Environmental Audit CommitteeWritten evidence submitted by Calor Gas Ltd
“The fact is, thousands and thousands of our customers have already taken advantage of this amazingly generous subsidy and are enjoying the many benefits.”
Solar Fusion Ltd leaflet, distributed to homes, 2013.
Executive Summary
1. Subsidy to wind has been on a rising trend since 1991: the annual subsidy will reach £5 billion in 2020—this subsidy burden is ultimately borne by households. Subsidising an industry for 30 years leads to a dependent and vulnerable industry rather than a commercially viable industry. Denmark has found that subsidy to wind creates no net jobs, has depressed its GDP and has distorted its economy away from more profitable sectors.
2. Wind is an intermittent technology with an unfortunate tendency not to deliver during the coldest weather. It has to be backed up 80% by fossil fuel power, and thus embeds a significant need for fossil fuel generation for decades to come. The Government has made no calculation of the cost of installing this back-up power.
3. Wind-power from offshore is double the cost of cheaper, alternative means. Its subsidy costs the economy far more than the value of the carbon it saves. The Government recognises significant negative environmental negatives from wind, and these need to be added to the debit side of the balance sheet.
4. Subsidy to biomass is likely to surge as biomass capacity is likely to at least double from 2012 levels. 92% of RHI accredited installations are biomass boilers, and RHI installations with their accompanying subsidies are rapidly rising, too.
5. Biomass increases carbon emissions in the short to medium term—conditions are unlikely to be met for it ever to repay its own carbon debt, even after 90 years.
6. The demand for wood in UK biomass is met mainly by imports, increasing our reliance on third parties, worsening the trade balance, and causing enormous loss of habitat abroad.
7. RSPB, Friends of the Earth and Greenpeace calculate that Drax biomass power station alone will be getting a subsidy of £550 million a year by 2016 from the taxpayer. At that rate, it costs £225 to save one tonne of CO2—three times the computed social cost of the carbon.
8. Government made the assumption that there are no net emissions from biomass production. In fact, the drying process alone causes high energy consumption with a high environmental impact. DECC has acknowledged, however, negative environmental effects, including on climate change and air quality, of increased transportation throughout the lifetime of a biomass facility. Government does not know how much black carbon—a potent global warming factor—is emitted by biomass combustion.
9. Particulates emitted to air cost an associated loss of total population life of 340,000 life-years, a greater burden than the mortality impacts of environmental tobacco smoke or road traffic accidents; under the previous Government’s targets for biomass this loss of life would have been doubled. The social costs of early death and disease to be caused annually by biomass are now calculated at £1399 million. Householders are paying subsidy to have their lives significantly shortened. Other poisons are emitted to air, including tonnes of arsenic and hexavalent chromium (of Erin Brokovich fame). This will add to the external costs of biomass.
10. Subsidy to heat pumps is set to rise significantly when RHI payments for the technology begin in 2014 for domestic households.
11. Tests to date on installed heat pumps show most failing the test of sustainability. Failures would not count towards our renewables target and could either completely waste or forfeit subsidy. Most heat pumps when installed do not do what it says on the tin.
12. Heat pumps are highly consumptive of electricity. Large scale installation of pumps would mean having to reinforce the grid at great cost. For instance, by 2030, each heat pump in a rural area could cause extra reinforcement costs of up to £1,130—another cost to be heaped upon the shoulders of electricity consumers, and this for a technology that so far does not work in most cases.
13. DECC does not know the total of subsidy devoted to renewables so neither the Department nor the Public Accounts Committee can do a study to ascertain whether the subsidy is good value for money.
14. Total subsidy to renewables over the period to 2030 has been calculated by a third party at £130 billion—this cost will be paid through fuel bills. Is this supportable in an age of austerity, where some 4.5 million families are already in fuel poverty?
15. The total cost of renewable energy policies (subsidy plus extra network costs) is about £175 billion by 2030. Will the value of carbon saved by 2030 be worth over £175 billion because if not the policy is fatally flawed?
1. The subsidy to wind is rising to insupportable levels
1.1 The original intent was that subsidy would be degressive as wind approached commercial viability. The opposite has been the case—subsidy has been on a rapidly rising trajectory. In 1990–2000 total subsidy to wind was £7.3 million (WA, 28.2.11, col. 244W). £2.2 billion was spent in subsidy to wind between April 2002 and March 2010 (WA, 11.2.2011, col. 457W). Subsidy to wind will rise to £5 billion in 2020 (WA, 4.7.2011, col. 1072W). If after thirty years of rising subsidy the industry remains commercially unviable it is never likely to be commercially viable.
