Memorandum submitted by the Micropower
Council
EXECUTIVE SUMMARY
The Micropower Council welcomes the Energy and
Climate Change Committee's inquiry into low carbon technologies
in a green economy. The Council represents the full range of low
and zero carbon technologies in the microgeneration sector many
of which are particularly important for the greening of the UK
building stock which is responsible for almost half of UK CO2 emissions.
Insulation work, though a vital step, will not by itself be enough
to achieve the Government's target of all homes being "near
zero carbon" by 2050 .[45]
The difficulty of reducing emissions from some other sectors of
the economy means that building emissions will probably have to
fall by more than 80 per cent to comply with the obligation
to reduce GHG emissions by 80% by 2050.
Microgeneration technologies can contribute
to the two key areas of interest to the Committee's inquiry; stimulating
the economy and achieving the UK's emissions reduction targets.
THE ROLE
OF MICROGENERATION
IN STIMULATING
THE ECONOMY
The Government's budget announced very little
in terms of strategic investment in establishing a mass market
microgeneration sector. The main obstacle to a wider roll out
of microgeneration is the high capital costs of the equipment.
This capital barrier is too great a hurdle for many even though
the technology will often provide substantial savings over its
lifetime. Whilst the microgeneration sector remains only a fraction
of the UK's home heating and power sector, companies are still
investing in installation training centres and product development
with the anticipation that the sector has the potential to expand
substantially.
Whilst a number of forward thinking companies
are showing leadership, one barrier to their success remains the
lack of certainty provided by Government policies. Government
documents and statements contain many laudable ambitions but the
actual implementation of definitive policies remains slow. For
example, the Government first announced its intention for all
new homes to be zero carbon by 2016 in 2006 but industry
still has not final definition of what "zero carbon"
is and the latest consultation proposes a review of some of the
policy in 2012. In effect, there will be an absence of certainty
over the zero carbon homes policy among the microgeneration sector
until any review is completed. Companies are far less likely to
invest and will struggle to raise external capital if there is
a lack of certainty in policies. Simply stating that homes will
be zero carbon is inadequate for investor confidence for a given
technology. Companies waiting to launch expansion plans in anticipation
of the 2016 market are being frustrated, to the extent that
British based companies and workers may miss out on the opportunity
to capitalise on the change in regulations.
For the UK to be a centre of excellence in the
microgeneration sector policies must convert consumer desire for
such equipment into tangible sustained demand. When this happens
companies will invest more in research and development and develop
as leaders in their field leading to a healthy export market.
If the policy framework and financial support mechanisms are less
competitive than other countries the UK, despite having a long
tradition of being a centre of innovation, will not become centre
of ongoing manufacture and export. With 25 million homes
and the potential market is massive; Government leadership is
required to see that market opportunity exploited.
The key financial drivers for the sector are
the Feed-in-Tariff and Renewable Heat Incentive due to be implemented
in April 2010 and April 2011 respectively. If appropriately
formulated and adequately funded, these could remove the capital
cost barrier to uptake and drive the market. These policies must
be easily accessible to the consumer with a minimal bureaucratic
burden. The industry is capable of delivering a major shift in
the number of installations providing skilled manufacturing, installer
and servicing jobs but are reliant on the Government implementing
well designed policies giving long term certainty and adequate
capital cost support. The Micropower Council have produced a paper
on how these policies should be run to ensure that all stakeholders
derive the maximum benefit. The Council can send the report on
its policy recommendations to the committee if required.
The dramatic rise in oil and gas prices in 2008 led
to a substantial increase in enquiries about microgeneration products
but the current economic downturn has affected the sector as discretionary
spend has been cut by consumers across the board.
MICROGENERATION AND
REDUCING EMISSIONS
To decarbonise the UK economy a wide range of
technologies and installation sizes will be required. Effective
and widespread deployment of microgeneration could reduce demand
from many millions of homes and businesses freeing up the larger
generation stations to supply other parts of the economy such
as industry and transport. The key to rolling out a mass market
is clear, certain support through both fiscal and non-fiscal policies.
