Look carefully and you can see solar PV output denting UK electricity demand

When the sun is shining, solar PV on roofs cuts apparent electricity demand and reduces the call on conventional generating stations. Can we see the effect in the national figures for power need? Yes, it seems we can. The last few days have been sunny so I compared electricity demand this year with a comparable period in June last year when it was very dull indeed. Overall, power use is down slightly but apparent demand in the sunniest bit of the day is strikingly below the average for last year. The 2.5 gigawatts or so of PV on roofs and in fields appears to be having an observable effect on the need for daytime electricity production. I compared the seven days from 31^st May to June 6^th with the period of 20^th June to 26^th June 2012. You’d expect electricity demand to be roughly comparable in these two periods. Average generation in 2012 was about 32.8 gigawatts and about 3% lower in 2013. But the daily pattern of generation varies substantially between the two different weeks. Nighttime demand was slightly higher in 2013 while  daytime requirements on the grid were almost 2 gigawatts lower.

Chart 1

Source: Elexon

The chart below expresses this simply as the difference between the two years. A negative figures means demand in 2013 was lower than in 2012.

Chart 2

Source: Elexon.

It’s plausible that the prime cause of this daytime demand drop is the three hundred thousand or so domestic and factory roofs providing most or all of the electricity to the building. The daily period over which the demand reduction is seen is slightly later than I would have guessed. Lower demand starts at around 8 am but continues until 9 or 9.30 pm, when the sun is almost set.

Forecast German solar production today (7^th June) has a slightly different pattern. (‘Solar time’ in central Germany is about 30 minutes in front of us: the clocks are an hour in front but the sun rises somewhat earlier because Germany is east of the UK). It has died down by around 8 pm. These figures are the reverse of the UK in that they express PV as a positive addition to electricity output rather than as a reduction in demand. Nevertheless the broad picture is the same as in chart 2.

Chart 3

Source: EEX Transparency Platform

I’d hesitate before saying that we can definitely  see the impact of PV on UK demand but it’s a reasonable hypothesis that summer daytime electricity production on sunny days is being depressed by up to 2 GW –  5-6% of total demand.

Solar will get to grid parity in the US within four years

Energy policy day at Oxford University last Friday – many senior industry, academic and government people on the panels. Speaker after speaker ignored solar because ‘PV is too expensive’. Charts appeared on the large screen in the lecture theatre with PV sitting at about £250 a megawatt hour, or about seven times the current wholesale price for electricity. People really ought to read the newspapers: PV costs have fallen vertiginously for years. Solar isn’t yet competitive with coal in the UK but it isn’t far off.

In the US, the position is even more favourable for solar. Here’s what Neal Dikeman, a leading US cleantech venture capitalist, wrote today:

First Solar announced a $0.99 cent/Wp target within 4 years for installed with trackers utility scale in its investor deck.  That equates to around $4-5 henry hub gas price in a new combined cycle gas plant.

The scary thing is that best utility scale PV solar is already approaching the $1.50/Wp range in the LAST quarter, equating to $7-8 Henry Hub.

The Top 5 PV manufacturers announced module costs all south of $0.65/Wp.  First Solar says <$0.40/Wp in 4 years. Greentech Media says the best Chinese C-Si plants will do $0.42 within 3 years.  Screw the EU and US dumping  trade wars.  That my friends, is grid parity for a massive swath of the electricity market wholesale AND retail.

These companies are learning to work on GP margins of sub 10%.  They are getting lean, and mean and good

(A few notes: Wp is peak watt. This is usually expressed in Europe just as watts. Henry Hub is the US gas exchange. Last week’s prices (late May 2013) were about $4.20. US wholesale electricity prices are far lower than in the UK and Europe: current Texas prices are about $42 or £28 per MWh. Large UK solar fields are already at $1.50 a watt. So solar in the UK, which achieves about two thirds the output of a plant in the southern US will be competitive with grid power at the same time or before.)

The most disruptive effect of UK solar will be the marked dip in midday electricity demand between 10 and 2 as panels on factories and warehouses achieve peak production. The UK grid is used to fairly flat summer demand at these times. This isn’t going to be the case for much longer as building owners wake up to the increasingly obvious fact that PV saves you money. UK policy makers need to wake up to the impact of even lower PV prices than today rather than making comments about solar that are two years out of date.