1.2 The day-ahead wholesale electricity price averaged approximately £50/MWh in June 2011, according to the London Energy Brokers Association. The level of renewables obligation support available to onshore wind farms is one renewables obligation certificate (ROC) per MWh of electricity generated, and that available to offshore wind farms is two ROCs per MWh. The expected value of a ROC is constant over time at around £43 in 2011–12 prices (WA. 4.7.2011, col. 1073W). Thus, for offshore wind the total level of subsidy is 172% of what it costs to generate electricity on a commercial basis.
1.3 The cost of wind power from the consumer’s perspective is not simply the basic cost of generation, plus the subsidy (paid by the consumer) but also the cost of integrating wind into the grid (also ultimately paid by the consumer). The cost of integrating wind comprises three elements—system operation costs of £16/MWh caused by errors in wind forecasting; transmission upgrade costs of £20–23/MWh to move the energy from wind farms to load centres; and, a planning reserve costing some £24–28/MWh to keep conventional plant running at a reduced load factor ready to pick up on wind’s incapacity to deliver on windless days (Source: Colin Gibson, “A Probabilistic Approach to Levelised Cost Calculations” 2011). So, the system cost from the consumer’s perspective totals £190/MWh for onshore wind and £270/MWh for offshore wind. In contrast, a combined cycle gas plant generates at £66/MWh.
1.4 Households pay approximately 40% of the Renewable Obligation costs. The remaining 60% of the RO cost imposed on industry, commerce and the public sector is ultimately paid for by households in terms of increased costs of goods, services and taxes.
2. The cost of subsidising wind is far more than the cost of the carbon it saves
2.1 What is the cost-benefit analysis of subsidising wind? Its supporters say that it reduces carbon emissions. In 2002, the UK Government Economic Service recommended an estimate for the social cost of carbon at £70/tonne of carbon for use in policy appraisal across Government. The Renewable Energy Foundation (REF) has found that onshore wind costs £93/MWh to remove a tonne of carbon from emissions and offshore wind £185 per tonne. On this basis, wind costs more to society than the carbon it displaces—and in economic terms, offshore wind costs our economy far more than double the carbon it is meant to displace.
3. DECC knows full well about the “severe negative” environmental effects of wind
3.1 DECC itself has enumerated the environmental negatives of wind. Paras. 3.24ff of the “Appraisal of Sustainability for the revised draft NPS for Renewable Energy Infrastructure: Non-Technical Summary” (DECC, October 2010) can be summarised -the construction of wind farms has a negative environmental effect; this impact could be severely negative when wind farms are close together; offshore wind farms could have a severely negative impact on international navigation routes; noise disturbance can be a hazard for humans and fauna and the disturbance lasts for 25 years; the visual effects could be significant and would last 25 years; where wind farms are clustered the impact will be cumulative; and, clustered wind farms offshore may result in increased flooding of the coast.
4. Wind, far from creating jobs, may have a negative effect on GDP
4.1 UK Government support is posited on the kit lasting 25 years. But, “Wind Energy—the Case of Denmark” CEPOS, September, 2009 found that, “Many 10 to 15 year-old turbines are past their useful life”. This puts into question the strategic, economic and environmental benefits of a power plant that may have to be scrapped, replaced and resubsidized every ten to fifteen years. On the plus side, then, the negative environmental effects listed by DECC may last 10 to 15 years less than expected, but conversely subsidised plant which lasts half as long as expected will produce a lot less electricity, a lot more expensively over its lifespan.
4.2 The Danes have subsidised wind power since 1988, and in 2007 generated 19% of their demand by wind turbines. They are further along the curve than we are. CEPOS concluded:
“The Danish Wind industry counts 28,400 employees. This does not, however, constitute the net employment effect of the wind mill subsidy. In the long run, creating additional employment in one sector through subsidies will detract labor from other sectors, resulting in no increase in net employment but only in a shift from the non-subsidized sectors to the subsidized sector… The subsidy per job created is 600,000–900,000 DKK per year ($90,000–140,000). This subsidy constitutes around 175–250% of the average pay per worker in the Danish manufacturing industry.
In terms of value added per employee, the energy technology sector over the period 1999–2006 underperformed by as much as 13% compared with the industrial average. This implies that the effect of the government subsidy has been to shift employment from more productive employment in other sectors to less productive employment in the wind industry. As a consequence, Danish GDP is approximately 1.8 billion DKK ($270 million) lower than it would have been if the wind sector work force was employed elsewhere.”
