Memorandum 27
Submission from Energy Saving Trust
The Energy Saving Trust was established as part
of the Government's action plan in response to the 1992 Earth
Summit in Rio de Janeiro, which addressed worldwide concerns on
sustainable development issues. We are the UK's leading organisation
working through partnerships towards the sustainable and efficient
use of energy by households, communities and the road transport
sector and one of the key delivery agents of the Government's
climate change objectives. Our response focuses on the key areas
of the Energy Saving Trust's activities and related issues that
are relevant to the consultation. Please note that this response
should not be taken as representing the views of individual Energy
Saving Trust members.
Our particular interest in this consultation
is the Government's role in funding research and development for
micro-renewable energy-generation technologies and providing incentives
for technology transfer.
NEED FOR
INTERVENTION
1. In the short term, there is sufficient
established technology to deliver energy efficiency improvements
in the consumer sector. The key task is to engage consumers and
scale up existing activity to deliver faster. But climate change
is a long term issue; and the scale of emissions reductions required
cannot be achieved with existing technology alone. Plans need
to be put in place now to ensure that there is sufficient investment
in innovation of both new energy efficiency technologies and microgeneration[34]
technologies that allow individuals to produce low carbon heat
and electricity in their own homes.
2. We have built an analysis tool[35]
that enables us to look at the impact of different policy mechanisms
on the potential uptake of microgeneration. It is clear from this
work that there is significant market and carbon saving potential
but effective intervention is required to deliver this:
— Without policy support, the
potential savings from microgeneration are negligible—below
2 MtCO2/year by 2050.
— The model suggests if well supported
microgeneration technologies could make a combined saving of well
over 60 MtCO2/year by 2050.
3. To encourage mass market uptake of microgeneration,
one of the most important factors is ensuring that sufficient
investment is made in technology. Microgeneration products need
to be available to the market at affordable costs. The results
of the model are highly sensitive to predicted reduction in costs
of technologies and if these don't occur, the carbon savings won't
follow. Conversely, if technology costs come down faster than
predicted, this would have a large positive impact on uptake.
4. It is a political reality that subsidy
programmes are likely to be capped. As a result, they do not provide
a long term support mechanism which will increase microgeneration
uptake. Where subsidies are provided, they should therefore be
targeted towards technology development and cost reduction.
5. The general case for Government support
of pre-commercial technologies is well-established—there
is under-investment in the free market due to a spillover of benefits
from the innovator to free riders. For low carbon technologies,
as the Stern Review set out, the case for Government support is
increased significantly by the externality of climate change.
6. For technologies to enter mass market
a number of issues need to be addressed:
— cost reductions through mass
manufacture;
— very high levels of reliability
in the field;
— extensive and customer friendly
supply chains; and
— effective product accreditation.
7. It is clear that a grants system alone
is not the optimal policy intervention. Early consultation on
`route mapping' undertaken for the DTI's microgeneration strategy[36]
has identified several other barriers that need to be addressed:
— public awareness raising, information,
advice and support,
— skills development and training,
especially for installers, and
— accreditation of products and
installers to ensure appropriate standards of performance and
reliability.
8. In the new build sector specifically,
the Government has set an ambitious target to move to zero carbon
homes (Code for Sustainable Homes[37]
Level 6) by 2016. This will involve radical change in the housebuilding
sector, with very different designs that will need to involve
both very high levels of energy efficiency and microgeneration.
The housebuilding sector will therefore be both a fertile test
bed for new technologies and in need of innovation in design and
construction techniques itself.
9. If the 2016 target is to be met, rapid
innovation to deliver it is required now. Within the period 2008-11,
this will need to encompass both widespread adoption of the basic
techniques to deliver low carbon homes (Code levels 3 and 4) as
well demonstration of the new designs and technologies required
to meet the higher Code levels, so that significant construction
experience can be gained in the following five years before making
zero carbon mandatory.
