Examination of Witnesses (Questions 426-448)
DR HOWARD
PORTER, MR
COLIN TIMMINS
AND MR
ALAN ALDRIDGE
11 NOVEMBER 2009
Q426 Paddy Tipping: Welcome to Howard
Porter and Colin Timmins from BEAMA and to Alan Aldridge from
ESTA. It is good of you to come. Just a short housekeeping note
that at 11 o'clock we shall have a couple of minutes' silence
in remembrance so we do not forget. I am sure we will still be
talking at that time so we will just put a brake on proceedings.
Thank you very much for coming. You have listened to the previous
discussion. I wonder whether you would like to initially comment
on the Government's green stimulus package. Is it sufficient,
what is in it for you and what would you have liked to have seen
in it?
Dr Porter: I think any fiscal
stimulus on energy and climate change is to be welcomed and that
is absolutely true. We believe there are lots of other technologies
that are in existence that could be taken forward probably quicker
than some of the areas covered in the stimulus package. We would
very much support many of the technologies mentioned earlier by
Dr Whitehead in terms of describing them to the previous speakers,
but many of those are not going to make a massive difference in
the short term. Certainly the submission we have put forward highlights
that there are a number of areas, and we have identified four
particular areas that we think are relevant very quickly, but
there are other ones that can come on in addition to those four.
So that is an issue. It is to be welcomed but there is a big hole
in things that could be done tomorrow, next week or next year
which we believe are not being carried out at the moment that
could be.
Mr Aldridge: We are very positive
about the amount that has been done. We think it is not as much
as it should be, which is obviously what has been said in the
previous session. Our centre of gravity is very much in the non-domestic
area. Probably about two-thirds of what we do is in that area.
We did not see much in that stimulus that is helping that particular
area and we think what needs to be done is that there is a whole
issue in the way the building stock is actually managed in the
UK and we feel that gets ignored in these things. We look at technology
and applying technology, which is obviously the right thing to
do, but then there is an operational gap between what is in the
package in the way of technology and how it is delivered in terms
of its actual energy performance. We saw nothing in that stimulus
package which helps to tackle that area of activity.
Q427 Paddy Tipping: You have both
made that point. Tell us what should be done. Our last discussion
was pretty theoretical at times. I get the impression that you
and your members are much more practical. What is your prescription?
Dr Porter: Certainly from our
side, and Alan can add from his side, we have identified probably
about a 30% reduction in the losses in the electricity grid and
then in the buildings identified of the products that are available
now that could go forward. We have also identified a number of
exemplars as to the size of the benefit if that happened but also,
very importantly, the barriers. There are a great many barriers
that vary a little depending what sector you are in, from high-voltage
transformers, down to smart metering, down to lighting controls
and heating controls. There are a lot of different barriers as
to why it is not happening. Within the stimulus package we believe
that there could be a great deal done from the stimulus package
probably at less overall cost but with more immediate gain going
forward. I will maybe hand over to my colleague Colin who can
give an example on heating controls, which is one area we are
particularly keen on.
Mr Timmins: As Howard said, we
have worked with our members to put together a number of papers
looking at some of the technologies that are currently made by
our members with the potential for carbon savings and which are
not realised at the moment. Of the six papers we have put together
so far, what we are trying to do is identify what the carbon savings
could be, what the economic benefits could be and what the barriers
are and the solutions to that. Of the six we have done so far
the total carbon dioxide savings come to about 2% of total UK
emissions in a year, so it is quite considerable from these examples.
Heating controls, as Howard mentioned, is a good example. It is
an area where it is an existing technology, it is an inherently
energy-saving technology, that is what it is there to do, and
we know that in homes and looking at existing housing stock, which
is a big problem to be tackled, 84% of the energy use is heating
and hot water and it is about 70% of the carbon emissions. That
can be addressed through insulation and through a new boiler but
it can also be addressed through improving the system. That is
something where some other countries—and Ireland is quite
a good example of this—have a much bigger focus on the aspects
of controls. We have picked up a number of barriers where there
is a lot more that could be done. We have picked up about 70%
of existing housing stock without the minimum standards of controls
that you would get under the building regulation with a new system.
We think there are things like that that are practical examples
of existing technologies and the existing supply chain that could
be addressed almost immediately.