4.3 Evidence from the UK so far strengthens these concerns. In the period 2002–10 the UK spent £5 billion subsidising dedicated renewable electricity generators, at a cost of £230,000 per wind industry worker over that period. Subsidy per wind industry worker in the year 2009–10 amounted to £54,000—greatly in excess of the median earnings in either the public (£29,000) or the private sectors (£25,000) (Source: “The Green Mirage” by John Constable, August 2011). While it is not yet possible to estimate the net employment impacts of such costs, they are unlikely to be positive.
5. Wind is intermittent and inherently unreliable especially in the depth of Winter
5.1 The UK Renewables Strategy 2008 was frank about wind:
“3.9.4 Analysis of wind patterns suggests that, at high penetration levels in the UK, wind generation offers a capacity credit of about 10–20%. This is an indicator as to how much of the capacity can be statistically relied on to be available to meet peak demand and compares to about 86% for conventional generation. This means that controllable capacity (for example fossil fuel and other thermal or hydro power) still has to be available for back-up at times of high demand and low wind output, if security of supply is to be maintained. New conventional capacity will, therefore, still be needed to replace the conventional and nuclear plant which is expected to close over the next decade or so, even if large amounts of renewable capacity are deployed…
3.9.6 In the British market electricity generating capacity does not earn money simply for being available; it earns money only when it actually generates. This is consistent with striking the optimal balance between costs and benefits of spare capacity on the system. It also means that wholesale electricity prices are likely to rise to very high levels at times when high demand and low wind speeds coincide. This is necessary in order to cover the costs of plant which does not get to generate very often, and so ensure that generators are incentivised to provide back-up capacity.
3.9.7 It is nevertheless possible that uncertainty over returns on investment, because of the difficulty of knowing how often plant will get the opportunity to run, will discourage or delay investment in new conventional capacity—or speed up the closure of existing capacity—and hence increase the risk of occasional capacity shortfalls.”
5.2 The Revised Draft NPS on Energy accepts this argument: “An increase in renewables will therefore require additional back-up capacity and mean that we will need more total electricity capacity than we have now” (Para.3.3.11).
5.3 Put more plainly, every 10 new units worth of wind power installation has to be backed up by what are likely to be eight new units worth of fossil fuel generation, because fossil fuel can and will have to power up suddenly to meet the deficiencies of wind. Wind does not provide an escape route from fossil fuel but embeds the need for it. Nuclear runs at base load and cannot power up to cover the absence of wind. If fossil fuel plant has to be constructed and stand by waiting for wind to default then its power will have to be more expensive in order for the plant to “wash its face”. So, the effect of having a large investment in wind is to drive up the price of power generally. Surprisingly, Government has not worked out the costs: “The Department has not provided estimates of the cost of constructing fossil fuel power stations to compensate for intermittency in the period out to 2030” (WA 9.2.2011, col. 356W).
5.4 The Daily Telegraph reported on 11 January 2010 that out of a UK capacity of 5% wind was delivering 0.2% during the January cold spell. The wind was not blowing when most needed. Andrew Horstead, a risk analyst for energy consultant Utilyx, commented: “This week’s surge in demand for energy in response to the cold weather raises serious concerns about the UK’s increased reliance on wind power… Failure to address these concerns could mean further rationing of energy in future years and could even lead to black-outs, so it is vital that the UK Government takes action now to avoid the lights going off,” (ibid). The poor performance of wind in January 2010 was echoed in the cold snap of December 2010: The Times of 3 January 2011 reported that since the beginning of December turbines had been operating at only 20% of their capacity—on 2 January wind was contributing but 0.5% of the country’s power. At the coldest times of year then, wind power has an unfortunate tendency to make itself unavailable.
5.5 Low wind conditions can prevail at times of peak load over very large areas and that low wind load factors in other European countries can coincide at exactly the same time—a European Supergrid may not be able to solve such problems. Wind power can be highly variable year on and back-up conventional generators will not only have uncertain income over shorter timescales, but will face significant year on year variations—all this forces up energy costs for the hard-pressed consumer.
Subsidy and Biomass
6. Subsidies to biomass are rising fast
6.1 The value of subsidy given to biomass generation in 2010–11 was £370 million (WA, 29.6.11, col. 850). This subsidy is on a rising trend as well. 92% of Renewable Heat Incentive payments are for solid biomass boilers. RHI applications and installations are rising rapidly. For large scale electricity generation by biomass dedicated regular biomass generation receives 1.5 ROCs/MWh, while “advanced conversion technologies” (gasification, pyrolysis and anaerobic digestion), dedicated biomass burning energy crops, and dedicated regular (non-energy crop) biomass with CHP all receive 2 ROCs/MWh. Installed capacity of plant biomass and co-firing in 2012 was 1,399MW but this figure—and the pertinent subsidy—is due to rise significantly (3,812MW of biomass capacity have been approved in the planning system).
