are saved – it doesn’t drive many carbon saving projects and the ones it does drive are the easy, cheap, short term options. Market oriented support mechanisms, like the UK’s Renewables Obligation, similarly just focus on the ‘near market’ options- it doesn’t support the earlier innovative phase of technological development.
Those adhering to a more left of centre view, argue that you need targets and support mechanisms like Feed In Tariffs, to force the pace. And more support for less developed options for the next phase. That does mean you may incur extra costs, but they argue, that is an investment in the future- helping the technologies to mature and fall in price, so that overall costs then fall, at least in the longer term – especially given that then, less use need be made of increasingly expensive fossil and nuclear technology.
Oddly, given that it has been around for some decades, some free market enthusiast seem sanguine about providing support for developing nuclear technology, but sometimes argue that we should wait until renewables have developed more before supporting their wide diffusion. Failing that, free market enthusiasts may say that shale gas means that there is a new, rival, cheaper and plentiful option, which can be made lower carbon with Carbon Capture and Storage (CCS).
Many governments, under pressure to cut emission and maintain security of supply, but also to cut costs, would clearly like that, but they are also aware the CCS may not work effectively or economically on a large scale, and that CCS, and certainly Shale gas extraction may not be socially accepted or environmentally sound .
So they hedge their bets – backing nuclear, renewables and CCS more or less equally, while recognising that each of them may be problematic, nuclear, especially so, after Fukushima. But the same is true for renewable – progress is seen as slow at least in some countries – even if, arguably, that is mainly to do with the way some governments have approached providing support.
The three pronged approach (renewables, nuclear, CCS) may be portrayed as more diverse and robust than having just one or two, spreading risk. Or you could see it as diluting efforts- you may end up developing none of them successfully. And it could be argued that, for example, renewables are not just one option, but several, so that, if you want diversity, they represent a better deal, at various scales and levels of development.
There are of course also some cross cutting technologies, moving away from just electricity production, like CHP/co-gen linked to district heating and possibly heat stores. That can be, and mostly is, fired using fossil fuels, but once established, heating networks can be supplied using biomass as a fuel and possibly also large solar arrays- there are some large solar -fed DH projects already in existence in N Europe, some linked to interseasonal heat stores. It is sometimes argued, usually by those on the centre left, that this more collective approach to heating and power production is better technically and economically than the market driven ‘microgen’ domestic scale technologies.
That division of opinion shapes priorities for research and innovation. Should we be focussing on new cheap micro generation devices that can be sold on the conventional market, or on infrastructure issues like heat transmission and storage?
It’s the same in the wider area of overall energy supply and use, although here the ideological fault lines can get a little tangled. For example, advocates of large scale HVDC supergrid links often argue that they can open up wider markets to more competition, while some microgen enthusiasts trade on the idea that consumers can, to a degree, become independent of wider markets and corporate control (as long as they buy the kit!). However, they may both agree on the need for smart meters, although they may not share the same perspective on who will benefit most, economically, from them – producers or consumers.
I’m not saying that all the big energy innovation and deployment issues of the day can be framed in simple ideological terms. Some are based on more general technical concerns and issues. For example, should we be focussing on electricity, as an easy to transmit but hard to store energy vector, or gas/hydrogen/heat, as easier to store, with the potential for negative carbon if biomass use is combined with CCS. But even here there are some possible political divergencies, although also some overlaps.
The ‘heat and pipe’ lobby stresses ideas like biogas production, the use of solar for hydrogen production, and on the utilisation side, district heating, and conversions and storage of excess electricity from wind generation as heat. The electricity lobby is backed by nuclear enthusiasts and by some renewable energy supporters, who see electricity as supplying heat and battery electric transport power. Interestingly though, much of the new nuclear R&D in the USA is aimed at developing new reactors for process heating for industry and maybe for hydrogen synfuel production, for vehicle use. And perhaps even for CHP/district heating. So we may be seeing radically different technologies being developed for maybe similar end uses.
How does my perhaps rather laboured attempt at an ideological account stand up when you look at specific countries/regions and their programmes? The USA has adopted a market driven approach, avoiding carbon caps and targets, while the EU has adopted the EU Emission Trading System, which is bureaucratically defined, but market driven. In addition, many EU countries have introduced Feed-In Tariffs (FiTs).
The FiTs have clearly worked to boost renewable – putting countries like Germany ahead of all others, initially, in the deployment of wind – at lower cost per kW and per kWh than market let mechanisms, like the UK’s Renewable Obligation (RO) quota/certificate trading system. Basically FiTs provided a more secure investment climate, making it easier and cheaper to finance projects, including innovative projects. So much so, that the UK has now introduced its own small FiT system and is planning to replace the RO entirely – although, in a backward looking move, possibly by a form of competitive Feed In Tariff system, with tenders/auctions. Whether that would work remains to be seen, but it certainly needs a new approach since, so far, using a market led approach, it has only developed its huge renewable resource very limited extent.
Free market advocates nevertheless point to the US, where renewable energy deployment has now begun to accelerate rapidly under what amounts to a free market ‘technology push’ approach – with the US taking the lead in wind power from Germany as a result.
However China has now taken the lead from them, in wind power especially. How do you characterise their approach? They use Feed-In Tariffs but also auctions, and they have state targets and central directives, but also commercial enterprises.
Back in the EU, the recession and concerns about passing high cost on to consumers, has led governments to throttle back on the FiTs, with caps and tariff cuts for PV solar. It has been argued, usually by free market advocates, that PV was perhaps not well suited to FiT support since it started out with high costs. The counter argument is that, if the FiT system had been left to work, costs would have fallen- cutting back was a failure of nerve, or worse, a reflection of a preference for nuclear.
And so the debate continues. Maybe the IPCC was right to say in its recent report on renewables that ‘There is no one-size-fits-all policy for encouraging renewables’. But equally, there do seem to be some ideological fault lines."