Mixing renewables and back-up gas power is going to be wasteful

The purpose of this draft paper is to assess what will happen if, as expected, many gigawatts of  intermittent renewables are added to the UK grid alongside large amounts of standby gas power. I use actual data from spring 2013 to model what will happen in 2030 if the expected portfolio of low carbon sources of electricity is constructed. In particular, I try to estimate how much the back-up gas plants will be used and how much surplus and unusable electricity will be generated when the wind is blowing strongly or demand is relatively low. I suggest that the two principal issues facing the UK grid will be using the huge seasonal surpluses of electricity arising in late spring, summer and early autumn and, second, how to finance the construction of tens of gigawatts of standby power which may be used less than 10% of the time.

I conclude by tentatively putting forward a view that the right way to deal with these issues may possibly be to invest even more heavily in renewables (and less in gas standby) and use the increased surpluses to produce methane for use in the gas grid. This may be a cheaper and more energy-secure solution than current proposals. It will also make decarbonisation of heat easier than currently expected.

(As always, I'm very grateful for comments on this article, however critical.)

Electricity demand and supply in 2030

Electricity supply.

a)      Generation portfolio. With adjustments, I use the latest figures from the Committee on Climate Change (CCC). [1] The CCC says that ‘decarbonisation of the power sector is key to reducing emissions across the economy and would also enhance energy security’. It proposes four broadly similar scenarios that enable the UK to cut emissions from electricity generation to below 50 grams of CO2 per kilowatt hour. All these scenarios involve large amounts of nuclear power, wind generation, biomass burning, electricity production from fossil fuels using carbon capture and storage and unabated generation from conventional combined cycle gas plants (CCGT).  I have merged these four possible future plans into a single estimate but simplified it to only include nuclear, wind, CCS, biomass, unabated gas and solar PV.[2]

The figures in table 1 are based on the following key assumptions

a)      Nuclear. The government reaches agreement with the power and construction companies over the price that will be paid for electricity produced by nuclear power stations. As a result, two or three consortia built about 8 power stations by 2030.[3]

b)      CCS. The government must also reach agreement over the price paid for power from CCS-equipped fossil fuel plants. As important, experiments and pre-commercial deployments need to happen quite quickly, if large plants are to be ready by 2030.

c)       Wind. Offshore and onshore farms are projected to both contribute about 25 GW of capacity. The key issue is whether offshore wind costs decline at the rate expected by the CCC.

d)      Biomass. Electricity generation from burning biomass is included in the government’s plans for 2020 and financial incentives are provided. I have assumed no expansion of biomass beyond the CCC’s figure for 2020.

e)      CCGT. For the UK to have security of electricity supply, it needs to have enough ‘dispatchable’ generation capacity to meet peak winter needs. At the moment of likely maximum power requirements in early evenings in December and January, no PV is available and wind output may be negligible. So CCGT and nuclear, biomass and CCGT must cover the total requirement. In the last few years, the peak has been about 60 GW and I have suggested a figure of 40 GW of gas-fired power generation, leaving 20 GW to be provided by the other reliable power sources and a 5 GW safety margin. The CCC’s scenarios range between 40 GW and 46 GW.

Table 1

Central scenario for 2030 – generation capacity

Nuclear	12 gigawatts (GW)
CCS	11 GW
Wind	50 GW
Biomass	4 GW
CCGT	40 GW
Solar PV	10 GW
Total	127 GW

Electricity demand

In recent years electricity use has been gently falling. This change has been caused by improved energy efficiency and a weak economy. In addition, higher electricity prices have choked off demand.

The CCC assumes that electricity generation will rise from about 350 terawatt hours (TWh) in 2011 to between 403 and 465 TWh in 2030, an increase of between about 15 and 30 percent. The Committee isn’t clear in its most recent report why this increase will happen but previous publications from the CCC have pointed to the likelihood of increased electricity use from the use of heat pumps for domestic heating and from growth in the number of electric cars.

Other sources are less bullish about power demand. (Electricity demand is lower than electricity generation because of losses in the distribution system and use of electricity by the generators themselves). The most recent work by the National Grid suggests lower figures than those projected by the CCC.[4] National Grid’s three scenarios offer estimates of 2030 electricity demand that vary from a figure very similar to today’s level in its ‘Slow Progression’ scenario to estimates about 10% higher in its Gone Green forecast and 20% higher in the ‘Accelerated Growth’ view.

