Memorandum submitted by the Energy Saving
Trust
1. INTRODUCTION
1.1 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 for 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 inquiry. We do not attempt to answer questions
out of our area of expertise. Please note that this response should
not be taken as representing the views of individual Energy Saving
Trust members.
2. THE ROLE
OF INDIVIDUALS
2.1 The Growth Potential for Microgeneration
in England Scotland and Wales (2008) found that under the
right policy scenario, microgeneration technologies could contribute
up to 30 MtCO2 reduction by 2030, equivalent
to a 5% cut in total 2006 UK CO2 emissions.
This would require a number of policies including:
— A long lasting Feed In Tariff and Renewable
Heat Incentive, set at high enough levels to encourage widespread
uptake.[38]
— Intervention to either capitalise energy
savings and subsidies (front loading payments) or spread capital
investments (soft loans and Energy Services Company (ESCo) approaches)
— High levels of onsite renewables for
zero carbon homes
— Heavy investment in new and emerging
technologies such as fuel cell CHP
— Continued consumer campaigns to improve
consumer accounting for energy-based decisions.
3. THE ROLE
OF COMMUNITIES
3.1 Our report Power In Numbers (2008),
examines the potential and benefits for CO2 and
cost savings of distributed heat and power generation at the community
scale—as opposed to individual microgeneration. It found
that with appropriate policies, the potential for community distributed
generation could rise to 108Mt CO2 saving per
year, representing 65 per cent of the annual UK household
CO2 emissions. This policy could help meet 18 per
cent of the total UK energy demand. However In some community
types and sizes, even though there is already an economic case
today for community action, relatively limited activity has occurred
because of the "non-technical" barriers including:
— A lack of clear financial drivers to
initiate community energy projects.
— Very high set-up costs (planning, legal
costs, coordination), which are at risk before the project is
built and operating.
— The time and skills required to coordinate
the diverse interests within the community itself, as well as
the range of other stakeholders (local authorities, utilities,
finance providers etc).
— A lack of replicable, well-tested models
for deploying community energy projects.
— A lack of finance for the apparently
risky smaller community energy projects.
— For projects involving district heating
systems, there are difficulties in coordinating the retrofit of
a community system into a diverse range of domestic properties.
3.2 These could be overcome through:
— Financial incentives (RHI and FIT)
— Supplementing these financial support
mechanisms with low interest-rate finances
— Raise awareness of the benefits of community-wide
distributed generation and providing on the ground advice and
support.
We therefore urge the Committee to consider
the potential for householders and communities to make a meaningful
contribution towards the 80% CO2 reduction target.
RESPONSE TO
QUESTIONS
4. What opportunities exist for the creation
of a green new deal whilst pursuing a low carbon economy? Which
technologies have the biggest potential? Has the Government done
enough in its stimulus package?
4.1 The Energy Saving Trust believes a higher
percentage of the stimulus package should have been devoted to
the green sector. The UK devoted only 7% to green initiatives.
This compares to France (21%) and the USA (12%). If the UK intends
to be a leader in the green sector then far more investment is
needed in areas such as the renewable energy industry and energy
efficiency initiatives.
4.2 We believe that a number of microgeneration
technologies have the potential to deliver on this front. Our
report The Growth Potential for Microgeneration in England
Scotland and Wales found that a number of plausible policies
could lead to well over 2 million microgeneration installations
by 2020, and 3 million installations by 2020. Fuel cell CHP
systems were found to have particularly large potential to reach
mass market uptake post 2015. Please refer to the report for further
details of this.
5. How important is it to the UK economy
that it becomes a leading developer and exporter of low carbon
technologies? What Government policy needs to be in place to do
this?
5.1 We believe this is hugely important.
Investment in R&D is vital for all low carbon technologies
however, the current level is insufficient. A recent report by
UKERC found that low carbon technologies have significant prospects
for accelerated development. Technology acceleration through a
combination of increase public and private funding will lead to
cheaper low carbon power and reduce the cost of reaching an 80%
cut in CO2 by 2050. The report found that the
average benefits over the next 40 years are just under £1 billion
per annum. However, there is a need for a step change in R&D
funding to enable this to happen.
5.2 R&D budgets should not be solely
focused on large scale solutions but should give adequate attention
to household and community scale ones (including demand side management).
There is huge potential for the UK to take a lead in this side
of the industry as we have already done in the small scale wind
sector.
6. What is the potential role for public
procurement and policies such as the 2016 zero carbon homes
target in driving investment, development and job creation?
6.1 Public procurement which promotes these
technologies is vital. If government is seen to be taking a lead
on this issue, then it will inspire others to do so and add weight
to their claims to be a leader on tackling climate change. Public
buildings are also ideal in terms of providing anchor loads for
large scale district heating and CHP systems. These can then be
expanded to include building in the nearby areas.
6.2 The zero carbon homes target has a vital
role to play in the growth of the microgeneration sector. The
report we did in conjunction with BERR in 2008[39]
found that microgeneration installations in the future are highly
dependent on the strictness of the definition. With no offsite
solutions roughly 2.5 million installations could be expected
by 2020 (see graph below). Whilst we do not believe that
the definition should be this inflexible (as often this is not
feasible) we do believe that on-site microgeneration should be
maximised. This will in turn lead to significant job creation
in the sector.
6.3 Through encouraging the growth of the
UK's microgeneration industry there is significant potential for
job creation in the installation and maintenance sector. Our report
The Growth Potential for Microgeneration in England Scotland
and Wales found that up to 39,000 jobs could be created
by 2050 (see table below). However, several policies can
influence the demand for installers and servicing personnel considerably.
For example, a restrictive definition of Zero Carbon Homes causes
a large jump in personnel required between 2015 and 2020.
For the implementation of any policy to succeed it is essential
that the industry develops clear expectations of likely growth,
so that staff can be trained for the appropriate technologies
at the right times.
May 2009
38 The report states that support levels required today
to stimulate substantial uptake are over 40p/kWh (in addition
to the electricity price) for renewable electric technologies
(micro wind and PV), over 5p/kWh for microCHP-derived electricity
and over 2p/kWh for heat technologies. Back
39
The Growth Potential of Microgeneration in England, Scotland and
Wales Back
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