This didn’t seem to attract any comments. Maybe most of their contributors/ readers are on the other side of the fault line?
www.commentvisions.com/

Exit from pv?

Although it is confident that Germany can obtain 100% of its electricity from renewables by 2050, the German Advisory Council on the Environment (SRU) has called for a major slow down on solar PV, which it claims is too expensive and could slow the overall programme down. This at a time when Feed In Tariffs (FiTs) for PV are being savaged across the EU- including in Germany.

Germany has been a leader in PV, which has boomed dramatically under the Feed In Tariff system it pioneered. That was copied elsewhere and led to similar booms- initially in Spain, but also in France and Italy. And even finally in the UK. But the boom came at a price- increasing the cost pass-through to electricityconsumers bills. In theory, as PV boomed and the market built, prices should fall, with tariffs being progressively cut via the built in degression mechanism, so the extra cost to consumers should fall. But that process doesn’t seem to have worked well enough or quickly enough. The boom and the module price fall was too fast, leaving the tariffs too high. Given the recession, and sensitivity to consumer prices, governments have panicked and stepped in with extra cuts, or emergency capacity caps.

In the case of Spain, this was arguably done too harshly, resulting in a crash in the PV market. That left lots of PV modules unsold, so their price fell, stimulating faster uptake elsewhere, notably in Germany, until it too slapped on tariff cuts- most recently up to 15%. The UK, a latecomer to the party, has just imposed cuts of up to 72%. So a classic boom and bust scenario played out- further accelerated by the import of cheap Chinese PV modules. The down side reaction was also stimulated by hostility to PV and to FiTs from right wing free-marketeers and their allies in some of the large power utilities. The media dutifully relayed stories about vast extra costs being loaded up on consumers, as if PV and FiTs were the main reason why energy costs were rising, justfying the drastic cuts by the mostly right of centre governments - including the UK. All of this has shaken confidence in PV and the FiTs. It is in this context that we might see why SRU had recommended backing off from PV. Are they right?

SRUs retreat

You might see a strategic withdrawl from PV as being a wise thing in the current political and economic climate, so as to be better able to defend other renewables. But throwing PV out of the mix is an odd idea. Economically it’s almost certain to get very much cheaper, so if the FiT price degression system can be amended to take that on board more effectively, there should be fewer problems. After all the worst is now over- the initial high prices are falling. And SRU’s technical case against PV is not that strong- yes it doesn’t work at night and so you need grid backup/balancing, but PV can make a lot of sense for day time occupancy buildings, for summer air-conditioning and for topping up night time storage heaters during the day. More generally, although load factors are low, we are going to have to get used to balancing variable supplies, as we have more renewables on the grid. SRU may be right that PV will make it harder, but it’s a huge resource well suited to access via roof tops, easy to install and run-with no moving parts to go wrong. It may have been unwise to try to use FiTs to get its initial very high price down rapidly, but that doesn’t means the technology is rubbish. Or that FiTs are no use.