Mr Aldridge: Just to give three
examples of things that could be used, and there may well be others,
if we take the energy services model, and that has been in discussion,
there are barriers to that. Two of the risks for example that
limit the number of things that the companies in that field work
on are, firstly, the risk in terms of developing a project proposal,
which can take anywhere between six months and two years to come
to fruition and there is cost in that and, particularly where
it feeds social housing, there is a risk there in terms of the
income from it, so in terms of the stimulus package perhaps looking
at mechanisms to support either end of that project whilst allowing
the contractor to take the operating risk in the middle would
be a way forward, at relatively small cost compared to the overall
investment and cost of that project. That is one area. Another
one which we are very keen to look at is the spread in the use
of display energy certificates, which we believe is a particularly
excellent management tool that should be applied universally within
the non-domestic area. They could be supported by metering and
the technology which we call automatic monitoring and targeting,
which you may possibly have come across, which delivers the data.
In those systems you can press a button and achieve literally
within a minute or two the actual display energy certificate at
very low cost compared to things like energy performance certificates.
So that is an area that we would welcome input into. The last
one is we think that the whole system of enhanced capital allowances
is not functioning particularly well. We think that needs to be
focused very much on the retro-fit, which was mentioned earlier,
as opposed to new build, and the value of it needs to go up three,
four or even five times from its current method of delivery. We
do not think the economic stimulus is there in capital allowances
and again a refocusing of funds already there would actually help
to stimulate the retro-fit market.
Q428 Paddy Tipping: I think your
headline central message is that we can do more on energy efficiency.
This seems a pretty straight forward message. Why is the Government
not getting it?
Dr Porter: That is a very good
question.
Mr Aldridge: Our view is that
there are many overarching policies that we think are very good
and correct. The Climate Change Committee set up the targets and
many of those things we think are right. Where we think there
is perhaps more ambition to be seen is in the development of the
specific targets. If I take for example the CLC energy efficiency
scheme, the initial view of that over the period to 2020 was to
save 1.2 million tonnes of CO2. Our view was that was a very low
ambition. I believe that has gone up now to something like four
million, but that is an example where we believe developing that
ambition can achieve an awful lot more.
Mr Timmins: One of the problems
that we have picked up in working on exemplars and also in the
White Paper we did about a year ago is that from our perspective
and from industry's perspective we do not necessarily make government
aware of the savings, we do not specify exactly what the savings
potential is, what the barriers are and what needs to happen,
so that is something we are trying to work on and be proactive
about it. One of the aspects is there is a greater need for government
and industry to work in partnership. To a very great extent with
existing technologies it is about how you get those technologies
to market. Obviously industry has a lot of experience of doing
that and, to a great extent with these technologies, if the framework
around them is put right and some of the barriers are addressed
then the market can get on and deliver. Power factor correction
is one of the exemplar technologies we have looked at where, really,
if there was a regulatory framework in place which adequately
penalised people with a poor power factor and made sure that the
energy suppliers and distribution networks were making efforts
to tackle that, then it could be addressed and the market could
deliver. In answer to your first question, it is really a job
for us to do to make sure we communicate that effectively. More
of a partnership where we start talking about technologies and
problems rather than just responding to proposed solutions would
be more productive.
Q429 Paddy Tipping: Let me pursue
that notion of partnership. There is an interesting phrase in
your written evidence: "BEAMA believes that the Government
must regard the industry as partners"—the point you
have just made—"not as opposition." What do you
mean by "not as opposition"?
Dr Porter: Maybe if I could deal
with that. I used to work for a government agency and I now work
for industry and I have seen it from both sides and I think there
is still, unfortunately, a mistrust between government, particularly
civil servants, and some industry groups. That may be all our
faults from both sides, including our own, but in order to go
forward genuinely both sides need to get an increased trust. In
order to meet the very large targets that are out there, industry
needs to provide the right kit, have the right attitude and be
trusted. Largely in our role we try to make that happen. There
needs to be a similar reaction from government and civil servants,
which in all cases does not exist at the moment, and certainly
we are very keen on that. There are a couple of examples that
we are already working on now, for example, a heating and hot
water alliance between some government people and civil servants
and industry, and that is the sort of thing we would very much
like to see going forward. That is not to say that there are no
demands to be made on industry, absolutely not, but it is much
more a partnership arrangement. There are some very boring, very
specific barriers on some technologies which I do not want to
bore you with today, but these need sorting because there are
some real hard barriers that when you delve down a little bit
you cannot do it or you do not get a rating and if you do not
get the rating therefore you do not get the fiscal benefit and
you do not get included in the scheme. There are lots of those
sorts of barriers that need to be worked through in an effective
way to allow technology to go forward. In some cases it does not
need a great deal of change. It just needs the will to change
and to remove that barrier to allow the technology to go ahead.
Q430 John Robertson: I just want
to pick up something Mr Aldridge said about we should not concentrate
on new build, we should concentrate on retro-fit, but surely if
we do not concentrate on the new build it will be the retro-fit
in the future? So do we not want to get everything right for everything
that is coming from hereon in, and hopefully still be doing some
kind of retro-fitting, but surely new build must have the priority
at this point in time?
