Examination of Witnesses (Questions 130-139)
MICROPOWER COUNCIL
23 OCTOBER 2006
Q130 Chairman: Gentlemen, I am very grateful
to you for coming. This is our second evidence session on what
we call now Local Energy Generation. I am not quite sure what
it is we are studying, the nomenclature slightly escapes me, but
it is distributed energy and microgeneration. A multitude of sins
is covered, I think, by the title. Can I begin by asking you,
although I do know you both, particularly one of you, to introduce
yourselves for the record?
Mr Sowden: Thank you to the Committee
for inviting us to give evidence. I am Dave Sowden. I am Chief
Executive of the Micropower Council. We are an industry body that
exists for policy research and advocacy for the microgeneration
sector. Neil Schofield to my right, who will introduce himself,
I am sure, is from a company that is one is one of our members,
Worcester Bosch. One of the things we are hoping to develop in
the course of this afternoon's questions is the importance of
renewable heat. Neil chairs one of our policy and development
groups looking at that subject in particular.
Mr Schofield: I am Neil Schofield
from Worcester Bosch. Worcester Bosch is an equipment manufacturer,
predominantly of central heating boilers. Our headquarters is
based in Worcester itself but we have another manufacturing site
in Derbyshire at Clay Cross. We are market leader for central
heating boilers. The market has changed dramatically in recent
years to condensing boilers due to building regulation changes
in 2004 and we are market leader for the condensing boiler side.
We also manufacture oil boilers in the UK but more recently we
have moved into microgeneration technologies, in particular the
mainstream solar thermal panels and ground source heat pumps,
and we are part of the larger international group of Bosch.
Q131 Chairman: Thank you. I visited
the factory recently in Worcester and know your operation quite
well. Can I start, Mr Sowden, by asking you to explain what the
Micropower Council is in slightly more detail, all the bodies
out there involved in this issue? Just take us through it and
tell us exactly what you do for the whole sector.
Mr Sowden: Around five years ago
a number of companies identified a gap in the way that the microgeneration
sector was represented insofar as the renewables industry was
doing quite an effective job in representing the renewable family
of technologies and emerging technology known as micro-CHP or
combined heat and power, which was starting to appear on the scene
as well. We looked at that and discovered that there were quite
a number of common things, particularly to do with interface with
the electricity industry but also on wider issues to do with the
engagement of consumers and customers taking responsibility for
providing part of their own heat or electricity requirements from
sustainable sources. On that basis there was a good case for drawing
industry representation together where common themes could be
found and speaking with one strong voice on behalf of, if you
like, the non-expert user or consumer-led applications of sustainable
heat and power production. That was, if you like, our genesis.
Today we have around 15 corporate members. They tend to be the
larger players in the microgeneration sector but we also build
in membership of all of the other trade associations and professional
institutions that have a strong interest in the microgeneration
sector as well, including some of the trade associations you have
been taking evidence from in this inquiry.
Q132 Chairman: But it is fair to
characterise it broadly as the representatives of the private
sector?
Mr Sowden: Yes, I think that is
right. It is the companies and trade associations that are interested
in the commercialisation of microgeneration technologies across
the whole family, across a range of applications.
Q133 Chairman: Before I bring in
Mr Bone can I ask you if there is a term of art you would prefer
to use for this rather diverse concept? What microgeneration means
is enshrined in statute law but I am coming to the view that we
should be talking about much more than electricity and "generation"
seems to imply electricity all the time. Is there a word or phrase
you prefer?
Mr Sowden: We would love to find
one, something snappy and eye-catching. We are at the stage, as
you rightly point out, where Section 82 of the Energy Act defines
microgeneration to include heat as well as power production technologies,
and that seems to be where the political world has formed an understanding,
so, given that that is where we are (and Neil in particular raises
with me), that microgeneration or micropower has connotations
of electricity production, I do hope that we represent a fair
balance of heat technologies as well as electricity. It is important
to us that we do that.
Q134 Chairman: "Low-hanging
fruit" is the cliche we use now, and the low-hanging fruit
seems to be largely in heat rather than electricity. Is that fair
comment or not?
