Blackouts, barriers & red tape
THE UK’S RENEWABLES INDUSTRY IS INNOVATING ITS WAY ROUND NEW HURDLES
Home » Blackouts, barriers & red tape
Published: 11 August 2014
This Article was Written by: Katie Hill - My Green Pod
Any footy fans would have been reassured last month when Ed Davey, Secretary of State for Energy and Climate Change, announced the lights would stay on in the unlikely event of England reaching the final. This is despite the fact that a World Cup Final this summer – with England in it – could have overhauled the record for a domestic electricity demand surge ‘of any kind’. Davey went on to add that energy security ‘doesn’t just happen by accident’, and that intervention is necessary as government, industry, scientists and plenty of others work in partnership.
So what kind of ‘intervention’ are we talking about? ‘Demand-side balancing measures’ for 2015-16 will reward volunteer businesses that, if called upon, reduce the amount of electricity they draw from the grid during peak hours. The cost of getting businesses to close down will be passed on to the taxpayer, but the National Grid reportedly expects the measure will add no more than £1 to the average annual household power bill.
The hope is that the increasing threat of blackouts – particularly during harsh winters – will be minimised through an approach that’s much cheaper than building new power stations to supply demand. At the same time, Davey acknowledged that ‘we must ensure that all our energy is increasingly low carbon.’
Despite its track record on the environment and its worryingly unflinching stance on fracking, the government is injecting money into technologies and solutions which should, in the long term, reduce our reliance on fossil fuels.
‘With government running over a five-year cycle, the ability for rapid change is hampered. In order for new technologies to achieve any chance of success, schemes like the fit and rhi cannot be influenced by the political process.’
Anthony Morgan, CEO of Newform Energy
So the penny has finally dropped: the UK government has realised that a shift in focus from financial services to manufacturing could be the key to success and economic recovery. We need to make things in order for the economy to survive; there’s still lots to do – homes need to be built, the energy infrastructure needs to be improved – and the work required would create jobs and increase revenues for the government as we move towards a new low-carbon economy.
So far so good? Here comes the but: the taxpayer funds these investments through schemes like DECC’s Entrepreneurs Fund – a £35m programme to support the development and demonstration of ‘novel, innovative technologies in a broad range of technology groups across the energy efficiency, power generation and energy storage sectors.’ The fund is aimed at small and medium enterprises (SMEs), and organisations can bid for up to £2m to develop and demonstrate ‘innovative technologies’ and receive advice from experts on how to bring their products to market. These technologies often take years and millions of pounds to develop, but once they’re ready for market they have to compete side-by-side with far more established solutions – completely unsupported.
There is no mechanism to provide support while the rough edges are sanded off and the company enters the transition phase between research and development and established product. This tends to be an expensive period in a product’s transition to the mainstream; unless the product is either backed by big business or supported by government, the product stands little chance of succeeding.
Once the product has been developed with the aid of government funding and is ready for commercialisation, one option available to the company is to sell the concept to big business. However, it’s generally not in the interests of a big business to adopt technology outside its own product sets; it poses a risk and could potentially displace existing technology that the company has a vested interest in bringing to market. In order for the products to get beyond this point and to have value to bigger companies, the technology must be clearly demonstrated and largely free of risk.
Another option is to rely on support from the government; schemes like the Renewable Heat Incentive (RHI) and Feed-in Tariff (FiT) are valuable when it comes to driving down costs and providing the level playing field required to allow products to enter the mainstream. We can see the effect FiTs have had in reducing the cost of solar PV over the last few years, but in order for a new technology to become adopted by these schemes it must either be recognised by the steering committees that influence the decisions of what is included and what’s not, or have a large enough deployment for DECC to evaluate the appropriateness and efficacy of the technology.
Generally the steering groups are made up of competitors who are fighting their own corner and trying to protect their piece of the relevant pot of funding; if the technology is completely different there is not an appropriate committee to assist in the first place.
What is needed is a second stage of funding and a mechanism to line up innovators with clients (preferably in the public sector) and big business. This way the technology can be de-risked and an appropriate level of deployment can be obtained to provide the necessary evaluation of the technology. Essentially, those products that succeed through the R&D phase should progress to an ‘Innovation Fund: Part 2’ to help them get to market. Without this, all the well-meaning public funding that has been ploughed into the research and development of new technologies is being wasted as new cutting–edge products fail at the point of market entry.
The good news is that, despite all the delays and changes, there is now finally a mechanism in place to support the adoption of more established renewable heat. The Domestic RHI, which offers a financial incentive to homeowners making the switch to renewable heat, is in need of refinement – but with the right tweaks it should provide a stable framework to allow the sector to grow. According to DECC, the Domestic RHI paves the way ‘for mass roll out of renewable heating technologies in the domestic heating sector during the 2020s by building sustainable supply chains, improving performance, reducing costs and reducing the barriers to take-up of these technologies.’ Superb.
Companies like Newform Energy have forged their own path and ploughed money, time and resources into researching and designing solutions that could really put us on track to reach our goal of deriving 15% of our energy from renewable sources by 2020. The company developed a pioneering hybrid technology that combines solar thermal with photovoltaics (photovoltaic thermal, or ‘PV-T’), so homeowners and businesses could use one installation – that generates both heat and electricity – to cash in on both the RHI and the FiT incentives, reducing their power bills and their carbon footprint in one go.
