Extreme Cognitive Dissonance
I am amazed by the UK Government’s recent decision to stop and smash the UK renewable energy industry, specifically the destruction of the solar industry, halting the wind industry and throwing the biomass power industry into uncertainty. Evidence points to the increasing marginalisation of Department of Energy and Climate Change with policy emanating from the office of the Chancellor, “King George” Osbourne (whose father in-law is Lord Howell, President of the Energy Industries Council and quoted as saying there are lots of desolate areas suitable for fracking in the North East of the UK).
Let’s Re-Carbonise the UK!
The UK Government is seeking to re-carbonise not decarbonise the energy power generation sector at the very point that renewables are becoming cheaper than fossil fuels. They are keeping and increasing the subsidies for shale gas fracking and concluded one of the worst public infrastructure deals ever for new nuclear reactors at Hinkley Point. It will take 10-15 years to build these reactors that have a locked in price for 30 years. Solar PV has reduced 80% in the past decade and is predicted to have a minimum reduction of a further 30-70% over the next decade. Before the nuclear plant is even operational, solar could have decreased to $0.5 a watt. The UK Government is the only G7 government who is increasing subsidies of fossil fuels.
Everyone Else Gets It
Meanwhile the rest of the World is rolling out highly ambitious renewables programmes and embracing the disruptive change that will occur to energy systems to allow for greater decentralised power, energy intelligence, energy storage systems and energy efficient infrastructure. The USA’s Clean Power Plan was further augmented by long term extensions to wind and solar subsidies, India’s highly aggressive 175GW renewables target by 2022, China 400GW renewables by 2020, Mexico, Indonesia, Chile all planning a shift to renewables, even Russia is looking at 6GW of Solar!
DEC & DECC
The policy being set by the UK Government’s Department of Energy and Climate Change is set by many ex-Big 6 (actually 66 executives on “secondment”). Is DECC helping the rise of a more robust, responsive, cheaper, more decentralised energy system? Or are they stuck in a mainframe world? Would you ask DEC/ Digital Equipment Corporation to build you a software business? Who are DEC? well they employed 140,000 people in the 1970s and were the second largest computer manufacturer in the World. Their CEO was famously quoted as saying “There is no reason for any individual to have a computer in his home”. You can guess what happened to DEC. Would you ask Kodak to build you a digital photography business in 1990 or Apple? So why are we asking Big 6 centralised utility executives to build us our future grid? The UK Government are “rear view mirror” driving into the future.
Solar Domestic Jobs & Solar Multiplier Effect on GDP
There is little thought that a UK Solar industry of 30,000 people is not a resource that can be turned on or off but a highly productive, efficient and improving resource for the country. Increasingly the largest portion of the cost of solar is manpower and other soft costs such as planning bureaucracy. The more experienced people we have, the more efficient they will be. The UK Government should be targeting and actively encouraging every single home (approximately 17 million) to have PV by 2035, not decimating the industry. The way that the economics will play out this is a highly probable scenario anyway, as solar will become so cheap. In addition the solar industry provides the UK economy with a significant better multiplier effect than importing Qatari natural gas, every GWhr of Solar PV provides 3-6 jobs compared to under 1 job for nuclear or gas. The solar industry has a huge hinterland of domestically owned businesses and installers have a significant impact on the national GDP as opposed to large utility scale natural gas power generation. As solar gets cheaper and cheaper, if they have a roof, it will soon be the first thing a person does. At the very minimum the Government should be planning/encouraging for at least 15-30% solar as part of the energy mix over the next 20 years. I envisage a future when some UK Premiership Clubs could be owned by homegrown solar entrepreneurs….as opposed to the Qatari royal family.
Solar Speed to Market & Zoning
It will take around 15 years to build Hinkley Point’s 3.2GW plant which will run at around 90% efficiency. In the first three months of 2015, China laid 5GW of solar at an average efficiency of 15%, so with 20GW of solar laid they would achieve more energy in one year than in 15 years of building one nuclear plant.
When considering solar you should also account for distribution and transmission infrastructure costs. Solar can be further incentivised by zoning differentials to be encouraged to fill in gaps and alleviate bottlenecks in the transmission and distribution network. For example new builds like new industrial parks be required to have onsite solar generation.