Mr Aldridge: If I can try and
put that into context, we put that forward from the point of view
that, by and large, we think the development of the Part L building
regulations, the path, the trajectory of that to Zero Carbon buildings
is being handled well. There are specific discussions on particular
issues within that but we think the overall framework is working
well and we think that should be used as the main way to achieve
performance within new buildings. We believe the biggest issue
with that is enforcement. The actual regulations themselves are
developing very well but we do not think enforcement of them is
100%. We are not ignoring new building. We think the strategy
is working pretty well and moving pretty well but it needs to
be enforced.
Q431 John Robertson: If the strategy
is there then I presume the rules governing what you are talking
about are there also, so who should be doing the enforcing?
Mr Aldridge: It is enforced through
the building standards officers in local authorities, but also
there is obviously a link back with Communities and Local Government,
as the people that write these things and approve them, and perhaps
there needs to be more interaction to demonstrate compliance in
that and to prove that these things are actually being put in
place. We see various buildings where it is not there.
Q432 John Robertson: So why is that?
Mr Aldridge: There are obviously
local discussions that go on between the building standards officers
and the people that are putting forward the plans. It is an advisory
issue, so there are occasions when it does not get 100% application.
Q433 John Robertson: So does that
mean then advice is given which is not really advice, it should
be the rules that the build is governed by, and they are not being
done? If they are not being done, then whose responsibility is
it? In other words, who is guilty for it not being done?
Mr Aldridge: The legal responsibility,
so far as I understand it, is the building control officers, but
we do think CLG should take a larger role in establishing just
how compliant the new building stock is. We feel there is a gap
there that they could usefully put resource into.
Q434 John Robertson: Do you think
it is deliberate or do you think it is not enough people to do
the job?
Mr Aldridge: It is probably like
all of us, we have got too much to do and too little time.
Paddy Tipping: That sounds like this
Committee! Des?
Q435 Dr Turner: Not surprisingly,
given your membership, you place energy efficiency at the top
of your list of priorities and of course it is an area where performance
in this country has been lamentable and we need to up the game
enormously. Personally I think we have to address the area of
retro-fitting because so much of our stock is not new build. If
we only concentrate on new build it will only address a small
percentage of our housing stock. How do you think we could scale
up the effort, because at the moment there are many government
schemes, the Warm Home scheme, etcetera, but they are only skimming
the surface and there is so much more potential that can be achieved?
How would you like to see the Government step up and make a step
change in our approach at deploying energy efficiency measures?
Mr Aldridge: The main thing we
want to achieve in the non-domestic side is for an energy manager
or facility manager to take action on plant and equipment that
is currently working, so he has no problem with it but it is not
energy efficient, how do you motivate that person and say, "I
will go and change those drives to variable speed drives, I will
change those valves or those meters or whatever." That is
what we need to try and achieve and I do not think the policies
are achieving that at the moment. There are two ideas behind that.
I have already mentioned one which is revision of the enhanced
capital allowances, which I think would be a good stimulus to
achieve that, but also coming back to the display energy certificates,
if we universally applied those, then obviously there is a reputational
factor which people need to take into account, but we could consider
having minimal levels of that, so for example within two years
you need to move from a G rating to an F rating and, in the same
way that you cannot operate a building if you do not meet fire
regulations, maybe this issue is so serious in terms of climate
change that we should start putting minimum regulations in place
to try and raise the barrier, raise the level at which people
respond.
Q436 Dr Turner: Would you apply this
to shops, for instance? If you go into large stores they are so
over-heated they are criminally uncomfortable and their entrances
lose enormous amounts of heat and you often find heaters over
the door which are just heating the outside. Would you apply this
principle there? Do you think there is scope and acceptability
for regulation which would actually be quite punitive if companies
did not comply?
Mr Aldridge: I think there are
a lot of private sector companies that are keen to go down the
display energy route and actually give their credentials, if you
like, in terms of what it is they are actually achieving, so I
think there is some appetite out there (although I would not say
it is 100% by any means) to do this in order to demonstrate the
green credentials and the brand value of being energy efficient,
being seen to be green.
Q437 Dr Turner: And what measures
do you think we could take to improve the performance in the domestic
market? The Sustainable Development Commission is proposing £11
billion a year in investment, which might indeed make a difference
but how would you see that working?
Dr Porter: That would be nice!