FiTs to go too?

SRU backs FiTs for offshore wind and other renewables, though it’s interesting that they also talk favourably of tendering mechanisms (e.g. for offshore wind farm grid links), and point to the UK Non Fossil Fuel Obligation. That’s very odd. NFFO was very ineffective at building renewable capacity- low bids were put in and accepted, but projects often couldn’t be delivered in practice. Why on earth repeat that? Though of course that’s what the UK government now wants to do- with, instead of a German style fixed price FiT, auctions linked to the proposed ‘Contracts for a Difference’ market-based system.

In part the sub text here is all about supporting nuclear, which is likely to do well under the CfD system, but it’s also being presented as a way to avoid the boom and bust syndrome that is allegedly associated with fixed price FiTs. Thus Tim Yeo, chair of the Energy and Climate Change Select Committee, talks of ‘an automatic mechanism for feed-in tariff strike prices to respond to changes in cost and thus avoid the problems seen recently with the solar PV feed-in tariffs.’

The German government is trying to do something similar with its FiT system, to keep PV on track. SGU says this won’t work, or at least that it won’t be enough, and wants to back off PV dramatically to avoid the problem. That certainly risks playing into the hands of those who are opposed to FiTs, PV and indeed, you could argue, renewable generally. But what’s the alternative? A seriously revised FiT system would also probably slow PV down. In the UK PV is mainly to be supported, not by the CfD, which is seen as being for the larger options (offshore wind, nuclear and CCS), but by the UK’s small FiT, the Clean Energy Cashback system- if that survives. PV may therefore be boxed up.

Wind better?

Standing back from the fray, it does all seem a little odd. The UK FiT cost consumers a massive £1.40 extra on their annual electricity bills, and even though DECC says this could rise to £26 by 2020, that’s still tiny. Their cuts would they say take it down to £3. Does this make sense? Isn’t it worth investing in this new technology? Or are there better uses for £26 per head per annum? Some say it was wrong to try to accelerate PV via the FiT, but that has teased out capital from those who could afford the investment cost. True, they then have been well rewarded by the FiTs, paid for by all the other consumers, and that can be provocative in a recession. Compared to the UK, that’s been less of an issue in Germany, where the uptake of PV has been so much wider across the population.

Even so, the ‘opportunity cost’ issue is still important. Would it be better to spend this money on, say, wind - since it’s cheaper? That begs the question of whether the money would be available- an attraction of PV is that individual consumers can buy it for their homes. Micro turbines apart, that’s not an option for wind. That said, the German FiTs main success has actually been in supporting wind, now at 27GW, compared to 19GW for PV. The German wind boom has been helped by the fact that, as in Denmark, many projects are locally owned, so spreading the benefits. There are also some solar co-ps, but SRU says the focus should now be more on wind. Is that the way to go?

* ‘Pathways towards a 100 % renewable electricity system’, SRU
www.umweltrat.de/SharedDocs/Downloads/EN/02_Special_Reports/2011_10_Special_Report_Pathways_renewables.html

Free market contradictions

The basic tenet of free market capitalism is that trade should be free, unencumbered with state controls and intervention. In reality there is nowhere that complete market freedom actually exists- even the most rapacious capitalists have come to terms with regulation, taxes and so on to reflect wider longer-term social and environmental concerns. But free market enthusiasts do usually draw the line at the state trying to overstep the mark by intervening to support selected technologies via subsidies. That’s almost as bad a state socialism!

You can hear complaints along these lines emerging from the likes of the increasingly oddly named Renewable Energy Foundation in its new Green Mirage report and also from climate contrarian Lord (Nigel) Lawson’s Global Warming Policy Foundation. A bit more surprisingly (although see my previous Blog), a new University of Califonia Berkeley study seems to adopt a similar stance.