The need for fiscal support is highlighted earlier in this paper.
Two principal policies to drive the uptake of microgeneration
technologies are the zero carbon homes and buildings agenda and
the intention to dramatically reduce the emissions of the existing
housing stock.
ZERO CARBON
HOMES
The Micropower Council has produced a report
on zero carbon homes setting out how the policy could be developed
to ensure zero carbon homes are truly zero carbon and generate
support for the industry. Achieving zero carbon is possible and
has been demonstrated several times, yet the recent Government
consultation appeared to weaken the definition to the point where
homes are unlikely to merit being called zero carbon. As already
mentioned, the proposal of a review of the allowable solutions
list in 2012 will only stall investment and innovation in
the UK market. The Micropower Council recommends that a clear
direction is set out in the Zero Carbon Homes and Buildings definition
and that this be written in such a way that technological innovation
and improvement can be readily incorporated into the definition
without a need for any review. This will encourage investment
in both new and existing technologies. Retrofitting properties
with energy efficiency and microgeneration measures is more costly
and disruptive than building them to a high standard initially.
The Government acknowledges this fact but seems reluctant to implement
policies that will lead to such benefits.
EXISTING HOUSING
It is estimated that at least 70 per cent
of the existing housing stock will be in place in 2050 and,
therefore, emissions from these homes must be tackled as part
of any commitment to reduce emissions. Tackling retrofit is very
challenging due to the wide range of different house types, available
heating sources and planning restrictions such as conservation
areas and listing. The appropriate solution for each house is
different and, therefore, formulating policy is difficult as,
if highly prescriptive, it will probably be very inappropriate
for some, if not most, dwelling types. The wide range of microgeneration
technologies, however, facilitates an appropriate low carbon solution
for a given house type.
Retrofitting has other key advantages such as
reduced fuel bills, insulation from fossil fuel and electricity
price volatility and more comfortable homes with more even temperatures
(minimising cold spots, dampness and mould). Again, the key to
roll out of these technologies along with vital energy efficiency
measures, is business confidence and appropriate levels of Government
support. A key example where government has failed to give clear
direction to industry is over permitted development rights for
micro wind turbines and air source heat pumps. The Government
announced over a year ago the intention to move ahead with permitted
development[46]
for these technologies. The parliamentary under secretary of state
Iain Wright announced in a written statement to parliament that
the only remaining issue to be resolved, that of noise levels,
was now resolved and was to be set at 45 dB(A).[47]
This announcement was made on 13th March 2008 and yet there
has been no progress since then and British manufacturers and
struggling as a result. A study commissioned for the Scottish
Government revealed that air source heat pumps were the most cost
effective of a range of technologies[48]
at removing off gas-grid households from fuel poverty.[49]
Affordability is a key strand of energy policy and this technology
can help many of the UK's 5 million fuel poor households
but the lack of permitted development represents a huge hassle
barrier to many. Work by National Energy Action has shown that
as well as bill reductions of up to 70%, emissions savings of
up to 60% were also seen. Such simple but substantial barriers
are completely at odds with government targets on fuel poverty
and emissions reductions. The Micropower Council has written report,
"Retrofitting for the future—reducing the UK's housing
energy demand" which we would be happy to send through
to the committee.
The Micropower council aims to provide constructive
policy advice to enable the promotion of microgeneration technologies
within the context of the Government's emissions and fuel poverty
obligations. We would be willing to submit any of our report to
the committee and provide further evidence to help the committee
in its inquiry.
May 2009
45 Heat and Energy Savings Strategy Consultation, Departments
of Energy and Climate Change and Communities and Local Government
February 2009. Back
46
Permitted development rights would grant householders to carry
out prescribed work set out in legislation without the need to
seek planning permission. The legislation contains restrictions
which, in the case of microgeneration, will ensure that products
are appropriate and correctly installed. Back
47
Hansard 13 March 2008, column 21WS. Back
48
Measured as number of homes removed from fuel poverty per £1
million of Government grant. Back
49
The Scottish renewables heating pilot, Scottish Government 2008. Back
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