Batteries are here and are becoming cheaper
Battery economics are following solar economics, driven initially by the devices and now the electric vehicle market. These units will allow for a smoothing of the solar PV generation curve. Batteries will allow the sunlight to extend into the early evening peak, all we need is to timeshift huge amounts of solar from midday/1pm to 7-9pm. Existing battery platforms such as Lithium Ion are following solar PV economics and have declined from $1000 pMWhr to around $250pMWhr and analysts such as McKinsey are forecasting it to decline further to $150 pMWhr over the next 5 years. New battery platforms will take 10-15 years to fully commercialise but offer significant higher efficiency and capacity batteries. For example Professor Clare Grey of Cambridge University is leading the charge of a next generation, high capacity Lithium Air batteries.
Demand Response Markets & Peak Power
Clearly solar could not run the UK entirely in the foreseeable future. Solar would only be one plank in a UK sustainable energy system. Demand response has successfully begun and coupled with this, is the ability to increase energy efficiency to reduce overall energy demand by near 25%. An effective time based demand response system will enable the market to supply energy at least cost either by incentivising storage, peak shaving or encouraging energy efficiency projects.
The UK is Windy
The UK Government wants to stop wind. Scotland however wants more wind and has the space and resources to locate it, so why not let them develop it? Likewise the well documented offshore wind resource could provide UK companies with a tremendous headstart in the experience curve, the USA, Chinese and Korean markets are just starting and the UK would further improve exports through helping domestic companies export their knowledge. Wind alone could take upwards of 40-60% of our future energy mix. Onshore is already cheaper than gas (without costing in carbon prices and methane leaks) and offshore wind will arrive at a competitive price over the next 5-10 years, if strong growth targets are set.
Buildings and Heat Loss
The opportunity to reduce the energy demand in buildings is easily achieved with steadily increasing building standards. Again the UK government is missing improving some of the worst housing stock in Europe. Heat simply flows out of huge amounts of housing and the failure of the Green Deal insulation scheme is not due to “any technical problem with insulation working” but poor design in the scheme.
Gas Leaks & Expressway Permitting
The UK government seems keen to rely solely on a two plank plan for the UK energy system of using “clean” gas and nuclear but it seems to be unaware of the huge emissions risk in the expansion of the natural gas supply chain. A recent study of 16 natural gas facilities in the USA projected methane leaks to be eight times the expected leaks . Let’s hope there are no stringent carbon markets returning to further add costs into gas.
The “expressway permitting” of fracking, which is now even allowed in the UK’s National Parks is another form of subsidy as time is money. I can imagine the furore if they seriously start fracking in the Peak District or the Yorkshire Dales, the 24/7 convoy of trucks, the harsh chemicals leashing into groundwater, the drilling rigs themselves…
Nuclear: The World’s Most Expensive Power Plant
This is the biggest and mostly costly mistake that I believe a UK Government has ever undertaken. It is so expensive a huge amount of financial analysts are left completely bemused (HSBC, Jefferies, Libernum Capital etc). Vitally the strike price that the projects builders will get for 35 years is an inflation linked £92.5MW/hr. To try and understand what energy prices may be in 2050 is incredible. Why should a government even attempt this? How does the UK Government know that power prices will even increase? Did semiconductor prices increase or decrease since 1980? In 1980 did we know anything about mobile phones/internet or basic life in 2015? Actual real world energy prices could fall by 80% led by solar. The very real prospect that this nuclear plant could be producing energy that is 10-20 times more expensive than the market. This is of course without accounting for the whole costs of the project (insurance, waste storage, security). By comparison the UK government spent £4.5bn on the 2nd Gulf War (to secure new oil contracts).
To conclude the above policies are all indicative of the Madness of King George and supplication of the UK “Energy” Secretary Amber Rudd. There is simply no coherent long term UK energy policy based on allowing a multitude of clean technologies to prosper. In a country with the education resources of some of the greatest energy thinkers, universities and analyst companies (Bloomberg New Energy Finance spring to mind) this is shocking.
The Solution: A UK 100% Renewable Future
Stanford University Professor Mark Jacobsen has led the Solutions Project which provides roadmaps for over a 100 countries. These roadmaps provide a blueprint for planning the necessary steps now, for a 100% renewable future by 2050. Yes economics will change as you proceed along the path but a lot of the technologies are here already. The UK Plan as an infographic is here.