Green Energy Republic

London Array gets go-ahead

After serious concerns that plans for the world’s largest wind farm might be shelved, the London Array project has been given a new lease of life and the final investment it needs to start construction.  This is cause for celebration in the UK renewables industry, and breathes fresh life into the green energy revolution.

The project was put to one side after Shell pulled out of the consortium of investors last year, having already been granted planning permission and all the groundwork completed. This left EON, Dong Energy and the Masdar Initiative short of funding, a bill which EON have now agreed to foot.

The wind farm will be the largest in the world, set to produce 1,000 MW of energy with the first turbines coming online for the Olympics. Covering 90 sq miles off the coast of Essex, the first phase of the project will prevent the release of 1.9 million tonnes of CO2.

Greenpeace have praised the government’s role in the turnaround of this project by giving much needed support to offshore projects by opening up grid connections and incentivising renewables through the ROC scheme. This is a financial mechanism that supports renewable energy, and it was announced in last month’s budget that payments for offshore wind projects would be doubled. This was the green light that the London Array consortium needed to get going.

Some good news that is warmly welcomed at Good Energy.

Government makes a sort-of decision on coal

Ed Miliband has finally made a firm announcement on the future role of coal in the UK’s energy mix. After a long review and consistent pressure from the likes of Greenpeace and Friends of the Earth, the government has stated that no new coal-fired power stations will be built in the UK without at least a quarter of the emissions being captured by carbon capture and storage technology. The Energy and Climate Change Secretary added that power companies planning to build new coal-fired power stations will also have to scale up their plans to include full carbon emissions capture by 2025 -- provided that In the words of the government, the technology is “technically and economically proven.”

This is a real victory for the environmental NGOs who have been campaigning hard on the issue of new coal, as it marks a dramatic U-turn from the government. They have praised Ed Miliband for acknowledging that we cannot go on building more coal plants, which are the largest emitters of CO2 in the UK. Energy company E-ON are now looking at their plans at Kingsnorth, where they intended to build a new coal power station with no plans for carbon capture, and are now proposing a cluster of “demonstration” stations pumping carbon into a pipeline under the Thames estuary taking the carbon to be buried under the North Sea. 

There are still some looming questions over the policy however. Firstly, Carbon Capture Storage (CCS) technology is a highly controversial proposal. The arguments against it range from “It can never work”, to “It could work in theory, but it would be so ridiculously expensive that it would impossible to finance.” Whilst there are several theories on the best way to isolate carbon emissions from power stations and store them somewhere, there is not one working example of this in the world. 

So what would happen if the technology cannot be built? Or if the companies build coal plants the Coal plants and discover CCS doesn’t work? Will they be shut down and cause havoc with the energy supply?

More fervent critics also point out that the recommendations to government by the likes of Lord Turner’s Climate Change Committee and James Hansen, head of NASA, are that no power station should be built without complete CCS as of today – not by 2025. Even at 75%, that’s a huge volume of CO2 being pumped into the atmosphere by a power plant the size of Kingsnorth.

As with so many of the government’s environmental policies, this is just a step in the right direction, without making the whole leap.

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Australia to build largest solar farm in the world

Some good news on renewable energy from Down Under.  The Australian government is to invest A$1.4 Billion in building the world’s largest solar electricity plant. At 1,000MW the plant will surpass previous attempts in China and California to build the biggest.  Forget the space race, it’s the solar race (not a race to the sun, that would just be silly).

More on the plans here: http://uk.reuters.com/article/environmentNews/idUKTRE54G0C820090517

It’s good to see the Australian government shift its position on climate issues. A few years ago Australia was lambasted for its refusal to sign the Kyoto agreement and lack of momentum on tackling global warming. Perhaps the change in tactics is a reaction to rampant bush fires, agricultural problems and drought forecasts – severe and visible signs of climate change?

It seems they’re on the right track now, with the plans forming part of a larger network of solar electricity farms, making the most of that southern sun they get smothered with so regularly (not jealous at all..).

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Taking the wind out of ROC Retirement – an open letter to Good Energy customers

1. We felt we should update our website readers and clarify matters regarding our ROC retirement policy.  Over the past seven years Good Energy has strived to be open and transparent about what we do, and seek independent verification where necessary. We have operated the same system over ROC retirement for the past seven years and not received any customer complaints.