Projections for 2030

In the following section, I have estimated how much electricity is generated by the portfolio of generating plant in Table 1 during a portion of 2030. My approach was to assume that the daily pattern of spring demand in 2030 – rising from about 5 am to a plateau from 9am to 7pm and then falling sharply – is identical to 2013.

Figure 1 shows how electricity production varied for each of 4,300 half hour periods from February 23^rd to May 23^rd.

Figure 1

Electricity production, including imports, for half hour periods, expressed in megawatts

 

The chart shows the expected daily variation with production rising to a peak at the end of the working day/beginning of the evening and then falling to a much lower nighttime level. It also exhibits the weekly cycle of lower weekend and Bank Holiday power needs. Average demand levels were highest during March 2013 because of the unusually cold weather, peaking consistently at over 50,000 megawatts (50 GW).  By May, peak demands averaged around 40 GW, with nightime levels falling to around 25 GW, down from 30-35 GW in March.

The next step was to estimate the source of electricity by type of generator in 2030.  I have done this in the following way.

a)      I used the 3 months electricity production data from late February to late May 2013. The manager of UK electricity trading arrangements, Elexon, publishes data for each half hour period. This information includes data on how much power is produced by nuclear, wind and all other types of generator.[5]

b)      This 3 months of data provides estimates of the total amount of electricity generated by wind power in each half hour. For this 3 month period, the capacity of wind connected to the UK National Grid was 7.15 GW. The estimate in Table 1 is that this will rise to 50 GW by 2030. Therefore if the weather patterns in spring 2030 were to exactly the same as in spring 2013 we can plausibly assume that seven times as power will be generated. (7.15 GW multiplied by 7 equals about 50 GW, the assumption in Table 1 for the amount of wind capacity in 2030).

c)       Nuclear power stations will operate continuously although some portion of capacity may be unavailable because of maintenance. I assume that 10 GW work continuously during the 2030 spring period.

d)      CCS plants will also be working continuously. This is because they will be paid a standard and unchanging contract price for electricity. It will therefore make financial sense to operate them all the time.

e)      The same is true for the 4 GW of biomass capacity.

f)       I have assumed a standard daily profile for PV production, starting at daybreak and rising to midday and falling as the afternoon proceeds. This profile varies only by the month of operation with May output being much higher than production in late February. Average daily output figures for each month per kW of installed capacity are taken from records of a small rooftop PV installation.

g)      Imports of electricity: in spring 2013, the UK imported significant quantities of power from France and the Netherlands. The 2030 forecasts assume no net imports. (This assumption is relaxed later in this paper).

To summarise: I have taken actual 2013 electricity generation for each half hour in a three month spring period and then used the predicted portfolio of generating capacity in 2030 to show the makeup of electricity production in that year. Nuclear, CCS and biomass plants (totalling an available figure of 25 GW, slightly less than maximum capacity because some plants will be undergoing maintenance) work continuously in 2030. Production from wind turbines is seven times greater than the 2013 actual figures for wind generation. Solar PV generates electricity during the daytimes according to a set pattern. CCGT plants operate when the amount of wind and PV generation would be insufficient to bridge the gap between the dispatchable power sources (nuclear, CCS and biomass) and the total 2013 demand levels.

The results

Overall

25 GW of generating plant that is working continuously will generate almost enough power to cover the minimum needs of a night in late spring. By contrast, peak demands of 55 GW in the early evening of the last days of February will require either substantial wind-generated electricity or the use of some of the 40 GW of CCGT plants.

When the wind is blowing strongly, the UK is likely to have a substantial surplus of power. By contrast, quiet days will mean continuous use of gas-fired generation.

In the three months under study, UK generators attached to the main distribution network and adding in imports produced about 81.2 terawatt hours (TWh) of electricity (or 81,200 gigawatt hours). In 2030, the portfolio of predicted generating plant working under the same conditions would produce 94.5 terawatt hours. This would be made up as follows

Table 2

Makeup of spring 2030 electricity production if demand conditions and wind speeds the same as 2013

Nuclear	23.6 TWh
Wind	32.0 TWh
CCS	21.5 TWh
PV	2.4 TWh
Biomass	8.6 TWh
Total before CCGT	88.1 TWh
CCGT	6.4 TWh
Total including CCGT	94.5 TWh
Surplus over electricity generation need	13.4  TWh (about 16%)

This is the key result: with the portfolio identified by the CCC, and the same demand pattern in 2030 as in spring 2013, CCGT plants need to generate 6.4 TWh and, second, the variability of wind means that the UK nevertheless produces 13.4 TWh too much electricity. This surplus must be exported, stored or dumped because electricity demand must match electricity supply every minute of every year. Figure 2 shows when the UK is in surplus, and by how much, over the 4,300 half hour periods under study.