7. Biomass emits more GHGs than fossil fuels; its carbon debt is unlikely to be repaid
7.1 The purported benefit from subsidising biomass is reducing carbon emissions. The UK regards biomass as “zero carbon” yet defines it as sustainable if it makes GHG savings of 60% over fossil fuels: “These sustainability criteria include a minimum greenhouse gas emissions saving of 60% compared to fossil fuel” (WA, 20.1.11). It does not need an advanced arithmetical or logical mind to recognise that a 60% reduction in emissions from fossil fuel levels is not and cannot be regarded as “zero-carbon”. This is a logical somersault too far, conveniently—for the sake of cherry picking this technology—equating 40% to 0%! However, doubts about the true sustainability of biomass go much further.
7.2 In 2010, a Manomet report for the Commonwealth of Massachusetts (“Biomass Sustainability and Carbon Policy”, June 2010) acknowledged, “Growing concerns about greenhouse gas impacts of forest biomass policies” and quoted the IEA report “Bioenergy” (2009): “Conversion of land with large carbon stocks in soils and vegetation can completely negate the climate benefit of the sink/bioenergy establishment”. The UK Environment Agency is alert to this danger: using biomass for generating electricity and heat could help meet the UK’s renewable targets but “only if good practice is followed…worst practice can result in more greenhouse gas emissions overall than using gas (‘Biomass—carbon sink or carbon sinner?’ April 2009).”
7.3 Manomet discussses the varying rates by which regrowing forests repay the carbon debt incurred by their removal and combustion: burning biomass emits more greenhouse gases than fossil fuels: “Forest biomass generally emits more greenhouse gases than fossil fuels per unit of energy produced. We define these excess emissions as the biomass carbon debt. Over time, however, re-growth of the harvested forest removes this carbon from the atmosphere, reducing the carbon debt…Over a long period of time, biomass harvests have an opportunity to recover a large portion of the carbon volume removed during the harvest. However, this assumes no future harvests in the stand as well as an absence of any significant disturbance event. Both are unlikely.” Recovering the carbon debt is a gamble, and it seems strange to be cracking open these cheap and natural stores of carbon while at the same time investing billions of pounds in trying to create as yet unproven carbon capture and storage technologies.
7.4 A report supported by the DG Development and DG Environment of the European Commission (“Flows of biomass to and from the EU”, July 2011) concluded: “Analysis of the data and trade statistics looked at in this report shows that the quantity of wood required to satisfy the 2020 targets is likely to be too large to be met by increased production within the EU…Most of the increase in imports will therefore most likely come from Canada, the USA, and perhaps also Russia (if the risks associated with imports from Russia do not become prohibitive when the EU’s Illegal Timber Regulation is fully implemented in 2013). This risks not only damaging ecosystems in other parts of the world, but will also increase the EU’s own carbon footprint”.
7.5 DECC admits that, “The UK is expected to be increasingly reliant on biomass imports in the future”—this for a commodity that was once vaunted as decreasing our reliance on third parties. Unfortunately, HMG does not know how much wood is being imported for biomass combustion (WA, 1.12.2010, col.801W). We do know, however, that imports are increasing very fast: imports of wood pellets into the EU rose by 50% in 2010 alone (The Economist 6 April, 2013) and that DECC itself expects that approximately 80% of feedstock to come from imports. The RSPB, Friends of the Earth and Greenpeace conclude: “Demand for wood, for electricity generation, will therefore add to the existing trade imbalance” (“Dirtier than Coal?” by RSPB, Friends of the Earth and Greenpeace 12 November 2012).
7.6 The EEA Scientific Committee on Greenhouse Gas Accounting states that the assumption that burning biomass is carbon neutral is incorrect: “Using land to produce plants for energy typically means that this land is not producing plants for other purposes, including carbon otherwise sequestered.” If biomass production replaces forests, reduces forest stocks or forest growth, which would otherwise sequester more carbon, it can increase carbon concentrations net. If biomass displaces food crops—as biofuels did—this leads to hunger if crops are not replaced, and to emissions from land use change if they are. To reduce carbon in the air, the Committee concludes, bioenergy production must increase the net total of plant growth, or it must be derived from biomass wastes that would otherwise decompose. The Committee warns that the danger of this error is “immense”. It states, “Current harvests…have already caused enormous loss of habitat by affecting perhaps 75% of the world’s ice and desert free land, depleting water supplies and releasing large amounts of carbon into the air” (“Opinion of the EEA Scientific Committee on Greenhouse Gas accounting in Relation to Bioenergy”, 15 September, 2011).
