Green Energy Republic

On the spot over Electricity Market Reform

 

 
 
Our CEO Juliet Davenport recounts her experience talking Electricity Market reform with the Commons Climate Committee

Make no mistake; DECC has made clear that it views its Electricity Market Reform (EMR) project as the most important piece of work it is undertaking at the moment. Its implementation might not be as immediate as the Green Deal or as controversial as an early review of feed-in tariffs (FiTs), but its impact will be long lasting and will underpin the UK’s efforts to shift towards a more low-carbon lifestyle.

The House of Commons Energy and Climate Change Committee (ECCC) Chairman, Tim Yeo MP, will be keenly aware of this; since being elected as Chair of this important Committee last summer, he’s launched a series of inquiries into those issues making headlines. From grilling the Big Six about their recent price rises, probing the potential for the UK to face its own Deepwater Horizon disaster and cross-examining Chris Huhne about the recent UN Cancun Summit, Yeo and his Committee have focussed their work on those subjects where they can have most impact, both in terms of the public debate and on the Government’s own policy making process.

So the chance for Good Energy to appear before ECCC this week was a great opportunity for us to air our views on what we think the Government has got right and wrong in its EMR plans. We’re pretty proud of our unique position in the UK energy supply market; not just in terms of our commitment to 100% renewable electricity, but also because 1 in 20 of our customers are also renewable energy generators. Roughly 7% of generators registered on FiTs are Good Energy customers, and you’ll be hard pressed to find another supplier that has had the same long-standing commitment to helping those people undertake their own generation projects.

So what of the session itself? Preparing for it was like being back doing finals at university again; hours spent trawling through 140 pages of the deep technical detail of the EMR consultation followed by the prospect of a series of questions on how we felt the proposals would impact on the market if implemented.

Few could deny DECC Ministers’ commitment to the EMR programme – they see it as a once in a generation opportunity to put their stamp on the UK energy market for years to come, leaving a legacy to their time in Whitehall. But there is a real need to ensure that the political impetus that they have put behind the process is carried through. Make no mistake – renewable energy currently exists in spite of the current market, not because of it. The headline intention to take a radical approach to reform needs to go beyond column inches or speeches; it needs to be translated into policy on the ground, by the officials. Radical intentions need to be matched with practical sense. We believe that each of the four strands of reform must be implemented one at a time, starting with a carbon price, so that the impact of each set of changes on each other can be properly assessed.

One of key points we made to the Committee, was that there needs to be more recognition of what will and won’t encourage decentralised generation; during the session Good Energy found a perhaps unlikely ally in the Chief Executive of Drax, Dorothy Thompson, who agreed that whilst the proposed Contract for Difference FiT was greater for larger generators, above 100MW, it would do little to encourage larger numbers of smaller, decentralised generation projects below that level because the transaction and administration costs of participating in the scheme.

Why is this important? Well, as we also said, Good Energy’s reliance on a community of some 1,700 small scale generators means that our source of supply is completely decentralised. That means we have truly mixed portfolio of renewable generators, a characteristic that is absolutely vital to ensure security of supply through domestic renewables, by spreading weather risk as widely as possible. unlike the other major electricity suppliers, we’ve been able to freeze our prices during what has been one of the most bitter winters in years. So if the Government wants a mix of power for low-carbon, renewable sources then it needs to think long and hard about how it encourages this mix through decentralisation.

MPs are understandably concerned how these changes  will impact on their constituents’ bills and Good Energy was more than happy to respond to this. Under any scenario, the next 40 years are likely to see global energy prices increasing. Market reforms will add to short-term costs for consumers, but they will reduce the long-term price risk that would remain if we stick with an energy system that favours fossil fuels and imports over 60% of our energy. One way of helping consumers reduce their costs is through schemes like FiTs or Smart Meters; which can help households decrease energy usage and increase energy efficiency. Demand-side management will be key and our experience shows that having microgeneration at home is a key driver of behavioural change. . The coming weeks will see the Committee take oral evidence from a number of other witnesses, before retiring to make its conclusions, which are likely to be published in the Spring. The chance to feed our views into this important piece of work has been an exciting opportunity to ensure that the government gets practical and pragmatic feedback on policy around the EMR, and to play our part in ensuring that the UK gets the low carbon shift it needs. Whatever the Government’s final proposals, Good Energy plans to be fully engaged, pushing forward the debate on creating a 100% renewable future.

