What can be achieved?
34. Despite the fact that the UK's installed capacity
of local energy systems is very low, there is potential, in theory,
for it to contribute a large proportion of the energy mix in the
long-term. For example, the Renewable Energy Association noted
a study suggesting that if the UK were to cover the facades and
roof spaces of its existing buildings with photovoltaic (PV) panels
it would generate enough electricity to meet all the UK's existing
demands.[43] The UK is
also quoted as having the best wind resource in Europe.[44]
In addition, roughly 1.3 million homes change their gas boilers
each year.[45] Centrica
estimate that micro-CHP systems could displace as much as 30%
of this turnover by 2015.[46]
35. Be that as it may, most forms of local energy
have characteristics that are not suitable for all locations or
consumption profiles.[47]
For example, micro-wind power's potential is better suited to
rural areas than built-up sites, because of the likely screening
of turbines.[48] Indeed
one witness told us the technology was "in danger of being
oversold".[49] Elsewhere,
solar photovoltaic and thermal systems operate best on south-facing
roofs or walls, which are not overshadowed, while, as noted earlier
in this Chapter, micro-CHP is better suited to larger dwellings
with high and consistent heating needs. This suggests that, while
the overall potential of local energy is large, not every technology
is appropriate for all homes, businesses and communities.
36. Crucially, it must also be borne in mind that
most local energy technologies are either too expensive for most
consumers, or not even market-ready.[50]
As with all new technologies there will always be a number of
early adopters who choose to install local energy systems simply
because they are new, or because they wish to 'do their bit' for
the environment.[51]
But until costs come down, or the price of energy from other sources
rises markedly, local energy systems will only attract a niche
market.[52] It is for
this reason that much of the evidence we received predicted, at
best, incremental growth in the UK's installed capacity of local
energy for the foreseeable future.[53]
This finding is important because the UK faces a serious capacity
gap in the short to medium-term as around 30% of its large-scale
generating capacity will disappear in the next 20 years as the
current nuclear fleet is gradually decommissioned, and the EU's
Large-Scale Combustion Directive brings about the closure of many
coal-fired power stations.[54]
Given the current slow rate of growth in the UK's local energy
capacity, it is highly unlikely that local energy alone will be
able to plug the gap, which will appear in the coming years. Indeed,
there are already signs that new large-scale combined cycle gas
turbines and coal-fired power stations will provide the bulk of
the UK's new generating capacity in the near future.
37. Nevertheless, even with only gradual growth,
over the long-term it could still be possible to achieve a sizeable
increase in the amount of local energy, given certain conditions.
The Energy Saving Trust (EST) has attempted to estimate the contribution
household local energy technologies could make to the energy mix
over the next 50 years.[55]
Its analysis models the interaction of market growth and potential
declining costs for local energy over time. This is combined with
assumptions about government implementation of a number of policy
interventions to support the take-up of local energy by households.
These include regulatory changes (for example with regard to planning),
capital grant support, and the introduction of an electricity
pricing regime such that households receive an equivalent price
for electricity they export to the network to that which they
pay for electricity they import. Under these conditions, the EST
estimates that domestic local energy systems could deliver all
household electricity needs, with excess being exported to the
grid, as well as more than half of household heating demand by
2050. This would be equivalent to 30 to 40% of the UK's electricity
needs. The main contributors would be micro-CHP, followed by micro-wind
and photovoltaics. Achieving this level of penetration would reduce
our annual carbon dioxide emissions by 15%. Interestingly, the
Trust's analysis estimates that local energy installations in
homes could account for 20% of UK electricity generation in 2050
without any government intervention at all, simply on the basis
of these technologies becoming more cost-effective over time.
38. The EST's estimates have been criticised by commentators,
including EDF Energy and the Energy Networks Association, for
being too optimistic.[56]
For example, the analysis assumes a constant demand for electricity
over time. Its assumptions about the extent to which the cost
of local energy production may fall over time might also prove
unrealistic. As one witness told us, with regard to how costs
might evolve, "it is very, very difficult to tell because
there are so many unknowns".[57]
Nevertheless, the Trust's 30-40% estimates should not be interpreted
as a prediction of what will happen in the future. Rather, it
gives us an idea of what might be possible if action were taken
to tackle the various barriers to local energy take-up. This is
the subject of the next Chapter.
39. Looking at a community level, there is less evidence
available of the potential for larger CHP schemes. A significant
proportion of the UK population lives in high-density urban areas,
the steadier heat demands for which make community-CHP schemes
more viable than in rural settings. For example, over a quarter
of the estimated potential for existing buildings is in London,
with 12 other major UK cities accounting for another 60%.[58]
Even in cities, however, retro-fitting existing buildings with
district heating schemes would prove very expensive. This suggests
that the greatest potential for community-scale projects is in
developments of new construction, where systems can be built in
from the start. Long-term projects such as the Thames Gateway
offer a clear opportunity in this regard.[59]
There may also be scope for retro-fitting schemes in some high-rise
flats. These constitute almost a million dwellings in the UK.
Overall, estimates of what can be achieved vary significantly.
One study suggested the cost-effective potential of community-CHP
could be around 2,300 megawatts of capacity by 2010.[60]
However, given that over 80% of current homes are either houses
or bungalows, the majority of the potential for heat through local
energy sources would seem to be through household micro-CHP, provided
the technology can prove itself an effective means of reducing
carbon dioxide emissions.[61]
40. Local energy
systems, such as CHP, wind and solar photovoltaics, are suited
only to certain locations or consumption patterns. In addition,
most local energy technologies are not yet cost-effective, reducing
the potential for dramatic take-up in the near future. For community-CHP
projects, assessments of the potential vary. Though a large number
of urban dwellings would suit this technology, cost-effective
implementation is likely to be limited to developments of new
build. However, the UK's potential resource of local energy is
large. If costs fall, and/or prices of energy from other sources
rise, and certain government interventions are put in place, local
energy could contribute a sizeable proportion of the UK's energy
mix in the long run. One estimate, looking specifically at household
installations, puts this in the range of 30 to 40% of our electricity
needs by 2050. Local energy is a developing concept with real
potential, but it cannot make a significant contribution in the
next decade to closing the capacity gap created by the decommissioning
of coal-fired and nuclear power stationslocal energy is
not a panacea that will 'keep the lights on'.
8