I think very briefly it is worthwhile explaining how some of this
industry is moving forward. I agree to an extent with Alan in
terms of having minimum performance for products, and we see that
being done through a big European Directive called the Energy-Using
Products Directive, which is going through various products and
weeding out the most inefficient, in principle, that is a good
measure, if it is done correctly, and that will, effectively,
over time remove the most inefficient products from the market
place, lighting being the number one at the moment. You are aware
that certain types of bulbs are no longer available in the market
and that is primarily through that European Directive and our
implementation of it. That is the first thing. Products over time
will become more efficient and manufacturers will then compete
on efficiency rather than competing just on price. That is a very
important thing from a product producer's perspective. However,
we come down to householders, you and I in our house making decisions
on what we invest in to improve our energy efficiency. I think
this is an absolutely key point. It is a little bit outside the
manufacturer's role. I think the manufacturer can provide the
technology. I think this is a very important point in the future:
to what extent can technology automate the system to make it more
efficient without taking away the decision-making of the consumer,
where it is their house, they want to control their house, they
want to do things in their own home, but in many cases technology
can automate some of that decision-making. You could give control
equipment there and once you move into the smart metering arena,
there are many possibilities of using relatively simple technology,
but it is still quite advanced for most houses, that can automate
either the tariff or the use of a washing machine at certain times
of the day or indeed to automate the control system for lighting
and heating. The danger is that it takes away the decision-making
of the consumer but it will probably save the consumer five, 10
or 15% of their energy use in the background, with of course an
override for the consumer to do it. That is an area that has to
be grappled with, not just from the industry perspective but from
a social perspective as well going forward. I referred there to
smart metering and, without going into too much detail, there
is a recognition that when the full details of what is going to
happen when that roll-out goes ahead it is absolutely vital that
consumers accept the technology. If the consumers do not believe
that by having this technology in their homes it will give them
a benefit, it will help them control their lives better and give
them lower bills, basically it will not be accepted, it will not
be used and it will be a waste of money. There is a real effort
there needed. It includes education, it includes regulation, it
includes local authorities, very importantly, to help people,
it involves charities, and it involves central government providing
the framework for really educating and informing consumers what
they can do in their homes.
Mr Timmins: What I do think is
missing for existing homes is the right context for people to
understand why they should be doing this. We can introduce various
mechanisms and incentives but if they are for things that people
do not want in the first place, or do not see a reason for having,
they are still not going to take them up. There is a useful parallel
with new homes because Zero Carbon Homes by 2016 has set a clear
context for the building industry and for everyone working in
the building industry of why we are doing this and why we are
moving in this direction. It is resulting in some real advances
in thinking and in practical application to make sure this happens.
In existing homes we have argued that what you really need is
something to say to people at a certain point in time you will
not be able to sell or rent a home unless it meets a minimum level
of efficiency and these are the things that you need to do, and
then to soften that a little bit you can offer people discounts
and incentives and grants, with that context in mind, so you are
saying to people you are going to have to do this at some point,
it could cost you a lot of money in the future but we can help
you now. That works as an overarching policy. I can understand
why government might not want to go down that route. It is not
a very good message to give out to people. Another alternative
we have looked at—and the energy services model has been
mentioned before—potentially your energy supplier says to
you, "Your current energy bill is £80 a month. We are
going to start charging you £120 a month but we will deal
with your energy-using systems. We will replace your boiler when
we think it needs to be done and that upgrades your system,"
and so on, then the regulation is put on the supplier to actually
reduce the energy use in that home, but it is at a fixed rate
for the consumer so they do not have to think about it, which
I think is the way most people want to work with their energy
bills. The third option is to try and encourage people to make
the changes themselves. As I said, that is very difficult without
the right context and I think that is the area we are in at the
moment. I have not mentioned a house-by-house approach and the
scale of that is—
Q438 Paddy Tipping: We will come
to that.
Mr Timmins: If you are going to
a convince consumers to make these changes, I think they need
a very clear message and at the moment it is a very muddled message.
You see a lot of feedback saying that people are confused and
they do not have information. As I said at the outset, heating
and hot water is 84% of your energy use so that is where people
should be starting. I think there should be a clear message to
that effect and we should maybe play down some of the messages
around recycling and so on, which are all good things and all
have a role to play but I think it is confusing people as to what
they are achieving through this. I think there needs to be a much
more focused message on the things that we want to achieve, based
on some evidence of the savings potential that is out there, and
then industry can work within that as well to make sure that the
supply chain is right and the capacity issues are dealt with,
and that is how we can get there. Those are options and there
are different ways of doing it, but we probably need a combination
of a lot of these to actually make real progress.
Q439 Dr Turner: To bring the average
home up to the standards that are really desirable involves an
investment of £10,000 to £15,000 per household, which
most people cannot readily find in their back pockets. Do you
think that by a combination of cajolery and regulation it is possible
to get the electricity supply industry to fund this?