This article is also running on businessgreen.com

Scaling back the solar gold rush would be a mistake

By Juliet Davenport, CEO

                         The PV panels at Worthy Farm

The Cornish wind already supplies around 20% of our customers’ electricity needs – soon they’ll be getting it from Cornish sunshine as well. Developer Low Carbon Solar has two proposed local solar rooftop schemes in planning at the moment, one near Probus and the other near Goonhavern which, when completed will supply approximately 500kW to Good Energy’s customers throughout the UK. And we’re in talks with more than 30 other big solar schemes to supply us with energy.

Since the introduction of the Feed-in Tariff last year, offering larger solar generators 29.3p per unit, planning applications for large-scale solar farms have skyrocketed. Sunny Cornwall is leading the way, having received more than 100 informal applications, each with a potential investment of £10m: ‘a solar gold rush’ in the council’s words.

However, that gold rush may yet be curtailed if some government ministers get their way. Climate change minister Greg Barker has said he’s worried that most of the pot of money available to fund the feed-in tariff could go to a small number of large solar PV projects, leaving less funding for smaller-scale projects such as rooftop solar PV installations.  He said, “We will not allow large speculators in field solar to soak up available funds that are intended for community and household projects.”

Meanwhile Chris Huhne, Secretary of State for Energy and Climate Change, told the Financial Times recently:  “We are monitoring the situation closely and, whilst we won't act retrospectively, we stand ready to take measures to limit the access of such schemes to FITs if that is shown to be necessary.”

While Huhne’s comments are supposed to offer reassurance, the seeds of uncertainty have already been sown. Worries about an early review of the FIT with a potential change to primary legislation have spooked some investors, and we’re hearing stories of capital being withdrawn from prospective big solar schemes. Any review should be carefully considered and mindful of the need to encourage new investment in clean energy schemes.

Good Energy has always believed that decentralised generation, where energy is generated at home and in the community, is better for our future energy security, as assets remain owned by the community rather than in the hands of a few big companies. But with solar currently accounting for less than 1% of the UK’s energy mix, it needs support across all scales, with a few caveats.

We don’t want to see solar farms displacing land that could be used for food production. In our view there should be a hierarchy - it seems intuitive that it’s better to install large-scale solar PV on the roofs of existing farm buildings rather than prime arable land. Brownfield sites are preferable to greenfield sites – but if a greenfield site is used it should also be able to sustain wildlife habitats and livestock grazing.

Our pathway to a 100% renewable future by 2050 shows that solar power could provide around 10% of our energy needs - and a robust feed-in tariff which encourages generation at all scales will be essential to deliver that.

Hiking interest rates not the answer to inflation, but microgeneration could be

By Juliet Davenport, CEO

News that inflation rose to an 8-month high of 3.7% in December sparked a barrage of calls for the Bank of England to increase interest rates. Somewhat misleading in my opinion, and according to my own understanding of basic economics. The BoE has an inflation target of 2% to aim at, with interest rates being the main weapon in its armoury. But the recent increases in inflation are being driven by rising food, fuel and energy prices – wheat prices have gone up due to a lack of rain followed by too much rain; energy prices are being driven by trading conditions on world energy markets; and fuel prices by underlying oil prices, weather and VAT – none of which would be affected by hiking interest rates.