2. When we entered the market in 1999, we were one of the first companies to receive the Energy Saving Trust accreditation “Future Energy” for our electricity product.  At that time it provided suppliers with an audit procedure to check that they were matching what they sold with purchases from renewable generators.  However, in 2002 the DTI decided that it no longer wanted to fund this and it was replaced by OFGEM’s Green Supplier’s Guidelines published in 2002. This indicated that the retirement of ROCs beyond compliance limits could be counted as additionality. 

3. As a result of the demise of Future Energy, there was no longer any mechanism to validate the claims of suppliers under these guidelines. Good Energy decided we would use an independent verifier to check our claims in order to replace the audit procedure implemented under Future Energy.

4. At the same time OFGEM implemented a system to allow electricity suppliers to retire ROCs.  However, this scheme did not give the right for ‘additional’ retired ROCs to claim rebates from the Renewable Obligation ‘buyout’ fund so that ROCs used for compliance and ROCs used for additionality were not financially equivalent. 

5. The process is as follows: A supplier buys one ROC from a generator at around £50. It submits this ROC for compliance and subsequently receives approximately £12.81 rebate from the Government buyout fund.  Thus, the cost of the ROC to the electricity supplier is £37.19 (for 2009).

6. For an additional retired ROC a supplier submits one ROC which it purchased from a generator at £50 per ROC.  It subsequently receives nothing from the buyout fund. Therefore the cost of providing additional ROCs is £50 to the supplier. This shows that it is far more expensive to provide additionality than compliance.  
 
7. Therefore it seemed to us that there was a conflict between the OFGEM guidelines for green suppliers, where the two types of ROCs were assumed to have the same value, and actual practice, where they clearly do not.  As a result, Good Energy started its own scheme to retire additional ROCs beyond our compliance limits to the ‘equivalent economic value’ to us, the supplier - this is based on the average price we paid to generators for their ROCs.

8. We originally set ourselves a target of retiring ROCs to the equivalent economic value of 5% above our compliance levels. Doing this at £50 per ROC rather than £37.19 means we retire fewer than an actual additional 5%, but to an equivalent economic value.

9. In addition, we also pay our HomeGen customers an equivalent of three ROCs per unit produced. This we also count towards our “retired” ROCs, acting as a support mechanism to incentivise home generation. When this was originally introduced by Good Energy, there was no support for micro-generation anywhere in the country, and our initiative still goes above and beyond recent incentives introduced by government. 

10. The Government buyout fund varies each year, as does the amount we pay our micro-generators. Therefore, the calculation to work out how many ROCs we should retire is complex. We also do this a year in arrears, because of the timetable set out by the ROC legislation.  As a result, we decided it would be best to employ an independent firm, Smith & Williamson, to verify the figures and publish a statement confirming our approach and the figures.   We publish this report every year to verify this and you can find it on our website. We’ve been doing this since 2002.

11. We believe that for any market mechanism to work effectively, the price signals need to be set at an appropriate level. By retiring beyond our compliance limits and supporting smaller generators we hope to do our bit to ensure this is the case.

12. In addition to ROC retirement we also believe that one unit of generation should only be sold once. This is why we also retire LECs (Levy Exemption Certificates) against all of our domestic customer and charity customer supplies.  If sold separately from the REGO then the same unit of generation is effectively being sold twice. Good Energy believes this further distorts the market and it is a practice we feel should be prevented. However there are still many “green” tariff providers who continue to double sell their electricity.

13. Going forward, we hope that the work OFGEM is now undertaking for green tariff guidelines will provide greater clarity and transparency to the market and stop the practice of double-selling, as LECs will have to be retired for all domestic green tariffs. We are planning to update our offerings and consider an alternative to retiring ROCs.  However, until this is complete we will continue to follow the original guidelines from 2002.
 
14. I hope this answers any queries any of our customers may have. Good Energy’s customers have always been attracted first and foremost by our 100% renewable offering. Any confusion demonstrates that what the green electricity market needs more than anything else is independent accreditation. We believe that the OFGEM green guidelines and accreditation scheme should provide some long awaited clarity to this market and we look forward to demonstrating why Good Energy and our customers are making such a difference to the UK renewable energy market. 

If you have any further queries, please do not hesitate to contact me or the Good Energy team.

Kind regards,

Juliet Davenport
Chief Executive

Good Energy Shop wins online award

Last week the Good Energy Shop won a Green Log award. We were voted the “People’s Choice” for the Best Product Website 2009. Good news indeed, it’s nice to get a bit of recognition.

Check out other winners here: http://www.greenlogawards.com/peoples-choice-2009/

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Where have 262 million light bulbs gone?