Dr Porter: Clearly we have had
a system through the utilities for 15 years plus now, ramping
up in terms of scale, which has done an awful lot of good and
has put a lot of energy efficient products into homes. I think
there are some government plans to change that into a supplier
obligation model where there is a bigger obligation on utilities
to actually provide this equipment back. I think that absolutely
is the right way. I believe there is a great opportunity, if we
get it right, when those utilities are also rolling out smart
metering systems at the same time, whilst they are in homes, whilst
they are doing something in the building, having taken my previous
statement that we have to engage the consumer first to make sure
it is not rejected.
Q440 Paddy Tipping: We will have
two minutes' silence and reflection. Thank you all very much.
So, Howard, you were talking about an individual household approach
doing a whole package.
Dr Porter: Yes, I think there
is an opportunity to use the utilities and other companies that
are going into homes or doing a service within that home and trying
to then link in upgrading the system or upgrading elements of
it via one of those, hopefully, trusted people going into the
home. This is not to say that the heating installer or the electrician
or any other service provider into the home should not be involved,
absolutely, if they need to be involved to fit the equipment correctly
and make it operational, but it is the opportunity to make the
consumer actually make the decision to make a purchase or to make
an investment. Interestingly, the £15,000 you mentioned earlier,
you can do an awful lot for 15 grand in a house. In fact, you
can do an awful lot for five grand. I am doing a system in my
house at the moment. I have moved house and I am upgrading it
and you can really make a big difference in a house for I think
less than £2,000, very effectively focused on what you do
first. I think it is those sorts of measures that need to be done
first. It includes insulation and heating controls, before you
get into anything that is sexy or new or renewable, which should
be there but only once you have done the basics and got those
houses up to a reasonable level. I think it is those service models
that could really be advanced in the future, as I say, linked
to smart metering because there will be utilities putting in smart
metering systems with home area networks which introduces other
possibilities for controlling equipment. They will be going into
houses doing stuff and we need to make sure that there are the
right procedures in place so that other upgrades can happen at
the same time.
Q441 Mr Anderson: I think my question
has been covered, Chairman, but I want to raise this issue again
about your contact with the government. If somebody coming along
with a really good idea, for example I support somebody making
variable speed pumps, and there is the potential for those to
be installed in something like 16 million homes in this country,
at a relatively small cost relative to what the savings could
be; how would you get that idea into government circles so they
can think, right, this could work, it could be a way forward?
Mr Aldridge: Can I start because
I mentioned the building regulations and we are quite pleased
with the progress there. Variable speed drives for example in
air-conditioning were introduced—and I was involved in this—in
the last round in 2006 and that has transformed the market absolutely
on that side and the energy savings for the drive alone are of
the order of 40 to 50% of that energy, so there is already some
evidence that it is in and working more in the non-domestic area.
We are in discussions at the moment about achieving the same sort
of effect for the pump systems for hot water, heating and indeed
cooling water, to try and introduce that benefit into the non-domestic
side. Quite how you get that across to households—
Mr Timmins: It is quite a relevant
example in the context that we are looking at for heating controls.
There are couple of things. Firstly, the best research that we
have seen says that 70% of people have said that the decision
on their heating system was made by the heating installer. 70%
admitted it, so there is probably a greater percentage than that.
It makes sense really. If you are going to spend money on somebody
to do work on your home they are the person you are going to listen
to for advice, so we need to make sure that in the installer network
for heating systems and lighting systems and lighting controls,
that the installer who deals with the consumer or the person making
the payment is an ambassador for energy-saving technologies. That
is a process of education and a process of validation. It is giving
them the tools whereby they can sell something that might be more
expensive but they can show the benefits to the customer and that
it is independently validated. That is how between government
and industry we can probably work to deliver something like that.
You mentioned the pumps and systems are a complex area. We have
had a big debate about heating systems with the European Commission
and, as a consequence of that, we are hoping there will be the
introduction of a label that will allow the installer to label
the efficiency of the system that has been installed in relation
to the existing components. You could also then extend that to
giving the installers a tool that they can go out to people and
say, "Look, this shows that if you do this with the pumps,
if you install these heating controls, if you do some balancing
of the system and put water treatment in, all the things that
can help with efficiency, that is the end improvement to you.
There are thousands of boilers being replaced every day. There
are thousands of interactions between consumers and installers,
and those are the things that we need to make use of because we
cannot expect that every day people are going to go off and look
at a website or get some advice about what they should do to improve
energy efficiency. We know these interactions are happening, so
those are the opportunities, and that is where I think the heating
and hot water taskforce that Howard mentioned, which is not something
we have set up but it is something we have been very involved
in, is a real opportunity for us to sit down and talk about these
technologies and say what is the real potential, how can we do
that, what are the capacity issues, what are the training issues.