Mr Sowden: I think that is absolutely
right. Before we even get into micropower or microgeneration technologies
on the heat side we should be talking about energy efficiency.
Energy efficiency should come first. It is the low-hanging fruit
that we have out there at the moment and microgeneration technologies
are there to supply whatever residual needs you have after you
have taken every cost effective step to make a building as energy
efficient as possible.
Q135 Mr Bone: I would like to ask
a few questions about the application of microgeneration. If we
start at the basic level, we have got to persuade consumers to
take it up and to put solar panels in or have wind turbines on
their houses, but if you cannot persuade them, as you mentioned
in your very first statement, to turn the lights off, how are
we going to get them to consider taking up microgeneration?
Mr Sowden: Just to avoid me doing
all the talking Neil might like to talk about the commercial perspective.
Mr Schofield: I began by saying
that our mainstream and what pays the rent is central heating
boilers and only recently have we moved into microgeneration technologies.
The first one we have approached is solar thermal, which is by
far and away, as the Chairman said, the big take-up of all microgeneration
technologies but it is still relatively small. In Europe 50% of
all solar panel sales are in Germany, so it is very much an established
market over there, whereas in the UK it only represents something
like 2% of all solar panels sold. However, in the last 12 months
since our introduction of these products we have gained about
20% of the market. Obviously, we are delighted with that take-up.
That really is about engaging customers, coming back to your question,
and the way we have done that is the way we do with our mainstream
products, boilers, and that is through the route to market. If
someone wants a central heating boiler, normally it is not a particularly
exciting product; it is usually taken for granted, at that point,
because it is a distress purchase, because the old boiler has
packed up after 20-odd years, they call in an installer, a plumber,
and it is the plumber that then makes the recommendation and evaluates
the property. That is how we have approached these technologies.
We do not sell direct. We sell in a two-step distribution to builders'
merchants and the builders' merchants then sell to an installer
who then goes to the householder. The key within that route to
market as far as we are concerned is undoubtedly the installer.
If he is going to go to somebody's house and they need a new boiler,
if we can get the installer to engage with them and say, "Perhaps
this is the time to think about other technologies rather than
just the boiler and a perfect match with a central heating boiler
is a thermal solar panel", that is very simple. To do that
we have supported the installer with training. We have trained
round about a thousand installers in the last 12 months. We do
it independently. We give them an accredited card. It is UKAS
approved and independently tested, so it is quite a serious achievement
to get to that level of understanding and the installer is then
promoting it. What we have seen only in recent weeks is high street
organisations like B&Q and Currys promoting these technologies.
Q136 Mr Bone: Can I come in on that
point? In some of the evidence sessions it has been said to us
that yes, you have got these high street retailers promoting microgeneration,
but does the consumer not then get a problem with planning? If
I wanted to put solar panels on my house would I have to get planning
permission? Is that a barrier?
Mr Schofield: Undoubtedly it is
a barrier and currently you do need planning permission for solar
panels and wind turbines, but I understand there is legislation
going through.
Mr Sowden: Perhaps I could cut
in there and try to answer both points. The first point, if I
could paraphrase the question, is how are we going to engage consumers
in micropower technologies when we cannot engage them in energy
efficiency. Around nine million cavity walls, I believe, are still
unfilled and that is a very cost effective technology. That is
a valid point indeed. I was at a presentation last week to people
from the City, investors, and I asked the question, "Who
in this room has had a dinner party this summer?". Several
hands went up and I then put the subsequent question, "How
many of you showed your dinner party guests your cavity wall insulation?",
and of course hands remained firmly down. However, evidence does
suggest that those consumers who install microgeneration technologies
are rather proud of them, they do like to show them off to their
friends, and they actually start to change their behaviour in
other ways as well, thereby leveraging wider benefits than purely
the benefits that flow from having microgeneration technologies
themselves. It is not just me that is saying this. This is backed
up by evidence. We refer to it in our memorandum. The Sustainable
Consumption Round Table published a report around this time last
year, which is not statistically validated as it was only an anecdotal
piece of research, but nonetheless it is demonstrating that this
feature does exist. I am afraid the second point has gone out
of my head.