8. As with wind, biomass subsidy costs more than the carbon it purports to displace
8.1 The RSPB, Friends of the Earth and Greenpeace comment that DECC’s flawed emission accounting on biomass has led to a situation where, “Burning whole trees in power stations would make global warming worse, undermining goals of reducing our greenhouse gases by 2050”. On that basis they call for the withdrawal of public subsidies for generating electricity from feedstocks derived from tree trunks and to refocus support for bioenergy on the use of wastes and other feedstocks that are harvested sustainably. We agree. At a subsidy of £45 per MWh, it has been calculated that Drax, just one power station in the UK will be getting a subsidy of £550 million a year by 2016 from the taxpayer. At that rate, it costs £225 to save one tonne of CO2 (“Dirtier than Coal”, op.cit.). Even DECC has admitted: “Compared to offshore wind dedicated biomass electricity is a costly way of saving carbon,” (“Renewables Obligation: Consultation on a notification process for new build dedicated biomass projects”, May 2013). This is saying something because as already pointed out in para. 2.1 offshore wind costs our economy far more than double the carbon it is meant to displace.
9. Biomass emissions during production are underestimated
9.1 The “UK Biomass Strategy” (2007, p.41) made a blasé and dangerous—assumption: “For all biomass resources no net emissions during production assumed”. All the emissions produced during planting, harvesting, sawing up, drying and delivery of these bulky and heavy items are ignored. E4Tech’s study on biomass prices for DECC (“Prices in the heat and electricity sectors in the UK”, January 2010) makes the assumption that for the wood pellet imports there would be 50km of road transport necessary for production purposes, 200km of road transport necessary in the country of origin, sea transport of 1500km and 50km of road transport necessary in the UK. This cannot be written off as equating to “no net emissions”. The Environment Agency pointed out (“Biomass—carbon sink or carbon sinner?” op.cit.): “How a fuel is produced has a major impact on emissions: transporting fuels over long distances and excessive use of nitrogen fertilisers can reduce the emissions savings made by the same fuel by between 15 and 50% compared to best practice”.
9.2 Besides, and probably more importantly, biomass has to be dried before combustion can take place. Environmental emissions result from both the drying process and combustion in the boiler. These emissions typically include particulates, VOCs, and NOx to the extent that a common problem around biomass drying plant is so called noxious “blue haze”. “Biomass and Bioenergy“ confirms that, “Forest residues require a drying stage, which involves high energy consumption and high environmental impact” (Volume 34, Issue 10, October 2010, pp. 1457–1465). The pollution caused by these emissions should be calculated and factored into policy.
10. DECC knows full well about negative environmental effects of biomass “in the short, medium and long term”
10.1 The revised Draft NPS for Renewable Energy documents (December 2011) also revealed the damage to the environment likely from “considerable” transport movements: “Depending on the location of the facilities, air emissions and dust, which could impact sensitive flora, may also be increased through the high number of heavy goods vehicles transporting fuel and combustion residues” (p25). “There are potential negative environmental effects, including on climate change and air quality, of increased transportation throughout the lifetime of the facility…The overall effect of implementation on traffic and transport of biomass/waste combustion through the implementation of EN-3 is considered to be negative in the short, medium and long term. These effects are primarily from the movement of fuel and residue during the operational phase of the facility, although some significant, short term, local negative effects may result from the movement of component parts to the facility during construction” (p.39/40). The Revised Draft National Policy Statement for Renewable Energy Infrastructure (EN-3) admits some of this environmental damage: “Biomass or EfW plants are likely to generate considerable transport movements. For example, a biomass or EfW plant that uses 500,000 tonnes of fuel per annum might require a minimum of 200 heavy goods vehicles (HGVs) movements per day to import the fuel. There will also be residues which will need to be regularly transported off site” (para.2.5.22).
11. We should measure and control emissions of black carbon and isoprene from biomass before we deem it sustainable
11.1 We need to adopt a precautionary principle in relation to the emissions of black carbon (BC) from biomass. BC is part of the particulate emissions caused by combustion. BC is the second largest contributor to global warming after CO2. The UN’s Economic Commission for Europe found that, “Urgent action to decrease (black carbon) concentrations in the atmosphere would provide opportunities, not only for significant air pollution benefits (eg health and crop-yield benefits), but also for rapid climate benefits, by helping to slow global warming and avoid crossing critical temperature and environmental thresholds” (UNECE’s Executive Body for the Convention on long-range transboundary air pollution, meeting in Geneva, 15–18 December 2008: Item 13 of provisional agenda). The possibility that biomass could potentially contribute significantly to global warming by emissions of BC would be perverse indeed.