Figure 2

UK net electricity surplus (-ve) or deficit (+ve) before taking in account the use of CCGT plants, expressed in megawatts

 

Several features of this chart stand out.

a)      As winter ends, surpluses of electricity become more common. From mid-April onwards, periods of deficit, and hence need to back up intermittent wind using CCGT, become much more rare.

b)      Surpluses and deficits can be very large in any one period. Deficits peaked during March at levels over 20 GW. But deficits of this size tend to be very short-lived. The peak deficit of around 25 GW at point 903 was followed 5 hours later by a need for only 8 GW of back-up gas generation.

c)       Surpluses in the coldest months (such as around points 700 and 1400) are driven by major storms. These events last for several days and can produce sustained and very large surpluses. The importance of these sustained surpluses will be discussed later.

d)      The April/May surpluses are only interrupted by very short periods of need for CCGT back-up. The implications of this will also be mentioned in the section on storage.

Demand for gas generation

One criticism of the approach in this paper is to say that the CCC assumed higher overall electricity demand in 2030. (In future work I will examine the implications of greater aggregate demand). The calculations here suggest that 40 GW of CCGT back-up will only  provide about 6.4 terawatt hours of power in the late February – late March 2030 season. This is equal to only 7.5% of potential output. The CCC itself admits that the gas back-up stations will be used for ‘less than 20%’ of their capacity.[6]

An important question is whether the late February/late May 2013 electricity generation figures are reasonably typical. Multiplied up to the entire year, the figures under study suggest a total electricity generation of about 330 terawatt hours, just less than a quarter of actual total annual need for this year. In other words, the period I used has average daily electricity needs of very slightly below the mean for the year. But the variance is only about 5% and would not significantly affect the results in this paper: the total yearly demand for gas back-up generation will probably mean that CCGT plants stand idle for a very large portion of the time.

The CCC estimates that CCGT stations cost about £600 per kilowatt of power. The public policy question is therefore whether 40 GW of back-up stations are worth the £24bn that they are likely to cost (and for which electricity users will have to pay). If the late February/late May 2013 period is typical, these power stations will only provide about 8% of the total electricity production of the UK in 2030.

Storage

Swings in wind power production and variations in daily demand mean that electricity storage will become increasingly important. However, the results of my analysis suggest that conventional energy storage technologies are not particularly helpful in assisting management of electricity deficit and surplus. The reason? Periods of surplus, usually created by windy periods of a couple of days, generate far more electricity than could conceivably be stored using conventional technologies.

To validate this last assertion, I modelled the addition of 50 gigawatt hours of storage to the electricity network. The current storage capacity for UK electricity, almost entirely in the form of hydro-electric power plants that pump water to a high reservoir when demand is low and let it flow downhill when electricity is scarce, is only about 10 gigawatt hours. 50 GWh is a five times expansion of this capacity, which will also be created largely from new ‘pumped storage’ reservoirs, principally in the Scottish Highlands.[7] But even 50 GWh makes very little difference, particularly when the UK in 2030 will often have days or weeks of consistent surplus in the warmer, lighter six months of the year.

My simple model suggests that the periods of electricity surplus in the three months under study created a total excess of around 13.4 terawatt hours. Less than 10% of that (1.1 TWh) could be stored and regenerated as electricity during times of deficit in the hours and  days after the surplus was created.

Even huge scale expansion of conventional storage, costing billions of pounds, doesn’t solve the fundamental problem that electricity surpluses and deficits will not principally be diurnal, balancing out during the course of day, but multi-day (in the case of typical Atlantic storms in winter) or, more importantly, seasonal. With the pattern of electricity generation capacity proposed by the CCC, the UK will be in deficit in winter and in sustained surplus during the summer. 50 GWh is about 6% of the average daily electricity demand of the UK and therefore incapable of being a significant contributor to electricity supply. To put this more vividly, mid-April 2013 saw consistent winds that would have resulted in a total surplus of 4.0 TWh over a five day period (more than 1% of total UK annual electricity need). 50 GWh (0.05 TWh) of storage reservoirs would have reused little more than 1% of this.