Interest rates are effective at reducing consumer demand for goods and services, and therefore inflation when it is consumer demand that is causing inflationary pressure. But this is not the situation the UK economy is in at the moment; demand for the staples of life - food and energy - is relatively constant. Increasing the cost of borrowing will push up another staple cost, mortgages, and won’t do anything to help households reduce their use of energy.

A far more effective weapon against inflation would be putting policies in place to allow householders to cut their energy costs - either by generating their own energy or reducing the amount they need through better energy efficiency. In the current economic situation, increasing interest rates are a blunt and in my opinion, virtually useless instrument!

The true cost of greening UK energy

By Juliet Davenport

 
I woke up this morning to a really scary headline in The Telegraph: “£500 on electricity bills to pay for green energy”. Their trailer for today’s announcement of the Government’s consultation on Electricity Market Reform – the investment the UK desperately needs to make to ensure we have a secure, stable, low-carbon electricity system for the future.

We did a bit of digging, and found that the number quoted by The Telegraph came from a U-switch press release issued more than 18-months ago! So we did some calculations of our own – and came up with a much more palatable (and realistic) number of £176 on energy bills to pay for the investments needed. This would mean the investments were repaid after just nine years, after which consumers would start to see prices falling.

Not only does The Telegraph vastly overstate the cost to consumers of the reforms we urgently need to make, but it appears to be laying the blame for this entirely at the feet of the green energy sector. The truth, however, is that consumers are all having to pay for an antiquated energy system that has had no investment over the past 10 years.

In fact, if we don’t invest in our energy structure now, the costs to consumers will be far higher in the future. According to Energy and Climate Change secretary Chris Huhne, with the proposed investment consumers can expect to pay an extra 2% on energy bills until 2020 – and then see their bills fall by 5% a year, indefinitely. Without the investment bills would be expected to continue to rise indefinitely.

The UK currently imports around 60% of our energy (from fossil fuels and nuclear) so by reducing our dependence on imported energy we will insulate the UK against further price rises.

And that's not to mention the other benefits of generating clean, green, carbon-free energy and setting the UK on the pathway to a 100% renewable future. So here’s to investing in our future!

Dear Santa...

Thousands of children up and down the country are frantically penning their requests to Santa for what they would like to find wrapped up under the tree on Christmas Day. And our CEO Juliet Davenport has joined them, adding a few wishes of her own to Santa’s list. Alongside Sebastian Faulks’ novel ‘A Week in December’ and the new Kings of Leon album, ‘Come Around Sundown’, this is what she’d like this year:

 
I hope the Government doesn’t tinker with the Feed-in Tariff and keeps its promise to leave FIT alone until 2013.

The Feed-in Tariff has a vital role to play in achieving the UK’s binding target to generate 15% of its energy from renewables. But to do this we need a stable, long-term set of policies to support investment. I would like the Government to address the significant concerns surrounding the FIT’s future and keep to their existing plans to leave it alone until 2013.

I hope Energy Market Reform isn’t a stitch up for some of the large technologies, and the fledgling growth of the renewable industry is allowed to flourish.

Good Energy believes a 100% renewable future is possible for the UK by 2050. It won’t be easy, but our research shows it can be done. Achieving it will involve changes to UK energy at every stage of the process, from grid management to investment, and from R&D to transport. The Electricity Market Reform programme is a huge opportunity to deliver this pathway and we hope that the resulting White Paper will do so.

I would love the renewable industry to stay firm, not squabble and be supportive to one other.

Now, more than ever, our industry needs to work together to deliver a low-carbon future. This Government has laid claim to be the ‘greenest Government ever’ so now is our chance to hold it to that promise. Instead of focusing on those issues that divide the range of interests in our sector, we should be looking to identify those that unite us.

I want grid average to be abolished for calculating carbon and all renewables to be counted by DEFRA as zero carbon.

Renewable electricity must be recognised as making a real and positive contribution to the reduction of carbon emissions in the UK.  An organisation’s emissions from electricity use should no longer be based on the average fuel mix of the national grid – but on the electricity mix that has been bought or generated.  This recognition will both shift attitudes and drive market demand for renewables.

