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Public sector should be at the heart of renewable energy delivery

Source: Public Sector Executive Mar/Apr 12

Leonie Greene, head of external affairs at the Renewable Energy Association (REA), discusses UK policy on the issue

Twelve years ago Germany produced just 3% of its total energy from renewables. In just over a decade that has increased nearly four-fold. Billions of euros have been invested in renewable heat, power and transport. What is striking is the great majority of the investment in renewable power has come from individuals, farmers, project developers and municipal Government.

Germany’s powerful regions are happy with that – rather than spending money overseas on importing fossil fuels, that investment is circulating in the local economy and driving jobs (over 370,000 nationally). An estimated additional €9bn accrued to local authorities in 2010 as a result of employment, profits, taxes and rental revenues generated by renewable energy.

The German experience explains why REA has its own ‘squeezed middle’ concerns. UK renewable electricity policy risks polarising between the old fashioned utility model and the domestic sector. We’re concerned that mid-sized investors and technologies are being squeezed out of the picture, yet these are incredibly important investors. Renewable energy can transform not just how we generate energy, but who generates energy. This transformative power has not yet been understood by the UK Government. Yet Government are aware how consolidated the UK electricity sector is, and how much consumers will benefit from far greater competition and innovation. This is a circle that needs to be squared.

The UK Feed-In Tariff has showed that local government can engage vigorously with renewable energy when given an accessible mechanism. Cornwall and Birmingham councils, for example, quickly developed ambitious programmes for solar. We anticipated the biggest investments to come from the social housing sector, something we greatly welcomed. It is a double win to see renewable power being used to deliver deeper social benefits.

Since the widely-reported crisis over FITs, we have had some success at getting the Government to better understand the potential for solar power. However, while we share value for money objectives (we asked for the tariff to be reduced 25% last summer), constraining the FIT scheme under an inflexible cap makes for serious concerns. Solar is an incredibly empowering technology that mainstream analysts agree will deliver power cheaper than grid electricity before the end of the decade. A more ambitious approach could be afforded, especially given solar’s rapid job creation potential – over 25,000 people were employed in solar power at the end of 2011.

The active participation by local people and organisations in renewable energy investment also helps to overcome resistance. REA is concerned by the uncertainty created by the new National Planning Policy Framework. Projects over 50MW are determined by the Secretary of State and for microgeneration there is permitted development. Again, it is the important mid-sized investor and technology that faces the greatest uncertainty. The new NPPF missed an opportunity to clearly set out the national importance of the renewable energy agenda.

Energy-from-waste is another area where we want to see more ambition. Contrary to popular perceptions, European experience clearly demonstrates that high levels of energy-from-waste can sit alongside high levels of recycling. We’re concerned that ambitions for anaerobic digestion have been reduced in the latest Feed-In Tariff consultation. And just as gasification and pyrolysis developers were set to deploy their first projects, they have been presented with a new definition for qualifying technology, which in some instances reduces support to a quarter of previous proposals.

Mid-sized investors are squarely recognised in the the Renewable Heat Incentive (RHI), which was finally launched in the non-domestic sector at the end of November. The RHI is good news. It gives enterprising local councils and estate managers an exciting opportunity to save money against ever-rising heating bills while reducing emissions. Ground-source heat pumps, biomass boilers, solar thermal and biomethane-injection-to-grid are included in Phase 1, although some scales are not (yet) included. As well as driving the renewable heat market, the RHI is also enabling the wood-fuel supply chain to develop in the UK from a cottage industry. This offers important rural job creation opportunities and the potential to bring woodlands back into active management for the benefit of wildlife and the public.

It has became evident that DECC is rethinking how to support heat in the domestic sector and that we are unlikely to see concrete proposals for some time. Uptake of the domestic targeted renewable heat premium payment (RHPP) scheme has been low as the market waits to see what long-term support will be available for domestic heat.

For the public sector, the renewables policy framework now offers some great opportunities compared to where we a few years ago, but there is still a frustrating lack of recognition from Government on the critical importance of the public sector’s role in renewable energy investment. The RHI is obviously good news. But on the power side the Electricity Market Reform proposals are becoming highly complex and the FIT is now insufficiently ambitious. If we seem impatient in the industry we have good reason to be. The UK is lagging well behind on renewable energy, both internationally and in Europe. If we are to catch up and strengthen our position in the booming global renewable energy market, we need to mobilise huge investment as quickly as possible, not least from the public sector.

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