Q137 Mr Bone: If we are serious about
microgeneration do we need to change the planning laws to make
it easier?
Mr Sowden: The answer to that
is yes, but we have to take great care in the way we do it. We
do not want to see the unmitigated proliferation of inappropriate
visual amenity throughout our towns and cities. That would not
help the microgeneration industry to capture hearts and minds.
The Department for Communities and Local Government has been conducting
a review over the summer and the report is now with ministers.
It has been done by a planning consultancy called Entec, prompted
by provisions in the Climate Change and Sustainable Energy Act
which became law earlier in this parliamentary session. That is
setting out recommendations that, for example, for solar panels
the bulk of those would fall into what we call the permitted development
system, so they would be listed in the general permitted development
order under relevant town and country planning legislation. That
would even extend to wind turbines, but with appropriate limits
on size, visual amenity and particularly noise and vibration.
All those recommendations are in that report which rests with
ministers at the moment and we await a decision on whether ministers
are going to publish it.
Q138 Mr Bone: Merton Council I believe
requires 10% of new builds to be microgeneration. My council,
Wellingborough, has put it to me that we have thousands of new
homes to be built in our area because we are one of the Government's
growth areas, and they are saying that it should not be on their
shoulders. They would like to do it but why does the Government
not require it because with new building there would not be all
the planning issues because it would be done when they were doing
the new build. Do you think the Government should set for new
build a proportion to be based on microgeneration?
Mr Sowden: I know the Committee
has taken evidence from the Energy Minister, Malcolm Wicks. I
do not know if you intend to take evidence also from the Minister
for Housing and Planning, Yvette Cooper, but there are a number
of policy initiatives, if you like, within DCLG that I think might
start to tackle that, although we would like to see them go further.
The first is dealing with the Merton Rule, as it is called, and
its application. There are certainly quite a number of local authorities
around the country now picking up what is enshrined in statutory
guidance, and Planning Policy Statement 22, as we call it, PPS22,
does encourage local authorities to have a Merton-style policy.
It is not worded quite as tightly as saying 10% but it does require
that. The Government conducted a review earlier this year of the
extent to which local authorities were applying that guidance.
That review concluded that just under half of the local authorities
who could reasonably have been expected to adopt that style of
policy— basically those who have revised their local plans
since the policy came into force—had not done so. We would
obviously like to see the Government strengthen the guidance and
require them to do so.
Q139 Mr Bone: That sounds as though
it is still being put onto the basis of local government. If we
are really serious this needs the Government to say it, does it
not?
Mr Sowden: Yes. Forgive me; I
am coming on to that in just a moment. I am just explaining the
application of that particular policy instrument. The Government
has responded to a letter that we have sent saying that, beyond
a ministerial statement to Parliament made by Yvette Cooper on
8 June, they do not consider anything further is necessary, and
that ministerial statement simply said that the Government "expects"
local authorities to have these policies, nothing stronger than
that. We would very much like to see that go further. To answer
your question about whether we should do this through regulation,
the building regulations being a good example of that, the Climate
Change and Sustainable Energy Act 2006 amends the Building Act
to create a new provision in the Building Act to allow the Government
to regulate microgeneration into existence should it choose to
do so. It has taken an enabling power which it can exercise through
secondary legislation. At this juncture the Government is not
prepared to enact that legislative power because it takes the
view that the industry is not at the scale where it could deliver,
and I think that some in the industry would have some sympathy
with that view. In the meantime the Government has committed to
producing what it calls a code for sustainable homes which will
apply to all publicly funded housing that is built, I believe,
from April this year. I will have to check that detail but I think
it is from April this year. Within that code they have set a number
of standards. The exemplar standard, which is carbon neutral,
means that you cannot achieve that without some form of on-site
microgeneration. The mandatory level within that requires premium
levels of energy efficiency that go beyond the building regulations,
but we would like to see the Government in a measured and controlled
way tighten the requirement so that you need progressively greater
carbon performance over time and in that way we have a glide path
for the industry towards eventual inclusion as a mandate within
the building regulations. We think that is a sensible, measured
policy that sets industry expectations well in advance and allows
us to respond.
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