It is about government and industry just talking about what needs
to happen and how it can be done. It is not industry reacting
to something that is being proposed, where I think it does get
a bit oppositional because we have our own interests and government
has already set something out that it wants to do. We want to
try and avoid that and deal with these technologies as something
that needs to happens, what are the barriers, what are the solutions,
and what can we both do to make that happen.
Dr Porter: I think there is always
a role for the regulatory backbone of doing this. Whether it is
a heating installer, a lighting installer or somebody installing
something in a high-voltage network, if there is appropriate regulation
behind it then that stimulates the market to make sure that the
inappropriate stuff is not put in. Back to the installer example,
it is about educating the installer about what they have to do
but once the regulation is in place then the training and the
skills have to follow to make sure that that professional operator
actually understands the detail of what can be done. Back to this
partnership issue, I think one of the key things that I have discovered
in many years of working with industry and government is we have
to accept that the civil servants who are making very important
decisions or recommendations to ministers are not experts in all
these technology areas; nobody can be. I think we accept that
it is our role to help to—I would not say educate, that
is the wrong word—to inform civil servants making decisions
on the technologies available, what the differences are, but then
there needs to be a quid pro quo, there needs to be a reasonable
response to the opportunities out there, and I think that really
is the way forward. We can discuss all day the options of how
we can do it but it is that partnership approach that we could
set up within the heating area that can be expanded to many other
areas that we are not covering today, to really identify where
real, cost-effective savings can be made and why is it not happening.
It may not be government, it may be somebody else who is causing
the problem—but government can provide a little bit of a
push or a squeeze or a bit of new regulation that removes that
barrier and allows that to happen.
Paddy Tipping: I do want to talk about
smart meters, which has come up during the discussion quite a
lot as an area where we need to talk to officials about the technologies.
Alan Whitehead?
Q442 Dr Whitehead: You have mentioned
smart meters on several occasions in our discussions so far but
how important do you think the roll-out of a universal system
of smart meters and the development of a smart grid will be in
terms of UK CO2 emissions?
Mr Aldridge: I think that is absolutely
essential. It is also a very good example of where government
has brought the parties together. We talked previously about how
government can interact. For many years the supply side of the
industry has costed out what would have been the benefit to them
of smart meters. The demand side, which includes us, have worked
that out, but until recently the two of them had never come together.
The fact we have been able to bring that together, the Government
has done that and, if you like, the net present value of that
investment to the UK is positive, whatever model you use, so that
is a good example of bringing the factions together and actually
creating a policy. We think it is absolutely vital across all
of the market, not just non-domestic but domestic as well, because
getting information into the hands of people who can manage it
is extremely valuable. We do have a bit of an issue in the sense
that where you manage energy, particularly in a hospital or a
university, is not the place where the meter is sited. The meter
might be in a pit on the boundary or it might be in a plant room
on the roof locked away in a control panel. What we need to do
is to deliver that information to people in a format they can
use in the location that they use it. This is this whole issue
of automatic meter reading and automatic monitoring and targeting
to be able to do that. I think that approach is as applicable
on the domestic side as it is on the non-domestic, which is why
we are not totally in agreement with the mandatory real-time displays
because we think there is a variety of ways in which information
can be delivered to people and different people want to use it
in different ways, so we do not want to see the mandatory RTV.
We would like to see a mandatory "there must be a method
of delivery" whatever that method is.
Dr Porter: We have been very much
involved in the development of policy on smart metering systems,
and I think the first thing is certainty (and soon) on what the
structures of the market is absolutely vital. To answer your question
more directly, how important is it, personally I believe and BEAMA
certainly believes that it is absolutely vital. It is not going
to be a panacea. As soon as you have a smart meter the world does
not suddenly change, but once you have that system, and it is
really putting in place the connection between the utility and
the customer, which occasionally is not the best in terms of how
that operates, and giving information to the consumer or a business,
but in this case the consumer, which I think can help them make
their decisions. I also agree with Alan that having a single way
of displaying that information probably is not the best way because
there are very different types of consumers who to a larger or
lesser extent are interested in climate change or saving money
or who are on payment systems, and I think that there should be
some regulations or a requirement on the utility companies to
actually provide that feedback but allow them to innovate in how
that goes forward. I think this is at the centre of how we move
forward beyond smart metering. I mentioned earlier we imagine
that smart metering will provide a home area network to buildings
to allow a reading to be picked up away from the meter. I think
there are many people thinking if you have that, what else can
you do with it? We have been talking to people who make ventilation
equipment, boilers, white goods, appliances and any renewables
you put on that building, and there is an ability then to connect
the different energy uses within the building and provide some
energy management. It will not be the same energy management as
Alan talks about in a hospital, clearly; there is a bit of a difference.