Exporting the surplus

Instead of storing the electricity abundance during windy weather, the UK could export the surplus to countries linked to the National Grid through interconnectors. (At the moment, the UK is typically a net importer of power from France and other places).  Interconnectors have a limited capacity to take current. Presently, the links to France, Netherlands and Ireland have a total size of about 3 GW.

I modelled creating export capacity of 5 GW, 8 GW and 10 GW for surplus UK electricity. I did this by looking at each half hour period in the three month study period and when there was a surplus calculating whether it could be carried abroad on interconnectors of the three sizes. The results are in the table below.

Table 3

How much of the 13.4 TWh hour surpus in late February/late May could be exported?

Interconnector capacity	5 GW	8 GW	10 GW
Exported	5.2 TWh	7.5 TWh	8.9 TWh
Remaining surplus	8.2 TWh	5.8 TWh	4.5 TWh
Total surplus	13.4 TWh	13.4 TWh	13.4 TWh

This analysis shows that a 10 GW interconnector could accept about two thirds of the surplus generated in the three month period. Even a 5 GW interconnector would be able to export over 40% of the excess. The problem remains that when the UK is in surplus, the rest of Europe probably will be as well. High winds over the British Isles will mean excess in other countries close to the UK. As an illustration of this, we can look at the point of maximum wind power in the UK in the three month period under investigation. At around 3.30pm on 22^nd March, turbines were delivering 5.3 GW to the electricity grid. In Germany, the peak was at almost the same time.[8]  On that occasion Spain saw a daily peak of 12 GW an hour earlier than the UK.[9]

At times when the UK has surplus electricity, the rest of Europe – also heavily and increasingly reliant on wind power – will generally also be wishing to export. Although it may be possible to transmit the excess, the price of wholesale electricity will fall to zero or below. (Electricity can trade for negative prices if producers are paid for their production through subsidies such as feed in tariffs). Building bigger and bigger interconnectors to other European countries is not the solution to the oversupply problem.

The conclusions of this paper

This paper uses actual data from spring 2013 and modified CCC forecasts for the portfolio of generating plants to project the pattern of electricity demand and supply in 2030. It shows that the requirement that electricity demand is always met implies that the UK will have to have up to 40 GW of standby CCGT plants. If the UK acquires 50 GW of wind power (a seven fold increase on today but the CCC regards the figure as achievable) then the average gas plant will be used about 10% of the time. Expensive assets will lie unused for months on end but will have to be paid for by electricity users.

As importantly, a strong portfolio of nuclear and CCS plants will mean that baseload needs are met at periods of very low demand, such as summer weekends. 50 GW of wind power will mean about 40% of electricity demand is met from wind but much of this electricity will be – in effect – wasted because it cannot be stored and exports will have no value.

If the weather conditions of 2013 are replicated in 2030, the three month period of late February to late May will result in a surplus of about 13.4 TWh in the period. Extrapolation to a full year is difficult but might be as much as 40-50 TWh, or perhaps 15% of total electricity demand.

The following question arises. The CCC says that by 2030 all low carbon technologies, including CCS (and unabated gas) will be (very roughly) at the same cost.[10] Is the rational national strategy to choose 50 GW and some PV and expect substantial amounts of dumped electricity? Or will it be better to invest in ‘Power to Gas’ the only conceivable way of storing energy seasonally?[11] [12]

Demand for heat for homes and other buildings is a larger part of the UK’s total energy requirements than is electricity. It is also varies far more seasonally. Is the right route forward to hugely over-invest in renewable electricity sources, such as PV, and then convert the surplus on a sunny July day into methane for use in December? It seems to me that if the UK wants to decarbonise the entire economy, and not just electricity production, that this might well be the right way forward.  The rise and rise of solar PV makes this more and more likely. Within two decades we are likely to see PV on a large portion of all roofs, domestic and other. This will mean, as already in Germany, that for four hours a day, six months a year net demand for grid electricity will fall substantially below current levels. If export is unavailable, then storage of power as methane may be economically attractive.

I will try to explore these topics in a further paper.