The basic argument is that free markets are undermined by subsides and government intervention, leading to less then optimal economic development. But they go further and attack some of the usual economic justifications for intervention - e.g. that countries who get into an area first have a competitive advantages over those who follow. Instead they say, ‘first mover’ advantages are overstated, and it can be better to wait until new technologies are developed by others before buying into them- if they succeed.

This is a form of risk aversion- it says leave the risks of innovation to others. Capitalise instead on less risky market activities e.g. building and controlling markets for exsting products and (especially) services. To some extent this is what the UK has done in recent years. You could see it as a ‘losers’ approach- abandoning involvement with the cutting edge of new developments. That’s sometimes what leftists say we have done- but they tend to link it with claim that the UK has also abandoned industrial production. However it’s more complicated than that. Business school theory argues, with some justification, that the most lucrative parts of the ‘value chain’ are at the front and the back- product innovation /R&D can be cheap but yield huge profits if it works, and there can be huge gains by adding value to products via clever marketing. By contrast production itself is a mugs game, with small profit margins: leave that to others. In the case of the UK we seem to have limited our engagement in R&D and focused most on services and marketing.

For free market enthusiasts that’s presumably fine. It may have come a bit unstuck with the collapse of financial sector confidence, but the remedy is more of the same- not Keynesian reboots of the economy via state programmes and subsidies, green new deals and the like. And so we have REF, GWPF et al sounding off about the horrors of subsidies and specifically saying that we should not privilege renewables, for example, over other low carbon options. Which these days seems to include nuclear, with, for the UK, the technology being bought in from France!

So REF take the ‘One Million Jobs’ report by the Campaign for Climate Change apart- claiming that there will be no significant jobs from subsidised investment in green energy, while GWPF argue that this is partly since it is , and will remain, more expensive than other energy options: ‘there is little evidence that there are large additional economies of scale or learning to be gained, except perhaps for solar thermal equipment. Indeed, US figures suggest that the average cost in real terms of both wind and solar power installations stabilised and/or has been increasing since the middle part of the decade 2000-09. It is unlikely that there is some large reduction in the costs of renewable energy which can be achieved without a major shift in technology’.

So how does this view square with reality?

Solar PV is one new emergent technology - and it’s being progressed rapidly by China, using huge loans from the Chinese Development Bank, which are helping Chinese solar companies push American solar firms out of the market. As Stephen Lacey reported for Grist (part of the Guardian Environment Network) last Sept. ‘In 2010 alone, the bank handed out $30 bn in low-cost loans to the top five manufacturers in the country. This has enabled China's solar producers to grow to GW scale in a very short period of time, turning the country into a leading exporter of solar and pushing down prices dramatically’.

Aggressive, but good to see prices falling - and surely fair under free trade rules. But with some spectacular US company failures (including Solyndra and Evergreen), the US solar industry has been pressing the government for protection against ‘dumping’. An alternative, more progressive, approach would be to compete on technological innovation. GTM Research has noted that ‘It will be difficult for the U.S. to compete with China at its own game - namely, high-volume manufacturing of a commoditized product -given the cost advantages available for Chinese manufacturing. However, the U.S. can and should continue to develop and commercialize innovative technologies that offer lower costs than traditional panels. These new technologies are generally proprietary, require a more skilled labor force, and are difficult to duplicate’.

That could be risky - and may need government support. But that can be justified economically- as well as more generally, in terms of protecting jobs and the planet!

However the University of California Berkeley report is unmoved by ‘common arguments for subsidizing renewable power – green jobs, energy security and driving down fossil energy prices’ . But it does admit that ‘the role of intellectual property spillovers is a strong argument for subsidizing basic science research’, although it still insists that it is ‘less persuasive as an enhancement to the value of installing current renewable energy technologies’.