I hope that Good Energy’s core performance continues to improve for 2011.

2010 has seen a number of new developments for Good Energy. We’ve finally seen the introduction of FITs, we’re in the process of completing our redevelopment at our wind farm in Delabole, North Cornwall – a repowering project that will see the farm’s output more than double – and perhaps most importantly, we’ve delivered a winter price freeze for our customers. I hope that next year will be every bit as exciting as the last.

I hope Delabole becomes the first of many new Good Energy wind sites.

When it comes to meeting the country’s renewable energy targets, much of the Government’s focus in 2010 has been on the role that offshore wind has to play. But development of onshore wind capacity is still hugely important. Next year Good Energy will complete the re-launch of our wind farm in Delabole, North Cornwall. We are very excited about the project’s imminent completion and look forward to embarking on developing our next wind site.

I would love our FIT business to go from strength to strength.

Since 2003, we’ve been proud to work with a community of pioneering small-scale generators that we rely on to supply our energy. They have allowed Good Energy to develop a market-leading FIT service that no other supplier can come close to matching. We currently work with over 1500 independent generators and we’re looking forward to growing this number so that together we can help the UK to achieve a 100% renewable future by 2050.

And that Good Energy customers become the examples for the rest of the UK householders to aspire to.

Good Energy’s generators and customers have been the pioneers of the UK renewable energy industry. Whether by undertaking their own microgeneration project or by simply buying our electricity, they are helping drive the market for renewable energy and shift the UK towards a low-carbon future. We hope to continue helping people make this choice as we move into the New Year and look forward to what promises to be an exciting 2011.

On the 12 days running up to Christmas we will be featuring a different Wish List from a number of Good Energy customers, generators and partners, so keep an eye out for some eco-festive fun. 

Working towards paperless billing

We know that many customers like to keep their paper communications to an absolute minimum, and are keen to know when Good Energy will be able to implement paperless billing – i.e. a system which will enable you to view your account and pay your bills online. We’ve been working on this for some time, and have made progress in some areas already – for example you can now submit Meter Reads online and we accept credit card payments over the phone. However, a full paperless billing system will take a little longer to bring in. Our CEO, Juliet Davenport, explains why:

“Work on our systems gets prioritised in order of ‘high risk’ e.g. something is broken and needs to be fixed; ‘medium risk’ e.g. some regulatory issue has come up; and ‘new stuff’, which includes things like paperless billing.  During the last year we managed to keep our ‘high risk’ stuff down – but the ‘medium risk’ stuff has kept the team flat out, developing new systems for Feed-in Tariffs and making sure that we implement all the new licence changes which affect our bills, such as info about historical usage.  There is no slack in our systems team - the largest team in the company in 2010.

“Our vision is to offer a choice to Good Energy’s customers in how they receive information and manage their accounts.  We want to introduce an online account facility that will allow you to manage your own preferences; including receiving bills by email, rather than post.  Our plans include the possibility of being able to view past bills online including your payments, any credits, as well as your meter readings, graphs showing historical usage and so much more that will help you understand your usage and bills. We are working on engaging ways to help customers reduce their energy consumption through this.

“One of the issues for the company now is meeting our requirements under the Smart Metering provisions. This may eventually lead to customers being able to receive statements directly to their meters, and any system that we develop for paperless billing needs to be compatible with the Smart Metering protocols developed by government. Developing a system that doesn’t could mean we’d need to throw it away and start again.

“In addition to this we want to consider how we deliver paperless billing in the lowest carbon way, as paperless doesn’t necessarily mean carbon-free.  The growth in energy use of online servers currently outstrips that of aviation, so making sure that our system doesn’t clog up the servers of the world is important to us.

“We are currently pushing government very hard to determine how the DataCommsCo (the central communications facility for Smart Metering) will work, and to finalise the technical specifications for Smart Meters so that we can begin to push forward with our own solution. (Further information on smart metering can be found here.)