FROM DEVELOPMENT
TO MARKET
10. Spending on assisting both energy efficiency
and microgeneration technologies for citizens across the "valley
of death" from development into the market is negligible
and has been substantially under-funded when compared to upstream
generation technologies for example. There is minimal activity
on demonstration, field trials and early market support since:
— the Energy Technologies Institute
is not yet established, but is likely to focus on R&D rather
than nearer market support;
— the remit of the Carbon Trust
does not cover commercial demonstration and deployment of these
technologies and Carbon Trust has chosen not to prioritise R&D
in most key mass market technologies;
— funding for Best Practice in
the household sector is just £1 million annually (compared
to £19 million for the business sector), which is clearly
insufficient and unbalanced given that household emissions account
for approximately half of all carbon emissions; and
— the Carbon Emissions Reduction
Target cannot sensibly be structured to finance significant early
stage innovation or provide non-financial support.
11. The Energy Saving Trust is the only
organisation, within publicly funded institutions, with a remit
for supporting for commercial demonstration and early market support
of new technologies. We have a unique understanding of consumer
behaviour in the energy saving domain and can offer practical
support on marketing new technologies to consumers. Through mass
communication, the Energy Saving Trust can provide a receptive
consumer base, in which new technologies can flourish. However,
we currently have no significant budget to take forward support
for new technologies. There is therefore no adequate mechanism
at present.
WHAT IS
NEEDED
Field trials
12. For key products, field trials are required
to deliver credible performance data and underpin the development
of consumer confidence in new products.
13. In principle, it might be possible to
replicate the 100% private sector funding as for the current microwind
field trials[38]
led by Energy Saving Trust. The private sector backers are predominantly
energy suppliers and retailers (as opposed to manufacturers).
They have felt it necessary to fund field trials due to concerns
about reports of under-performance once the technology began to
be deployed in significant numbers. This situation has only arisen
because the gap in public sector support has allowed a new product
to reach the market without reliable data on either the performance
of individual devices or the wind speed conditions in which they
are being deployed. This is not ideal and consequently we strongly
advocate the provision of support for demonstration prior to new
products coming to market otherwise retailers and developers will
be less inclined to supply new products in the future.
14. In particular, to provide market confidence,
technologies should be independently monitored to ensure impartial
information. For pre-commercial devices, results should be disseminated
to industry to focus future development effort. For commercially
available products results should inform consumer promotion, including
"Energy Saving Recommended"[39]
and advice.
Technology acceleration
15. In our view, support should be targeted
on the barriers identified in DTI's route mapping process for
mass market commercialisation for the key microgeneration technologies.
16. These barriers will be addressed by
the most appropriate means, for example:
— targeted technical support,
— supply chain incentives.
17. The mix of mechanisms will depend on
the specifics of the technology, its potential market and the
barriers.
July 2007
34 Microgeneration is defined in section 82 of the
Energy Act 2004 as the small scale production of heat and/or electricity
from a low carbon source. Back
35
The work builds on a report done for DTI in 2005-Potential
for Microgeneration by Energy Saving Trust, Element Energy
and E-Connect. The new model results will be available in September
2007 and we would be happy to share these with the Committee. Back
36
The Government's Microgeneration Strategy includes the commitment
that "DTI will work with industry to develop a route map
for each microgeneration technology." Back
37
The Code is the national standard for the sustainable design
and construction of new homes. It is a voluntary star rating system
that shows the sustainability of a new home as a complete package.
The Code is a flexible framework that enables developers to demonstrate
the sustainability of new homes. For consumers the Code is a mark
of quality, giving them information they can trust. In March 2007
Communities and Local Government published full technical guidance
on how to comply with the Code, see http://www.planningportal.gov.uk/england/professionals/en/1115314116927.html Back
38
There has been very limited independent monitoring of installed
roof-top micro-wind systems on domestic dwellings in the UK undertaken
to date. This field trial by the Energy Saving Trust is to establish
the first large scale monitoring exercise in the UK. It will provide
independent evidence of: 1. the level of energy generation and
savings from micro-wind achieved from in-situ installations; 2.
the factors that can influence the performance of micro-wind systems;
and 3. the customer experience and perceptions of the technology
(acquisition, installation and operation) and the customer benefits
that can be achieved. Back
39
Under Energy Saving Recommended only products that meet strict
criteria on energy efficiency can carry the logo. See http://www.energysavingtrust.org.uk/energy_saving_products/about_energy_saving_recommended_products Back
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