Oh dear. With negative views like this becoming common in the reaction to Obama’s already watered down intervention polices, it looks like the US could end up trying to rely mainly on shale gas...
.
• REF report: www.amazon.co.uk/Green-Mirage-Low-carbon-Economy-Further/dp/1906837309
• GWPF report :www.thegwpf.org/images/stories/gwpf reports/hughes-green_jobs.pdf
• University of California Berkeley study http://ei.haas.berkeley.edu/pdf/working_papers/WP221.pdf

Centralising power - markets rule

‘For the first four decades of its existence the U.S. nuclear power industry was run by regulated utilities, with most companies owning only one or two reactors. Beginning in the late 1990s electricity markets in many states were deregulated and almost half of the nation's 103 reactors were sold to independent power producers selling power in competitive wholesale markets. Deregulation has been accompanied by substantial market consolidation and today the three largest companies control more than one-third of all U.S. nuclear capacity. We find that deregulation and consolidation are associated with a 10% increase in operating efficiency, achieved primarily by reducing the frequency and duration of reactor outages. At average wholesale prices the value of this increased efficiency is approximately $2.5 bn annually and implies an annual decrease of almost 40 million metric tons of carbon dioxide emissions'. http://ei.haas.berkeley.edu/pdf/working_papers/WP217.pdf

You can read this bit of analysis, from researchers at the University of Berkeley, California, in variety of ways. Free market enthusiasts may see it as confirming the wonders of competition and the horrors of state regulation; liberals (in the US sense) may quail at the spectacle of 'reconsolidation' and the creation of powerful monopolies- able to control prices as they see fit (e.g. not passing on any savings to consumers). UK observers might note that 'liberalisation,' or what we call privatization, initially created a lot of small power supply/ distribution companies, who later got swallowed up into a few foreign owned giants, big enough to run nuclear plants. And, allegedly, to do that more efficiently, as in the USA. However, consumer prices haven't benefited much, indeed they (and profits) seem to march relentless upward, with minimal regulation and a continued enthusiasm for nuclear.

Faced with all this, nostalgic lefties may look back to the days when the whole UK power industry was nationalized and managed in an, allegedly, more coherent and planned way. Lastly, environmentalists may look at the last sentence in the quote above and ask, are these carbon savings real- wouldn't you have got more cash and carbon savings by investing in renewables/ energy efficiency.

So the Berkeley study seems to raise more questions than answers. For example, if degregulation makes the market safe for nuclear, is that a good thing? Has liberalisation led to investment in new more efficient plant and distribution? Does 'concentration' improve the level of service and security of supply? From what has happened in the US in recent years, the answers to all these questions seem to be 'no'. After deregulation, California famously suffered major power blackouts, as a result of the lack on investment in new plant and grid infrastructure- that in turn being partly due to the high cost of running the increasingly uneconomic nuclear plants. Price hikes followed to try to keep the show on the road.

If deregulation and privatisation continue as the major theme world wide, we can expect more problems like this- outages and endless price hikes. Of course attempts will be made to blame this on the enchroachment of renewables- leading to higher costs and grid instability, due to the variable outputs of wind farms and so on. It may well be true that prices will have to rise initially in order the set up a sustainable energy system, and that one option for balancing grids is to have dynamic demand management- i.e. rephasing some loads from peak times. But once the system is fully in place, running cost should be lower, even given the extra costs of grid balancing- indeed peak shaving/ time shifting should cut costs.

All of this would get much easier if we could reduce demand and also avoid nuclear- the latter just pushes prices up and gets in the way of a flexible, interactive grid system. Otherwise we may have to prepare ourselves for more chaos. Interesting then that the International Energy Agency has just published a report on 'Dealing with Temporary Shortfalls in Electricity Supplies', which includes 'problems in electricity market liberalisation' as one possible reason why we might have to resort to 'saving electricity in a hurry'. Others include 'heat or cold waves', no doubt worsened by climate change, and 'safety problems at power stations', as has now been demonstrated so starkly in Japan.

You won’t get any sense of these looming problems if you read the tirades against ‘wasted subsidies’ on renewables emerging from free market enthusiasts like the Renewable Energy Foundation and Lord (Nigel) Lawson’s Global Warming Policy Foundation. They seem to be so concerned about the short term costs of subsidues, and what they see as their negative impacts, that they are willing to forgo what others see, given the inevitable rise in cost of fossil fuels, as the longer term benefits of developing future-proof renewable energy systems.