Until we can introduce paperless billing, we will continue to try and keep our paper communications to a minimum – and to use chlorine-free, 100% recycled paper, vegetable-based inks, and a print supplier who meets the highest environmental standards, as we always have done.

Turning the energy industry upside down

Last weekend Good Energy unveiled the pathway to achieving a 100% renewable future by 2050. Our CEO Juliet Davenport was one of the keynote speakers at the annual Schumacher Conference in Bristol and with its theme, Zero-carbon Britain, from aspiration into action, it was the perfect place to lay out our vision.

Juliet mapped out a detailed plan which involves fundamental changes to UK energy at every stage of the process, from grid management to investment, and from research and development to transport.

“The UK has a binding target to meet by 2050; reducing emissions by 80% from a 1990 ‘baseline’ figure. Business as usual will not get us there,” says Juliet. “We need to turn the energy market upside-down. We need to develop a new, closer relationship with the energy we use which will encourage us to value our energy more and use it less. Our vision of the future looks very different to what we see today: energy companies will be transformed from leviathans to enablers and, maybe, by 2050, they will all look like Good Energy.”

If you weren’t able to get to the conference then you can see Juliet’s speech below. A DVD of the full conference will be available shortly from http://www.schumacher.org.uk

CSR good for green energy

By Juliet Davenport




After many weeks of speculation about where the axe would fall in the Comprehensive Spending Review, Chancellor George Osborne has unveiled his cuts – and it looks like pretty good news for renewables.

The Good Energy headlines are:

• Feed-in Tariffs are being protected until their first scheduled review in 2013 (a 10% cut in the rate for solar PV in 2012 was always part of the plan).

• The Government confirmed it’s going ahead with the Renewable Heat Incentive from 2011-12.

I’m delighted that Energy Secretary Chris Huhne and his ministers have done such a great job at protecting the future of the UK’s renewables industry, at least for now. The growth in microgeneration installations since FiT was first launched in April shows what an important role these tariffs have to play in driving renewable energy generation amongst individuals, communities and businesses. By helping  people to both produce and use energy locally and making it a visible part of the local community, people will value their energy more and use it less – and make bigger carbon savings overall.

We’re also really pleased that the RHI will go ahead with only a few adjustments from the original  announcement. Currently, only 1% of total heat demand comes from renewable sources which the Government clearly recognises needs to rise if we are to meet our renewable energy targets. Good Energy has already proved that an RHI can work, having created our own  award-winning version, HotRocs, in September 2008 which now supports over 450 solar thermal users, resulting in a reduction in CO2 emissions of 270 tonnes a year. It doesn’t look as if the Government will be following the financing model we have trialled (a levy on gas suppliers) but we look forward to seeing how they plan to implement it.
 
Overall, today’s announcements go a long way towards reducing the uncertainty that had been hanging over the renewables sector for months – and should see private investment in microgeneration technologies start to pick up again. But if you’ve been planning to put solar PV on your roof, you'd better get on with it – because the published rate is only guaranteed until 2013.

Green energy issues must not slip down Government agenda

Will the Coalition fulfill its promise to be the ‘greenest Government in history’?

By Juliet Davenport, CEO 

When this Government came to power it was obvious that they had a rather large “to do list”. For me though, point number one has to be the critical importance of the next five years in dealing with the challenges we face regarding climate change and increasing issues of the security of energy supply.

I was pleased when Chris Huhne was appointed Secretary of State for Energy & Climate Change, largely because my first hand experience of the Lib Dems is that they understand the need for a strong energy policy to deal with climate change. I’d had the chance to meet Chris Huhne days before he was elected as he visited our local candidate (now MP) Duncan Hames. However, his lacklustre speech at the Lib Dem conference made me question if, now that they are in Government, the Party would be able to legislate as effectively as they had previously debated on the important issues of climate change and sustainability.