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[1] Next steps on Electricity Market Reform – securing the benefits of low-carbon investment, Committee on Climate Change, May 2013

[2] For reasons that are very unclear, the CCC almost ignores PV in its 2030 projections. However, recent investment interest has resulted in rapid expansion of large PV farms using ground mounted panels. See, for example, http://www.larkenergy.co.uk/news/uk-s-largest-solar-farm-completed-and-grid-connected/. I project that falling costs of PV installations will take the UK’s PV capacity up from about 3 GW at the end of 2013 to 10 GW in 2030. For comparison, Germany already had about 34 GW in May 2013

[3] These assumptions are distilled from Next steps on Electricity Market Reform – securing the benefits of low-carbon investment, pages 30 and 31 and elsewhere in the CCC document.

[4] UK Future Energy Scenarios, National Grid, September 2012. Available at http://www.nationalgrid.com/NR/rdonlyres/2450AADD-FBA3-49C1-8D63-7160A081C1F2/56766/UKFutureEnergyScenarios2014.pdf

[5] This information is published here: http://www.bmreports.com/bsp/bsp_home.htm . 3 months power production data is located by clicking on ‘Current/Historic’ underneath the ‘Generation by Fuel Type’ graph. These charts work best in Internet Explorer.

[6] Page 31 of the CCC’s Next steps on Electricity Market Reform – securing the benefits of low-carbon investment

[7] The utility SSE has planning permission to build a 30 GWh pumped storage plant at Coire Glas at a cost of £800m.

[8] The German figure is taken from the data produced by Dr Bruno Berger at the Fraunhofer Institute. (www.ise.fraunhofer.de)

[9] Spanish electricity production data can be found at https://demanda.ree.es/demandaGeneracionAreasEng.html

[10] See Figure 1.3 in the CCC’s recent Next steps on Electricity Market Reform – securing the benefits of low-carbon investment

[11] Power to Gas refers to any process that takes electricity and uses it to generate hydrogen through electrolysis and then adds the hydrogen to CO2 to make methane, the principal ingredient of conventional natural gas.

[12] An article on www.carboncommentary.com looked at this technology. See http://www.carboncommentary.com/2013/03/14/2932

Solar is now cheaper than nuclear. Even in the UK.

The Breakthrough Institute, a Californian environment and energy research unit, has put out an eye-catching report about German solar subsidies. According to Breakthrough’s assessment, the feed-in tariffs paid since the start of the solar boom make PV four times as expensive as nuclear power, even using the inflated costs suggested by the construction of the reactor at Olkiluoto in Finland. Breakthrough should have made the point - but didn’t - that the initially generous feed-in tariff rates in Germany have been repeatedly cut. The correct analysis would have not have compared today’s nuclear costs with PV of a decade ago but the current costs of both technologies. At 2013 prices, solar PV in mid-latitude countries is now cheaper than new nuclear. Put in the UK context, the proposed EdF power station at Hinkley is now more expensive per unit of electricity generated than solar farms in the south of England.  The implications of this need a great deal more consideration than they are getting.

By itself, the cost crossover  doesn't mean that countries shouldn't invest in nuclear power. Nuclear delivers electricity reliably throughout the year. This baseload power is more valuable than PV’s high levels of output at midday in summer when demand levels are low in most of Europe. And nuclear power stations take up little space compared to the land needs for solar farms. Nevertheless nuclear proponents, such as Breakthrough, should recognise the truly staggering improvement in the economics of solar power around the world, mostly driven by the German government’s commitment to PV a decade ago.  Costs have fallen by approximately 75%. By contrast, it probably doesn't need saying, nuclear has nearly doubled in price.

The analysis

The ‘cost’ of the many options for generating electricity is difficult to calculate. For both nuclear and for PV, the underlying expense  of generating electricity is dominated by the required payment to the providers of the capital needed to build the plant. PV farms, for example, have operating costs close to zero and nuclear power operates at no more than £15 per megawatt hour. Whether nuclear electricity therefore  ‘costs’ £80 or £100 per megawatt hour crucially depends on the rate of interest demanded by financiers on the huge amounts of money needed to construct new power stations. This is even truer for solar farms.

We do know what EdF, the owner of the Hinkley site, thinks it needs to pay its capital providers. Press reports, not denied by the company, suggest that it believes that it needs a minimum price of £97 per megawatt hour in order to achieve a required 10% return on the capital used to build the plant. Agreement has yet to be reached with the UK government that such a price will be written into law as the ‘strike price’ which EdF will be paid for the output from Hinkley. Nevertheless, £97 is consistent with the calculations of outsiders looking at the £14bn financing challenge faced by EdF for the two proposed Somerset reactors.