See: www.thegwpf.org/images/stories/gwpf-reports/hughes-green_jobs.pdf and
www.amazon.co.uk/Green-Mirage-Low-carbon-Economy-Further/dp/1906837309

Greening the UK

Can the UK become a power-house for the green industrial revolution? The potential is there- the offshore wind, wave and tidal resource could if fully harnessed supply six times our electricity needs. But the government is relying mainly on inward investment to try to get offshore wind turbine manufacturing going in the NE and Scotland. That's a bit dicey- the US company Clipper wind has just pulled out of the giant 10MW Britannia Turbine project that was to be based in Newcastle. But Siemens, Vestas, GE, Gamesa are still planning major offshore wind turbine manufacturing investments in the UK.

The government has set up a series of new Enterprise Zones, with reduced planning controls and lowered business rates to help. Building on that, Hull is developing a 'Humber Estuary Renewable Energy Super Cluster' fussing on offshore wind turbine manufacturing. But this is all just good old fashioned regional business support policy, backed by cash strapped local councils, desperate for jobs, with very little money coming from central government. The government is more lenient about supporting nuclear (while saying there will be no state funding!). That's what the radical new Electricity Market Reforms are all about, via its new proposed market-led variable price 'Contract for a Difference ' (CfD) Feed In Tariff (which is not really a FiT at all). In the end it’s the consumers who will pay.

Some see the greening of the UK coming from the bottom up. But smaller scale stuff just took a big hit- the government has imposed savage up to 72% cuts to the existing (Labour government initiated) 'Clean Energy Cashback' (CeC) Feed In Tariff , for PV solar projects over 50kW. When the CEC was first introduced, it had a project capacity limit of 5MW- higher than some had envisaged. DECC explained ‘We want to give ourselves a bit more flexibility... to include projects like schools, hospitals and community schemes’. But now the effective ceiling is 50kW for PV. So no more community scale projects. That really is a preliminary to switching over to the CfD, which seems designed mainly to help big projects and especially nuclear. More FiT cuts are likely- the last Budget called for £40m to be shaved off it. In energy terms the CeC FiT is marginal stuff (it’s only expected to deliver 2% of UK electricity by 2020), but locally may be worth fighting.

Overall though the governments approach is all about spending less- and getting us all to expect less from the state- and also do more for ourselves and others in the wonderful new Big Society. So the emphasis is increasingly on personal action, and low cost 'nudges’, rather than politically sensitive financial or other aggressive measures aimed at changing consumer (or company) behaviour. Or on investment in new clean technology.

The Cabinet Office has just published a study of 'Behaviour Changes and Energy Use' which reviews 'ways that do not require a new legislative initiative or spending programme'. My favourite example of that was a New Zealand government campaign which included the use of the slogan: 'If you sing in the shower, choose shorter songs'.

Some of this may be useful for reducing demand, but some might feel that what we are seeing is an attempt to reform peoples behaviour and expectations so as to fit in with the 'needs' of an unregulated profit-led market and whatever technologies it happens to favour. Shale Gas is the latest, which may even replace nuclear, which may be looking a bit problematic to investors, as of course do most renewables. Apart perhaps from genetically modified advanced biofuels for cars and aircraft, and maybe a bit of wind power to run overnight-charged electric cars. As well as a few micro-generators flogged direct to consumers.

To be fair that is one area where the government does seem to be stepping in with real money, via the grant-aided Renewable Heat Incentive. But one of the main domestic micro-gen options they seem to be keen on is heat pumps, which could be because they would use excess overnight electricity from the nuclear plants the government is also still keen on.

Some of this may be seen as green, but otherwise we seem to be a long way from a sustainable energy future or a new industrial revolution.

Energy after nuclear

With public opposition leading the way, nuclear power is on the defensive nearly everywhere around the world, even in France, where a poll in June showed three quarters of the French people interviewed wanted to withdraw from nuclear, against 22% who back an expansion programme. Globally opposition is running at around 62%, with massive majorities in Italy, Germany and Mexico being against - 94% in Italy’s recent referendum .

Local agitation and grass roots reactions, following Fukushima, has forced governments and parties to rethink- famously in Germany, Switzerland and Italy. Japan has now said it wants to exit from reliance on nuclear, in favour of renewables. And so also now, perhaps, may France, with presidential elections due in May and a policy review of options for future energy mix underway. Energy Minister Eric Besson said ‘We will study all possible scenarios. It will be done with total objectivity, in full transparency, without avoiding any scenario (...) including the scenarios of a nuclear exit.’ One scenario would be a total exit from nuclear by 2050, or even 2040. Reuters noted that shares in EDF, which runs 58 nuclear reactors in France, ‘fell nearly 1% after news that France would examine a full exit from nuclear’.