11.2 The Government does not know how much black carbon is emitted, or potentially emitted specifically by burning biomass in the UK, nor has it assessed how international control measures in the pipeline on black carbon might undermine the principle of subsidizing biomass combustion (WA, 4.5.2011: Col. 782W) . It should remedy these black holes of knowledge.
12. Biomass combustion leads to early death and illness on a significant scale
12.1 Biomass combustion can kill people. The particulates it emits damage human health by attacking lungs, hearts and brains. The latest Public Health Observatory data puts the percentage of total mortality attributable to particulates in England at 5.6%. What part of that can be attributed to biomass? We can work out the damage in terms of lives shortened and lost from an Impact Assessment published by DECC on new standards designed to cut down on the current level of mortality from biomass combustion. The quantum of mortality caused by biomass boilers currently being sold can be calculated from the assessment at £4343 million. The new limits will, if implemented, cut this reduction in life years to an equivalent of £1399 million. However, the new limits apply only to the larger particulates, and evidence is growing that the smaller particulates are more harmful than the large. No sum of the mortality caused by smaller particulates from biomass has been given. One must assume nonetheless that the impact from these smaller particulates in reducing human life-spans will be considerable.
12.2 The Committee on the Medical Effects of Air Pollution estimated that the 2008 burden level of particulates cost an “associated loss of total population life of 340,000 life-years…a greater burden than the mortality impacts of environmental tobacco smoke or road traffic accidents” (“The Mortality Effects of Long-Term Exposure to Particulate Air Pollution in the United Kingdom” 21 December 2010). Remarkably, this figure is exactly the level of extra burden of mortality to have been inflicted on the UK atmosphere by 2020 under the previous Government’s policy on biomass, with its target of 38TWh by that date. No wonder Government has resiled from a specific target. The last Labour Government was aware biomass boilers deteriorate as they age so proposed an annual MOT test on domestic biomass boilers—all mention of such an annual MOT test on boilers has since been dropped.
12.3 A rising output of particulates from biomass will add to our problem in complying with the EU air quality limits. Current UK emissions of particulates are acknowledged by the Government to be “relatively high” and could cause rack up fines for the UK’s infringements. The Government calculates that over 3,500t of larger particulates will be emitted to air in 2020 from biomass—a self-inflicted injury subsidised by the taxpayer, because without deliberate policy cherry picking of this technology and without significant subsidy mass generation of electricity from biomass would not be viable.
12.4 Biomass combustion also releases a wide variety of other pollutants into the air that we breathe. Non domestic burning of biomass emitted in 2010 160t of chromium, 130t of arsenic, and 16t of hexavalent chromium (WA, 23.5.2012.). Arsenic is poison: chromium and hexavalent chromium are carcinogenic (the latter being of Erin Brockovich fame). These figures will rise as more biomass capacity comes on stream, and the related morbidity and mortality toll will rise. We suspect that a location near a biomass plant will reduce the value of the housing concerned.
Subsidy and Heat Pumps
13. Subsidy to heat pumps is set to rise
13.1 Subsidy is currently provided to householders who install an air source heat pump (ASHP) at the rate of £850 per installation; and at a rate of £1,250 for householders who install a ground source heat pump (GSHP). Renewable Heat Incentive payments for operating these systems are scheduled for introduction in domestic premises from next year at an indicative rate of 6.9–11.5p/KWh for ASHPs and of 12.5–17.3p/KWh for GSHPs.
14. Too often, heat pumps when installed fail to deliver value for money
14.1 The key to whether heat pumps deliver value for money or not is the Coefficient of Performance (CoP) of the heat pumps in the field. Heat pumps extract heat from the ground or air and redirect the heat for space heating and hot water. CoPs represent the ratio of heat produced per unit of electricity consumed in generating that heat. A CoP of 3 means that 3kWh of heat are output for 1kWh of electricity used to run the pump. Higher CoP values represent relatively more efficient heat delivery. Heat pumps must achieve a CoP of 2.9 before their energy can contribute to the renewable energy target. Note that even with CoPs of 2.9 the carbon footprint of heat pumps will be higher than the fossil fuel, natural gas, so the UK taxpayer will be paying to incentivise the expensive and disruptive installation of a technology that is more polluting than a widely used fossil fuel.
