Wednesday, October 07, 2015

Powering the world

This post is inspired by the Government's recent decision to largely end financial support for small scale renewable energy developments - popularly known as feed-in tariffs (FITS). Have commented on this before, but wanted to consider with a longer term and more philosophical perspective. For those of us who believe the long term sustainability of our planet depends on meeting our increasing demands for energy from renewable sources, the end of feed-in tariffs is a disappointing development. However, it is not at all surprising. It gives me no satisfaction to write that for over two years, I've been pointing out the inevitability of this happening - though the suddenness has taken even me by surprise. I've not been alone in my concern. Others also warned about the approaching financial ceiling, but DECC just carried on spending during the last parliament as if no tomorrow. Perhaps they thought the incoming Chancellor in 2015 would shovel more billions DECC's way.

Ironically, the end of FITS is the consequence of a great success story. In 2010, the new Coalition Government set out its 10 year ambitions for massive growth in renewable energy to help meet UK's decarbonisation targets. It made available £8billion to be invested over a 10 year period to support this expansion. It was, in effect, a spending cap (known as the 'Levy Control Framework'). In 2010 this was considered to be a very generous commitment. However it's all been spent in 5 years, much of it on subsidising wind farms. It's been obvious for two years that we have been heading for the financial buffers, and in 2015, we've run into them big-time. We now know the Treasury has no intention of topping up the LCF. So the Renewables Obligation Scheme is being closed early, the Contracts for Difference Scheme looks unlikely to be used much more, and Feed-in Tariffs are being pared back to insignificance. It's not actually a change in Government policy, as many emailers are insisting. It's just that the agreed monies ran out.

Even though the money used to meet the cost of the renewables budget has come from energy users rather than the taxpayer, the Treasury will not allow the LCF cap to be exceeded. The guillotine has come down. We are now in the unsatisfactory position that a renewables sector - based on subsidy - had been cranked up to a level which is simply not sustainable without subsidy. The Government has acted in the fiscally responsible way I warned it would have to. The Treasury message is "You knew the budget available for next 10 years up until 2020. You decided to spend it in 5 years. You live with the consequences". Unfortunately this stop-start approach will inevitably disrupt new development, will create investment uncertainty and will lead to job losses in the renewables sector - certainly in the short term. It's been like going on a week's camping holiday and eating all the food in three days! I accept not everyone will agree with me but it's my view that 'big wind' has totally undermined other renewables by grabbing the lion's share of the budget. Personally, I am particularly sorry to see the damaging impact this will have on the growth of solar power in the UK - even if it will only be temporary. In my view, solar is the long-term future.

I have not any doubt that the world will eventually decarbonise its use of energy. No option.  I'm thinking 2050 onwards here. I accept that at present we don't have any certainty about how this will come about. But happen it will. I know that some insist that we in the UK act dramatically now, as if in some way exporting business and jobs overseas will help solve a world problem. Exaggerated claims of impending catastrophe has damaged the credibility of the case for renewables. Even writing this will lead to the charge of complacency or worse. Let's see what 'Paris' brings! 

The first big step forward must be to end the use of coal, the worst polluter of all - (unless cost effective carbon capture and storage is developed). Not much sign yet of this happening. Over the next 30 years, gas will probably be our main energy source - maybe imported, or maybe shale gas from under our feet. Too early to know if UK shale is viable.  But eventually, my instinct tells me that our energy sources in 50 years’ time will be renewables. And I really cannot see beyond new generation solar (involving effective energy storage), and nuclear fission based on smaller safer units than now (involving use of thorium rather than uranium perhaps). But I'm not expert here. Marine sourced energy may also have a significant role. All I do feel certain of is that during my grandchildren’s lifetimes, we will see a renewables energy revolution. I am looking forward to the DECC Secretary of State outlining her vision of the future - hopefully soon. 


M Davies said...

Mr Davies, you and your government attempt to completely flatten the future of renewables over the last few months and then you happen to mention "that our energy sources in 50 years time will be renewables" - how foolish are you? Most of the developed world are aware as are many school children I meet in school that renewables are the future now and have been for many decades! The damage of an ill thought out process to move away from FITS and subsidies is you and the governments own doing, partially putting the light out on an industry I and tens of thousands of others work passionately and tirelessly for and then in a moment to come out with your supposed 'instinct' view of our industry is laughable. You are indeed "no expert here" There is no doubt that your instinct is 'extinct' as you fought against Wind Power before May this year you have also unwittingly fought against Hydro, Biomass, Solar technologies all of which require an increase in power line capacity in Mid Wales to succeed. An increase in power line capacity would develop more jobs and security for the next generation in Powys. Alas what on earth are the next generation going to do for a living in the meantime with no improvement in infrastructure??? Think again Mr Davies as Renewables is NOW and embrace the inevitable rather than thinking in 50 years it will be the future.

Anonymous said...

Notwithstanding the debacle of the Mid-Wales inquiry, we seem to be hearing a different message at each turn of the wheel in respect of Conservative energy policy. Whilst I agree subsidy should be reduced, the way in which this new Government has chosen to remove this mechanism has completely eroded investor confidence in the renewables industry in which the UK and Wales could flourish. To indicate that the Levy Control Framework was in effect a budget cap is disingenuous; the legally binding targets for 2020 are at risk now because of the subsidy policy change and the mixed messages of support mechanisms for other forms of generation mean the playing field is far from level. The UNFCCC talks in Paris in December 2015 will only reinforce how alone in the world the UK government is in setting such contrary renewables policy.