While the centre-right UMP party mostly supports the extension of nuclear, the opposition Socialist Party has called for a moratorium on new reactors and pledged a national debate on energy transition if elected in 2012. That leaves the UK as one of the few remaining safe havens for nuclear in the western EU, with strong support from the government and only around 52% of the pubic opposing new nuclear. We need to try harder.

Given that France gets 74% of its electricity from nuclear, the French example should help (if they can consider a phase out, anyone one can- the UK only gets 18% and falling), even if cynics may feel that the new French energy review will end up ‘proving’ that France needs nuclear, much as some fear that the German phase out will falter, since not enough investment in renewables will occur, so that nuclear will be ‘needed’ again.

In case a French phase out sound hopeless, do remember that the 74% figure is just the electricity generated at the plants. Some of this is used by the plants themselves and for new fuel fabrication and spent fuel reprocessing (maybe 10%), and some is exported. And then a lot is lost in transmission and distribution (maybe another 10%) on the way to users. Also remember that its only electricity, and that’s typically only about a third of total energy use (even in France which uses a lot for heating). Nuclear generated 410 TWh/y at plants in 2008, with 60 TWh/y being exported, while total primary energy uses was 1,860 TWh/y in 2007. So nuclear met just 22% of France's recent energy demand (if non exported), or 19% with current export arrangements. For comparison, renewables were supplying 12.9 % of primary energy in 2010: www.developpement-durable.gouv.fr/ IMG/pdf/Rep-env-eng.pdf

So, if nuclear went, it would not be such a huge loss as may first be thought, and given that most of the plants were built around the same time, in the 1970 and early 80,’s , there will be a need for some sort of replacement of them all soon. Now is a good time to take a new path.

That certainly is what Germany is trying to do. It is phasing out all its nuclear plants by 2022. Cynics say that will mean it will use more coal. But actually it is still planning to meet its carbon targets, and expects to do that by a combination of much expanded renewables (35% by 2020 and then in stages up to 80% by 2050), energy efficiency savings, and a switch to natural gas as an interim option. However it can cut emission from some residual coal and gas burning via Carbon Capture and Storage. That will be useful since, for some while, there will be a need for some fossil-fuel backup for the variable renewables, even though the fossil backup plants will only have to run at full power occasionally- and can gradually convert to using biomass.

Of course there are limits to how much biomass and biogas they can get, so they will also need other approaches to balancing variable renewables. There are plenty- most obviously pumped hydro storage (they are building more). And also supergrid links across the EU and beyond, exporting excess wind and solar power and importing green energy from those that have excess, when wind/solar is low in Germany. Geothermal is also being pushed ahead.

In addition, there is also another newer idea- generating ‘green gas’ via electrolysis, using electricity from renewables when there is excess- and then storing it for use when there is lull in renewables. That produces hydrogen, which can then be converted into methane gas – using some CO2. Gas is easy and cheap to store and transmit to where it is needed for heat and power generation, and can also be used in vehicles. Biomass could be used as a carbon feed stock: in effect you would be upgrading it by adding hydrogen. And then, if you also have CCS, and assuming the biogas is produced from renewed biomass, the overall process is net carbon negative. The same would be true if you used CO2 from the air as feed stock, but ‘air capture’ of CO2 is currently very expensive.

Green gas sounds a wonderful idea, providing a truly carbon- free, and indeed potentially carbon negative, back up to intermittent wind power and variable solar power . But won’t all these energy conversions be very inefficient? Well it’s not too bad, since you can use some of the waste heat, though there are still some losses. See the paper from the Fraunhofer institute/ Kassel University at www.iset.uni-kassel.de/abt/FB-I/publication/2010-088_Towards-renewables.pdf. But you do get a flexible storage system. Just what you need if you are going for a massive expansion of renewables. And it’s a way to get valuable green gas without using so much biomass - and land. More at www.concito.info/en/udgivelser.php

Some clever green chemistry to see off nukes!