14.2 A study of installed heat pump performance published by the Energy Saving Trust on 8 September 2010—“Getting Warmer: a field trial of heat pumps” revealed that the actual performance of heat pumps installed in the UK was surprisingly poor. The study was financed by the heat pump industry and based on a sample of sites where pumps had been installed pre-selected by the industry. The pumps were installed and accredited through the Microgeneration Certification Scheme’s immediate predecessor, the Clear Skies programme. The study showed that only one of the 22 properties with Ground Source Heat Pumps (GSHPs) achieved the implicit minimum EU Directive CoP, and only nine of the 47 sites with ASHPs achieved the standard. REF commented on this report: “The risk of premature adoption and consumer disenchantment is clearly real, thus raising the spectre of a UK heat pump tragedy… On the basis of this study, there seems a distinct risk that some heat pumps will be subsidised even though they fail to meet the minimum standard for being considered a renewable energy source. If, on the other hand, government withdraws subsidies from such installations, well-meaning householders may discover after investing heavily in a heat pump that their installations fail to come up to the required EU standard, and thus forfeit entitlement to RHI payments” (“Renewable Heat Initiative”, September 2010).
14.3 Something similar occurred during the Joseph Rowntree Foundation study in Elm Tree Mews in York where a communal ground source heat pump was installed with a nominal design CoP efficiency of 3.2–3.5. Despite a number of interventions, throughout the year of monitoring the delivered CoP efficiency was 2.15—that is, it failed the renewable test of reaching a CoP of 2.9, and would not be good value for the householder, nor contribute towards national renewable targets. Potentially, expensive technology will have been installed under a false premise.
14.4 A report by the Association for the Conservation of Energy, “Improving the energy efficiency of off-grid properties—the role of different heating technologies”, (March, 2011) made assumptions about the CoPs of heat pumps based on international data: “For GSHPs we assume a lower end CoP of 2.3 and a higher end CoP of 3.5. For ASHPs we assume a CoPs of 2.15 and 2.7 respectively”. On this basis all ASHPs would fail the test of being renewable since the qualifying bar for this is set by DECC at 2.9, and would not deliver savings towards the EU targets; some GSHPs would also fail.
14.5 The Building Services Research and Information Association (BSRIA) is the leading independent UK laboratory for testing, certification and performance verification of a wide range of building services products. Its website discusses the pros and cons of heat pumps: “Test conditions (and hence manufacturers’ quoted CoP data) can therefore differ significantly from actual design and operating conditions”. This confirms the essential point that it is not enough to accept pre-installation manufacturers’ quoted CoP data. BSRIA avert to manufacturers claiming impressive CoPs but say BSRIA, “This data should be treated with caution”.
14.6 The BSRIA website proceeds to make the point that heat pumps can struggle at the coldest times of year, and their CoPs can fall below the acceptable: “The relevant test standard for most packaged heat pumps is BS EN 14511. For an air-to-water heat pump the standard specifies test conditions of 7oC outdoor air temperature (source temperature). At external air temperatures lower than this, the COP will fall, as will the heating output of the heat pump. Depending on the application this reduction may be significant, such as during a cold winter morning when building pre-heat is needed”.
14.7 In England the average daily temperature is below 7°C in January and February; in Scotland, the average daily temperature is below 7°C in December, January, February and March. The risk is, then, that for substantial parts of the year, varying by location heat pumps will struggle to deliver heat when it is cold outside. Recent experience of cold Winters emphasises this point. Met Office statistics for December 2010 show mean temperatures for the UK of -1°C, -0.5°C for England, -0.4°C for Wales and -1.9°C for Scotland. Indeed, in 2010, Met Office statistics show the mean temperature for the year to be 8°C in England and 6.5°C in Scotland—note below the 7°C reference point on average for the whole year. Perhaps it should come as no surprise that ASHPs should not prove so efficient when installed in the UK as their comparative systems in warmer continental countries.
14.8 DECC is well aware of the problem: “We are aware that systems installed in the past have not always worked as well as they should” (Para. 199, DECC Consultation on the RHI, 20 September 2012) and again: “It is a common feature in field trials and assessments that there is a significant gap between expected and actual performance” (para. 1.23, Microgeneration Strategy Consultation, DECC, 22 December 2010).
14.9 DECC is currently monitoring 150 heat pumps and preliminary results show that most heat pumps operating on a mild Spring day were achieving below the required performance levels—some significantly below. Far from backing a winning horse, DECC is backing a flop but it has been coy in admitting it, confining itself so far to admit: “We think it is likely that on average the results will still be a long way off the high-performing systems that are consistently being measured in Germany”. Time after time heat pumps simply do not do what is says on the tin.
15. Wide deployment of heat pumps would put a very expensive strain on the grid network
15.1 The Revised NPS (October 2010) revealed the full implications of a pure electricity play including the electrification of heat: “Generation capacity will need at least to double to meet this demand and, if a significant proportion of our electricity is supplied from intermittent sources, such as wind, solar, or tidal, then the total installed capacity might need to triple” (para.1.66). This is a major driving factor behind the rising cost of energy to householders.