By Chris Welby, Good Energy’s Commercial Director

The “Big 6” suppliers are obliged to spend a fixed amount of money on energy efficiency measures.  This includes loft insulation, cavity walls, boiler replacement and energy efficient appliances including lighting.

Figures reveal that they have sent out 262m low energy light bulbs.  That is the equivalent of 10 per household.  Where are they?  I received two from E-ON (although I’m not a customer),  but as all my lights were already energy efficient, they are sitting in a drawer awaiting one of my existing ones to go pop.

That said, I’ve asked around and no-one I’ve spoken to has received anything close to 10, and many none at all.  So where are they?  If like mine they are sitting in their box in a drawer, how can the “big 6” claim they have reduced CO2 emissions?

I am therefore starting a campaign.  It is called “find a light a home”.  If you’ve received one or more of these “free” light bulbs and it is sitting in a drawer doing nothing, then send it to me at Good Energy, and I will find it somewhere deserving to live.

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A good week for wind. Better than last week anyway

Ofgem relax the rules and National grid speed up connections

On Friday last week Ofgem, the UK’s energy regulator, said it would be relaxing the rules on connection to the national grid for renewable energy projects in order to speed up the process. The new rules allow projects to be connected to the grid as soon as their local connection is ready instead of having to wait for national review. This has brought forward 450MW of renewable energy that has been waiting to get online.

The new rules have allowed the National Grid to get renewable energy projects connected more quickly, with 16 installations being brought forward by an average of six years, and one wind farm being brought forward from 2018 to 2009.

Both the National Grid and Ofgem are keen to plough ahead with renewables as quickly as possible, but whilst this is good news there is still 1.3GW of capacity waiting in the queue. If the government wants to meet its own energy targets it needs to maintain momentum, and then some!

Scottish community welcomes turbines and ask for more

There was a refreshing story in the Guardian yesterday that stood out amidst the prevailing nimbyism which often derails wind farm developments. Not only did the residents of Fintry in Stirlingshire welcome a wind farm in their town, they asked for more turbines!

When developers from West Coast Energy turned up to Fintry they expected the usual barrage of protests and setbacks from passionate anti wind campaigners (they are always the minority, albeit a vocal one!). Instead the village asked the developers to build another turbine that they would fund themselves and then benefit from the energy generated.

As with many of the communities we work with at Good Energy, Fintry saw the huge benefits of a cooperative investment that will not only be good for the environment but also a great source of income. A year on the turbine has generated £140,000 for local residents and has enabled the launch of the Fintry Development Trust which helps the community with energy-saving and low-carbon investments. Now 150 homes have been fitted with cavity wall or roof insulation, local centres have been switched to energy-efficient lighting, and the group is looking into transport and food production.

Good Energy works with many other community energy projects such as Westmill Wind Farm. These projects are great ways to finance wind farms and can bring significant benefits to the community.

If you are interested in developing a project of your own, Good Energy can support you along the way. Get in touch with us on generation@goodenergy.co.uk.

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SuperGrid Update

Back in January we wrote an article on Supergrids called the Globalisation of energy. A Supergrid is the concept of joining various parts of the world to one huge energy network. The advantage is that it would facilitate more renewable energy projects that could all flow into the same system and be coordinated through it. Very simply, if the UK’s electricity grid is connected to the Sahara we could be receiving electricity from African solar power in the day time, and then when the sun goes down, the wind in the UK will keep the grid vibrating with clean energy.

A group by the name of Desertec Foundation (TREC) is leading the campaign to get the Supergrid idea into the European political arena and they’ve got some good news. Their Early Day Motion (EDM 123) has now gained signatures of 155 MPs in the UK, ranking it at 31 out of 1557 EDMs. This increases the chance of the idea being discussed formally and seriously considered, which is progress indeed.

For background on supergrids read our article here. To support the Early Day Motion visit TREC’s site.

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Smart meters all round

By Chris Welby, Good Energy’s Commercial Director

It is now two years since the government decided smart meters would be a good idea.  Today, the government has announced a consultation on what they intend smart meters should do, and how they should be delivered.

The consultation is a little short on detail, but a smart meter will:

• Allow energy suppliers read meters without a visit
• Allow energy suppliers to re-programme meters without a visit
• Allow energy suppliers (or network operators) to engage in demand management
• Allow customers to have accurate bills
• Allow customers to access real time information
• Allow suppliers to offer more imaginative tariffs

Good Energy has always supported the move to smart metering.  We believe that in order for customers to reduce their energy consumption they must first understand what they use and when.