Community energy: small is big

Local community initiated and run renewable energy projects have been very common in Denmark for many years- about 80% of the wind generation capacity is locally owned. It seems to be one reason why local opposition to wind is much lower than in the UK, where there are very few locally owned projects. As the Danes say ‘ your own pigs don’t smell’.

It’s similar in Germany where many wind projects are locally owned. The local ownership idea has also spread to other technologies. As well as being a leader in wind, Denmark, makes a lot of use of district heating, and it is now developing some solar-fed heat networks, with some of them being run as community cooperatives.

So how far have we got in the UK? The Bay Wind co-op in Cumbria was the first breakthrough, and several more wind co-ops have followed including Westmill near Swindon: www.westmill.coop/westmill_home.asp

Scotland has been the home to several more projects, the most recent being the community wind power scheme at Udny, Aberdeenshire, which started up last year to be followed by Torrance Farm Community Wind Energy project at Harthill. AAT in Wales has been trying to do the same thing. But it’s up uphill struggle, not least to raise finance. The Renewable Obligation is not much use for smaller schemes- it’s designed for large-scale commercial projects. On the continent the various Feed In Tariffs were by contrast much more use, and the UKs small new FiT may now help here. There had been hopes that some community owned solar farms could emerge, but the FiT for large PV projects has now been drastically cut back- by up to 70%.

However, the new energyshare.com scheme, backed by British Gas, is promising. To help community energy projects get off the ground, it has launched a special consumer tariff designed to help fund such projects. Its EnergyShare scheme is being run in partnership with Hugh Fearnley-Whittingstall's River Cottage. It will pay £10 into a fund for every year that the customer stays on the tariff. Individuals and communities register their projects on the EnergyShare and consumers who are on the tariff will vote for projects they want to support. British Gas has pump-primed the fund with £500,000. It has a target of reaching £15m, which means signing up 290,000 customers. Approved community projects will be able to bid for up to £100,000 each, and it could eventually fund about 150 projects, although many hundreds of groups have registered projects on the site.

More at www.energyshare.com/

This lets you create a group and invite others to join or support you to help with your funding application. Or search for a group in your area to join: www.energyshare.com/groups/.

If you’re looking for inspiration, check out these films about what others have achieved and how you can get started: www.energyshare.com/groups/case-studies/

You’d almost believe that David Cameron’s Big Society ‘self help’ localism idea was real, reading this! That issue was explored in a recent Radio 4 programme which asked, did the ‘Big Society’ have any relationship to Schumachers 1970's ‘Small is Beautiful’ idea?

http://www.bbc.co.uk/iplayer/episode/b0122n2g/Archive_on_4_Schumachers_Big_Society/

The conclusion was that there were some overlaps with Cameron’s policies, but also some major conflicts: not least that Schumacher was profoundly anti- nuclear, as a large scale dangerous centralised technology. There is also the fundamental issue that the underlying aim of the Con Dems is to cut state support and ‘Big Government’. So of course they like local ‘self reliance’. That doesn’t make self-help bad, but they see its practical impact as small.

Last years new National Policy Statement commented: ‘The Government has put in place financial rewards as it would like to see decentralised and community energy systems make a much greater contribution to our targets. Whilst the Government believes that these measures have a very important part to play in meeting our energy and climate change objectives, they will not enable us to meet these objectives on their own’.

The implication is that we also need big stuff- like nuclear power. In theory that’s not meant to be state subsidised, but it’s now becoming pretty clear that it will be- one way or another. For example nuclear operators insurance liability is to be limited to the first £1bn in any episode. The rest would be met by taxpayers. Fukushima looks likely to costs Japanese taxpayers many hundreds of billions.

It’s hardly surprising then that, when given a change to vote on the nuclear issue, most taxpayers oppose new nuclear overwhelming- 94% of those voting in the Italian referendum on nuclear voted against it. And interestingly, even in France, a MORI IPSOS opinion poll now shows 67% opposing nuclear power, with there being signs of a break up of the long running support amongst the technocratic elite. But it’s not the same everywhere. The UK figure was only 50% against. And with the UK government keen to support investment by EDF and E.ON, and Germany, Italy, Switzerland, along with Denmark, Austria, Ireland, Norway, Portugal, Spain, and Greece, and even perhaps now France, all being off limits, the UK now looks like the main site for EU nuclear expansion.