We said go for winners we know about. I think once we get into
this area the products probably are not there yet because we have
not had the mass roll-out, but there are the opportunities we
see now with large companies coming into this area—the Nokias
and Googles of the world—who are very interested in how
to use that connectivity to help consumers move in that area.
We have had discussions with BT, with Google, with Nokia, and
they are all very interested in how they can use their very strong
consumer focus/consumer relationship, along with the utility perhaps,
to actually use this information and use the technology once it
is out there. So it is not a simple question and a simple answer
but absolutely key we feel to integrating stuff. It very much
depends how that information and that system will be used by the
utilities. That is the key and I do not think we know that yet.
Q443 Dr Whitehead: Is there not then
a potential problem arising from those statements which is that
on the one hand it is necessary to roll it out quickly but it
is also necessary to get, as you have already mentioned, customer
acceptance of doing it. There are a number of applications which
could be attached to smart meters but a decision has to presumably
be made about the minimum functionality of what the meter is?
Dr Porter: Indeed.
Q444 Dr Whitehead: There is one go
at that—
Dr Porter: There is.
Q445 Dr Whitehead: What level of
functionality do you see is about the right entry level for this?
Is it reasonably literate meters, reasonably clever meters, very
clever meters?
Dr Porter: I think the level of
functionality that was in the Government's consultation, or which
we are waiting the answer to, is about the right level. I work
a lot in Europe and there has been a lot of work done over the
summer to try and get a common set of functionalities for smart
metering at a European level. It is very similar to the functionalities
put forward by the Government in consultation. I think that that
is an appropriate level and the suppliers believe that to be the
case and the manufacturers are content with that. Moving on to
one area that is difficult to look at is the link between smart
metering and smart grids and networks. It is believed, and we
think this is right, that the functionalities currently talked
about will be okay for the majority of requirements for smart
grids in the future. However, if we come back in five years' time,
there may be other functionalities that are required by the DNOs
which they have not thought about yet which clearly cannot be
thought about by the metering industry now. A recognition that
at some point the design may have to change to look at the requirements
that may come in the future cannot be used to stop the progress.
It is a complex issue but the first thing is we need is a decision
on the structure so that industry can get on and perform.
Q446 Dr Whitehead: You have stated
in your evidence, in parallel with that, that a fundamental restructuring
of the grid for a number of the reasons you have already described
is necessary. How do you think that can work and is the five-year
review cycle we presently have sufficient to enable that to take
place?
Dr Porter: I suspect not. I think
that the five-year cycle is a very rigid cycle and I think it
is arguable that technology has moved on and will move on at a
quicker pace than a rigid five-year cycle. I believe there are
some flexibilities within the system. It is not my particular
area of expertise, but I think we have to recognise that within
that regulated distribution industry, where it is regulated, there
does need to be more flexibility to allow for the fact if there
is a technology that comes forward in two years' time, does it
have to wait for the next review in order to get the funding cycles
for the distribution companies to invest in that technology? Given
the situation we are in, I suspect that is not an appropriate
situation. That is not to say that the whole system should be
thrown out completely, but I think some adjustments should be
made to recognise that it can change over that five-year cycle
to look at innovations.
Mr Aldridge: Can I pass two comments
going back to your base question. We think that over a period
of time manufacturers will develop, in effect, a hardware platform
for meters and a software platform. What that means is that just
like mobile phones, manufacturers make a phone that works anywhere
in the world, in a sense, we are going to be moving to that same
situation so whilst I think it is very important to set the functionality,
because we have all got to work with it, I am not quite believing
that it is a once-and-for-all decision. Certainly a lot of the
software could be upgraded in that time to adjust to different
circumstances—if there are more tariff bands for example
than the initial design. I think the manufacturers will have some
ways around that to deal with it. The second point I would like
to make is that in the consideration as to the market model for
this, which I think has been before the Committee before, which
is the notion of having a centralised method or a competitive
method of roll-out, to be frank, we are very strongly in the competitive
camp, which is not the favoured approach at the moment, and the
reason is that we believe that will bring competition and it will
bring innovation. As Howard said, if something comes up in two
years instead of five you have got the opportunity to deal with
it and develop it to the benefit of consumers and to the benefit
of the market. So we are pressing DECC to consider again the competitive
aspect. We have asked them to make a number of different assumptions
about how that works, because we do not think the assumptions
are necessarily right, and just see if that changes the economics.
They have not come back to us yet but we are hopeful they will
soon.
