Select Committee on Innovation, Universities, Science and Skills Written Evidence

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.


  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.


  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.


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,

    —    marketing support,

    —    training, and

    —    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 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 Back

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