15.2 A key culprit technology pushing up prices so astronomically is fingered by DECC itself: “In the case of heat pumps the challenge to be managed is in the form of significant new electricity demand. Relative to a conventional household, installation of a heat pump could mean a doubling of annual electricity demand. Given heat demand coincides with peak electricity demand, this is likely to put additional load on the network when it is most strained. Clearly, roll out of heat pumps at scale will have significant impacts on our electricity network, (Microgeneration Strategy Consultation Briefing, 23 December 2010)”.
15.3 Network costs of a high heat pump deployment scenario are estimated to be £290 per heat pump on a GB-wide basis in 2030 (£390 in 2050). This compares to £1,130 per heat pump in rural areas in 2030 (£1,490 by 2050) (“Assessing the Impact of Large-Scale Deployment of Heat Pumps on Electricity Distribution Network Costs”, by Ernst and Young, 2013). These large extra costs will fall on the already hard-pressed consumer.
Subsidy in an Age of Austerity
16. Subsidy to renewables is projected to rise to staggering levels
16.1 The Public Accounts Committee has not undertaken a specific study of the value for money from subsidy to renewables since the Coalition came to power—DECC does not have the key information: “We found that the Department did not know the total level of direct government funding that had been allocated to developing renewable energy technologies by the various organisations involved. The absence of a coherent approach to delivering direct government funding for renewable energy technologies or framework for evaluating its impact meant the Department could not therefore demonstrate that funding had delivered value for money” (Funding the development of renewable energy technologies, PAC, October 2010).
16.2 Levy-funded spending (ie increases to consumer energy bills to pay for low carbon energy sources) is currently at £2.35 billion for this year. Forward projections by REF show total subsidy rising to £8 billion a year by 2020. The total of subsidy would be some £130 billion over the period 2002–30. If system integration costs are added in the total cost of the renewables policy will be £13 billion a year by 2020, and the total cost over the period 2002–30 would be £175 billion. Are these costs affordable and sustainable on any reasonable projection of our economic future?
17. Fuel poverty is problematic, and could worsen
17.1 The latest figures (issued 2013) show 4.5 million households living in fuel poverty in the UK (cf. 1.2 million in 1994). The going is likely to get tougher. OFGEM predicted a rise of up to 60% domestic fuel bills (Evidence to Energy and Climate Change Committee 2.12.09). The Renewable Energy Strategy admitted: “Poorer households are likely to spend a higher proportion of their income on energy and so increases in bills will impact more on them”.
17.2 Professor Hills in his recent Fuel Poverty Review has proposed a new definition of fuel poverty to reduce this embarrassing figure, but redefining it will not lessen the eventual quantum of misery inflicted by a Government beggaring sections of its electorate. As Hills states, “In our central projections, the key fuel poverty gap indicator will rise by more than 50% between 2009 and 2016”. Such policies risk social unrest, and run against the Prime Minister’s pledge that green energy “must be affordable” (25 April, 2012). Redefinitions may ease political pain, but not the practical experience of people struggling with their energy bills.
17.3 DECC’s own estimates for the impact on electricity prices in 2010 arising from its energy and climate change policies is +27%. The sticking plaster on this otherwise crippling blow to family finances was the claim by Mr Huhne in 2011 that by 2020 on average households would be paying on average 7% less to heat and power their homes because of policies taken in the round. Unfortunately, this average hides a big variation between households, and using DECC’s own questionably optimistic figures REF calculated that 65% of households would be net losers from the policies ie the few will be gainers at the expense of the many (“Shortfall, Rebound, Backfire”, op.cit.).
17.4 In its January 2012 Research Note, Policy Exchange came to the same conclusions—two thirds of households will be worse off because of DECC policies. Policy Exchange estimated the full impact of renewable energy subsidies on an average household by 2020 (through bills, tax and costs of products and services) to be £400 per year—equivalent to 2.5p on VAT. This implies that by 2020 the total net cost (not just through energy bills) to the average household of carbon and renewable policies will be equivalent to around 15% of the (without policies) energy bill.
17.5 Calor has urged OFGEM to undertake a study of how far Government subsidies are anti-competitive and drive up fuel prices; and, a parallel study to assess how far Government cherry picking certain technologies and in effect excluding otherwise viable technologies from the market are having an inflationary effect on fuel pricing. Indeed, if the policy cost is £175 billion to 2030 does the policy cost more than the problem it is purporting to address?
17 May 2013