Dr Porter: There is probably a
difference between the non-domestic and the domestic area here
and the recognition that because of our very liberalised system
in the UK, when compared to some other Continental examples, there
does need to be some government decision here that actually stimulates
and gives it the oil for the industry to actually move forward.
I think that is where we are ambivalent to a certain extent how
the model goes forward but we accept that a more centralised model
probably has to go forward because that is the way that the oil
will be better. Having said that, a centralised model of providing
communications is very important but not necessarily using the
same technology everywhere. I think we recognise there is probably
no one technology that can do a Scottish croft and some high tower
block in London. There are great variations in how we do this
but a centralised model of rolling out for the domestic arena—it
may be different for the non-domestic—I think is probably
the only way it could work effectively and in a timeline that
is compatible with the targets.
Paddy Tipping: We have talked a bit about
consumers and we will have a couple of questions on consumers
and then we will finish. Mike?
Q447 Mr Weir: You talked earlier
about muddled messages but if we are going to move to a low-carbon
economy there has to be a step change not just for government
and business but for consumers. The HSBC Climate Confidence Monitor
found recently that people think that climate change is probably
irreversible and there is not much we can do about it. How do
we change attitudes and get people to take action to meet the
targets that are being set, when they eventually are, which are
going to be very challenging?
Dr Porter: A big question that!
Mr Aldridge: We run lots of conferences
and we often get this concerned citizen in the audience who asks
four or five questions on this subject and the response we give
is, "Your premise is that this is not good for business;
our premise is that it is good for business."
Q448 Mr Weir: But that is not the
question. The individual citizen is going to have to take action,
not just business, and given there is going to be substantial
change in how we live our lives if we are going to meet 80% by
2050 or whatever, how do we get that message across to the consumer?
Mr Aldridge: I will go back a
little to what I said. There are a lot of companies that promote
their energy-saving techniques and their responsibilities through
the workforce by helping them in their homes. There is a number
of companies that do that so they promote things for saving in
the home on the basis that that culture and behaviour will be
brought back into the workplace. It is not complete answer but
it is one of the ways that industry is leading on this.
Mr Timmins: There is quite a lot
in what Alan said because I think the industry does get it and
we recognise that the carbon targets are setting the framework
for the market in the future and therefore the products and services
provided are going to be ones that actually help people to reduce
their energy, whether they know it or not. If there is a limited
choice of products and you can only buy the most efficient ones,
you are improving your efficiency. In terms of getting individuals
to change themselves, I think we need to be a bit more focused
and a bit more consistent in terms of the approaches we take.
It is not easy. It is three things. First, they have to see that
there is a value in doing it. Whether that is in relation to the
environment or in relation to their pocket or just in relation
to what they get is going to be better than what they have got
already. They have to perceive that it is easy to do. They have
to see that there is the right social context; they have to see
that other people are doing it, that government believes in it
and the public sector is taking action in the right way. It is
a different combination of those for different products but it
always comes back to these. If we fail on any of those points,
from anyone's own personal opinion about deciding to do something,
if you do not think it is of value ,you are not going to do it;
if you do not think it is easy to do, you are probably not going
to do it; and if you do not think anyone else is doing it, it
is quite likely that you are going to think it is not worth doing
it for me either. We have to be consistent and try and simplify
it. There is an awful lot of complicated talk about behaviour
change. It comes down to those and there is a lot inside those.
If we start thinking in those terms of are we making sure with
all of the things that we are trying to promote and all the messages
that we are getting, that we are getting those aspects right,
that is how I think we can succeed.
Dr Porter: I think it is making
sure that those messages come across from all the agencies that
a consumer talks to. I think there is a great deal of confusion
even amongst consumers who believe they want to do something,
having believed the press, shall we say, that there is a problem
here. They are actually doing some action and getting wrong advice
from local authorities, and going through the utility is not always
the easiest thing in terms of the processes, but it is making
it easier. We referred earlier to the street-by-street approach.
There are a number of problems in that approach, but I think the
philosophy that an organised, systematic approach that goes along
the road, along the street, along the close, offering the same
advice, the same offers and the same approach to a number of consumers
should certainly be tried. I am not saying now that it will be
a roaring success but I think there is enough in that approach
that could actually deliver a better, more co-ordinated roll-out
than the current system. I think it should be tried.
Paddy Tipping: That is a positive note
to finish on. Can I thank you, Howard, Colin and Alan, very much.
I am conscious that I stopped both Colin and Howard rather abruptly
at a couple of points. On the Tube home or back to work, if you
reflect on anything, "I should have told them that. I had
the opportunity to do that," just drop us a note because
it is still not too late to have your say, as it were. Thank you
all very much indeed and thank you to colleagues for sticking
with us.
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