The technology has very real practical implications for the way we power our homes and buildings; by incorporating Newform Energy’s technology into the design of The Solar House in Leicestershire, Caplin Homes was able to prove that it can be practical and affordable to build zero-carbon houses, powered only by the sun’s energy all year round. Professor Peter Childs, Professorial Lead in Engineering Design, Department of Mechanical Engineering, Imperial College London, has said, ‘PV-T technology has the ability to attain significantly higher total power conversion rates than either PV systems or solar thermal systems, therefore giving a higher CO2 offset per metre squared of roof space than any other PV or solar thermal technologies.’
But when the Domestic RHI was launched this year, Newform Energy was perplexed to find that its PV-T technology – which the Chair of the Solar Steering Committee had ‘no objection’ to listing as both a PV panel and a solar collector, providing it was certified against the relevant industry standards (which it is) – was not eligible for both the Renewable Heat Incentive and Feed-in Tariffs. The company had followed the advice of the Solar Steering Committee and paid no small sum of money getting the technology accredited, so that customers could reap the maximum benefit from the renewable potential of their homes.
‘I have cross mapped the eligibility criteria for the two schemes… and would invite you to agree with my conclusion that if PV-T meets the requirements of the non-domestic scheme then it must meet the same requirements under the domestic scheme.’
Newform Energy met with DECC and Greg Barker a few days before the RHI was ratified in Parliament. During the meeting, the company was told that, following a consultation with Solar Trade Association and others, DECC had decided that there was insufficient evidence to support the inclusion of PV-T as a technology within the Domestic RHI Scheme.
It’s still not clear why; as Jo Walters, Director of Natural Technology Developments Ltd, explained to Greg Barker in March, ‘You advise that the RHI scheme is designed to support established technologies and that PV-T is considered to be a “new technology”. PV-T has actually been in existence since the late 1970s and has been commercially available in the UK for approximately 10 years… I understand there to be in excess of 500 existing PV-T installations in the UK alone… You confirm that there is little evidence to satisfy you that PV-T currently meets the scheme’s eligibility criteria. In particular, the need for a technology to be fully proven, commercially available and able to make a significant contribution to the deployment of renewable heat at cost-effective levels at a domestic scale. Since PV-T technology is already eligible for the non-domestic RHI scheme, which has very similar criteria, it is evident that PV-T has already been accepted by the government as being fully proven, commercially available and able to make a significant contribution.
‘I have cross mapped the eligibility criteria for the two schemes… and would invite you to agree with my conclusion that if PV-T meets the requirements of the non-domestic scheme then it must meet the same requirements under the domestic scheme. It is important to note that in the region of 90% of PV-T installations in the UK to date are in domestic properties so there is actually a greater body of evidence supporting inclusion to the domestic scheme than existed for the non-domestic.’
Various scenarios were discussed following Newform Energy’s meeting with DECC – the worst case being no future inclusion and the best case: automatic inclusion at the next review point, in January 2015.
It was left that DECC would provide Newform Energy with an indication of what would be required, in terms of the number of installations deployed, in order for DECC to form an evidence-based view of the technology that would allow it to make a decision by next January. Failure to get the technology included by the January deadline would most probably result in either no inclusion – or a further two-year delay due to the elections and the subsequent fallout they will cause.
‘On the 4th June the Government once again proved its green credentials when the Queen announced a significant rollback in the 2016 zero-carbon agenda. Under the new scheme, small builders (those developing plots of under 50 houses) will be exempt from the targets, whilst larger builders will be able to offset the carbon associated with reaching zero-carbon houses using carbon offset programs and offsite generation.
‘Once again companies at the forefront of innovation, that have spent years developing and honing solutions to meet the original targets, are having the rug pulled from under them at the 11th hour.
‘Newform Energy and Caplin Homes, with the joint venture company The Zero Carbon Solution, is demonstrating that zero carbon on smaller sites is already an affordable reality. Scaling back on these targets is bad for business, bad for the environment and two fingers up to all those who have made it their life’s mission to make zero-carbon living an affordable reality.’
Anthony Morgan, CEO of Newform Energy
This raises the question of how a government fixated with the quick wins that will boost its chances of re-election every five years can really lay the foundations for truly sustainable long-term development. ‘Our experience raises some interesting questions about our political system and how our democratic process actually impedes change and stands in the way innovation’, says Anthony Morgan, CEO and founder of Newform Energy. ‘This is a topic in its own right which I could potentially bang on for hours about – but in reality do nothing to change. I’m focusing on a second and more subtle issue, one which we can change with the right influence.’
Anthony explains that the immediate impact on Newform Energy has been an increased interest in its technology. ‘It does not get over the short-term issue of the lack of RHI on PV-T, but that in itself is causing us to be more creative and focused on the rapid introduction of our next technology: the multisource air source uses PV-T to increase overall system efficiency. Even without the RHI for the thermal part of the PV-T, the paybacks look attractive – so we are innovating our way round the problem!’
To find out more about Newform Energy and its latest innovations, have a look at www.newformenergy.co.uk.