Suppliers will also see efficiency savings (No more meter reading visits and reduced customer calls regarding estimated bills), which should offset some of the costs of implementation.  So if implemented properly it will be a win-win situation.

The problem is implementation.  The government has set out its preferred option, which seems to be the best approach, but will require the electricity and gas industries to come together (despite appearances, they operate completely separately behind the “dual Fuel” marketing front.) and design new systems both centrally and at the suppliers end.  Most of these systems will need to be in place before roll out can commence.

The scale of the change should not be underestimated.  People quote as comparison the switch from coal gas to North Sea gas.  But that was a straight forward technical exercise of tweaking appliances it didn’t require complex system changes and was under a single nationalised industry.  Beside, more homes hade people there during the day than now so access was easier.

Strong management will be required to push this forward, and the temptation to over complicate it must be resisted.  It should be do-able, it must be done if we are to improve our energy efficiency, but if you can think of a recent major programme of work of this size that delivered on time and budget, then please tell me.

 

Renewable economic update

Good news from Spain, where a renewable energy company has just launched the world’s largest and highly innovative solar tower near Seville, powering 10,000 homes. Generating 20MW, the "PS20" will contribute to Spain’s impressive peaks of 40% renewable energy vibrating through their national grid.

Recent news from the UK isn’t quite so uplifting.

Oil companies withdrawing investment from renewables
In a cycle that has repeated itself several times over the last 40 years, oil companies who have invested more in greenwash PR than they ever have into sustainable energy have pulled out of some major renewables projects.

In March, oil giant Shell announced (or, whispered) it was pulling out of all its wind, solar and hydro projects despite years of vast sweeping claims about securing a new clean energy future with renewables. Following this, BP has cut 620 jobs from BP solar, only months after a billboard campaign promoting a sustainable energy mix.

So, the oil companies have shouted a lot about investing in clean energy, backing it up by planning renewables projects, and then quietly cancelled the plans hoping everyone will remember the ads but forget to ask where the wind farms are.

Production industry going into decline
Last week Vestas, the world’s largest wind turbine manufacturer, said it’s shutting down its plant on the Isle of Wight. A drop in demand has seen the company struggle over the last year and will result in the loss of 700 jobs from the UK plant which makes turbine blades.

There’s been a glimmer of hope from budget measures to support of wind power but it’s unlikely that will stimulate the market quickly enough for Vestas to justify keeping the plant open. 

Meanwhile Iberdrola, which own Scottish Power, has halved its renewables investments over the last year. Overseas, Siemens is to scale back 400 jobs in its Danish wind energy division.

Wind farm replaced with nuclear power station?
Last week the Guardian reported that a highly efficient wind farm near Kirksanton in Cumbria could be dismantled to make way for a nuclear power station. It’s a smack in the face for renewables from a government who should know it’s already running the risk of missing its renewables target.  Destroying perfectly working existing capacity just doesn’t seem to make sense.

And what’s really offended local wind supporters is the speed and ease with which planning was granted to the nuclear power station, in marked contrast to the rigorous and overcomplicated process which applicants for wind turbines must go through.

So what’s the problem?
Aside from the bizarre nuclear announcement, much of the above seems recession related. To be fair to BP, its cutbacks are a reaction to a drop in demand for its renewable products. It’s also planning to scale back oil and gas exploration over the next year, and has seen its profits drop to a third of what they were last year (don’t worry, BP still made over £2 billion in the first quarter of 2009). But this seems a convenient excuse to cancel all renewable plans having talked about becoming a leader in the field and discovering a life “Beyond Petroleum.”

Vestas is suffering from a lack of demand that seems to be mostly down to a reduction in investment opportunities, as there are less funds available. The weakening pound makes building a wind farm considerably more expensive and therefore harder to justify.

Last year Vestas expanded their operations in China - following the route of so many manufacturers. There have been no signs of closure there, so as with the case above of solar in Spain, the worldwide renewables industry is looking positive. It's just our home turf that could be falling behind.

While these setbacks have been portrayed by the media as damning for the renewables industry overall, in fact it’s just following the same trends as every other industry. And it hasn’t been propped up by huge government bail outs. If the measures announced in the recent budget materialises, the renewables industry shouldn’t need bailing out.

So it’s not good news, but we can’t expect weekly reports on joy and success in the current financial situation. What’s important is that there are reasons to be optimistic, and reasons to carry on supporting renewable with all our vigour. The industry can’t be expected to buck all trends and find finance where there is none, but it doesn’t spell unmitigated doom and gloom either.

An who needs big oil companies anyway? Ho ho.

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