Whilst the Liberal Democrat conference reaffirmed the Government’s commitment to low carbon energy, emissions reduction, and the need for Britain to take the lead on environmental issues, and the Conservatives are expected to do the same this week; Good Energy, like so many others, remains less than reassured about the future. In particular, the continuing lack of announcements in areas like Renewable Heat Incentive and the future of Feed-in Tariffs mean that the renewable world is left in a flux as we wait for Government to make up its mind and allow us to get on with what we do best: the business of creating a low carbon future.

There are so many questions that must urgently be addressed if we are to see a significant change in energy use and production in the UK. 

Despite having one of the largest renewable resource potentials in the world -  the  strongest winds in Europe, and a long coastline -  we continue to produce less than 7% of our electricity from renewable energy and languish at third bottom in the European ranking on the proportion of energy from renewables. 

And, how is it that a planning regime which has been designed principally to consider housing development and garden sheds has been shoehorned into having to deliver decisions about projects that could contribute a significant amount to UK renewable electricity supply?

Then there is the issue of how to bring energy generation into the hands of the people rather than being centrally managed and owned; and how to encourage the development of new technologies such as wave and tidal that are, at the moment, in their infancy. 

The reality is that until the Comprehensive Spending Review (CSR) is published on the 20th October, no clear changes or commitments will be made.  So, although we welcome talk of the ‘renewable renaissance’ in the UK, we cannot move forward until the pre-election commitment in areas like the Renewable Heat Incentive are confirmed – only then will we be confident that the spark of radicalism in the Liberal Democrats has not been extinguished and, more importantly, that Chris Huhne and his ambition to lead the way on renewable and climate policy has the full support of the coalition Government.

 

At last - a 2050 plan

By Juliet Davenport, CEO and founder, Good Energy

For the last few years, calls to decarbonise the UK Energy market have felt like cries in the wilderness.  All talk with no action.  Yesterday the landscape changed when Chris Huhne, the Energy secretary, announced the UK’s first coordinated Energy Plan for 2050.

Accompanying this announcement is a couple of thousand pages, and a raft of proposals and consultations.  However, the key document for me is the structural reform plan.  In this, the Government lays out its workload for the next 12 months with deliverables, milestones and joined-up thinking.

It’s also put out for trial a carbon calculator on how we can reach our 2050 target, encouraging people to test its assumptions -- we will be doing so soon.  This is open government and it means business.  Rather than a vague plan which tinkers around the edges, Chris Huhne has delivered a firm commitment to reform how the energy market works and how it is regulated. 

The UK must decarbonise our electricity market, and this means that the market must be designed to favour renewables, rather than throwing up obstacles in their way.  This requires reforming both transmission and distribution networks; establishing a long-term carbon price; and ensuring energy trading arrangements can accommodate significant penetration by renewable energy. On the consumer side, reform is needed to incentivise customers to switch to Green tariffs - rather than rating all electricity as having the same carbon content, ‘Grid Average,’ regardless of how it was generated.

After years of dithering, the government is at last pushing forward with plans for smart metering.  However, work still needs to be done on reforming the settlement system for gas and electricity so it delivers effective ‘time of use’ tariffs – so everyone benefits from higher rates at peak times.

Effective demand management will also play an important role in the energy landscape of the future, and the Government has shown it’s serious about energy efficiency.  As the UK decarbonises, then electricity use will grow at the expense of fossil fuels – for example the transition to electric cars will have a big impact.  Either we double our generation capacity, or we use our energy in a smarter and more efficient way.

Heating is another area which needs to be looked at. The UK uses more energy heating our homes than Sweden does. Yesterday’s announcement was short on ideas for that, although the plan tells us it will deliver some proposals soon.

Here at Good Energy, we are pleased with this approach, and will work hard with this Government to do what we have always done – move from an aspiration to make a difference to climate change to actually delivering a result.