The question I therefore asked was this: would a ‘strike price’ of £97 per megawatt hour (just under 10p per kilowatt hour) be enough to incentivise developers to build PV farms in reasonable locations on flat land in southern England with nearby grid connections? My extremely simple modelling assumptions were as follows.

	Assumption	Notes
Capital cost	£800,000 per megawatt installed	In line with recent quotes from UK developers. This may rise as a consequence of the possible tariff wars between China and the rest of the world
Operating cost	1p per kilowatt hour produced	A large PV farm needs monitoring and some security provision
Inflation	0%	I understand that EdF’s requirement for £97 per MWh is index-linked. My assumption is therefore consistent for PV.
Life of the PV farm	30 years
Yearly loss of power producing capacity as a result of panel decay	0.3%
Output per kW installed	1000 kWh per year	This is achievable across Cornwall, south Devon, and some parts of the rest of the south coast and the Isle of Wight.

These rough calculations suggest that a ‘strike price’ of £97 for solar electricity would yield a return of 11.3% on the funds committed.[1] This is more than the 10% return achieved by EdF on its proposed investment at Hinkley. Electricity from solar PV is therefore cheaper – in good locations – than nuclear.

This can be put another way. Developers of solar farms should be willing to accept a strike price of less than £100 per megawatt hour, if their required return is similar to EdF. My approximate calculations suggest that a figure of £88, indexed to price inflation as with the nuclear company, will give returns of 10% on PV investments. Perhaps as importantly, the financial risk attached to a solar farm is tiny compared to the roll of the dice at Hinkley. Investors will actually need a much lower return on PV than nuclear.

Are these conclusions consistent with the evidence from sunny counties? Yes, they very definitely are. Applications to build large PV farms are flying in to planning authorities. And what is the current price achieved for solar PV? A developer of large farm will receive 1.6 ROCs (Renewable Energy Certificates) worth today around £65-£70. In addition, they will sell the electricity, perhaps for £40 per megawatt hour, meaning that their total income will be just over £100 per megawatt hour. In other words, developers are rushing to build solar farms today at prices only very slightly higher than demanded by EdF for nuclear.

These farms are not always even in particularly good locations, such as the one that the comedian Griff Rhys Jones is currently complaining about in Suffolk. The marketplace is therefore saying that solar power is now cost-competitive with nuclear. I’ll try to address what I think are the enormous implications of this for energy policy, here and around the world, in a note on this web site soon. As we’re coming to realise, the fact that PV is now cheaper than retail electricity (and therefore doesn't actually need any subsidy at all if the electricity is all used on site) has the potential to really upset many of the assumptions we've made about renewable energy. Electricity markets have yet to understand the disruption that is likely to be caused.

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[1] This is the Internal Rate of Return of a solar PV projects selling their electricity for £100 a megawatt hour.

How communities raise money for energy cooperatives

(This article was published on the Guardian web site on 29th April 2013.) This month a hydro project to generate electricity at a weir on the Thames in Oxford won the an investment of nearly £300,000 from 95 shareholders, three quarters of whom live in Oxford, within two weeks of opening its offer. Just a few weeks ago, the village of South Brent in Devon financed a large wind turbine almost entirely with local money.

Green energy projects owned by communities – long-talked about as a way to reduce emissions, cut bills and bring people together – are starting to raising serious amounts of money. But how?

Saskya Huggins, one of the volunteers who has organised the Osney hydro project in Oxford, said “when you get an opportunity like this that helps tackle a major global issue, albeit in a small way, and raises significant funds for your own community, you grab it with both hands.”

The two ventures share many features. Both had a core group of utterly committed volunteers like Huggins working for many years to bring the project to fruition. The Osney hydro plant has been in development for over a decade. South Brent’s team got planning permission three years ago but took until the late 2012 before being able to start fundraising.

In both places, the organisers are well known and trusted in their local community. This seems to have helped build the impetus behind the fundraising.

Charlotte Robinson, one of the Osney Hydro investors, said: “when I came to Oxford 10 years ago, this idea was reported in the local newspaper and I loved it, but I couldn’t see how such a big project could happen in such a small area. So I’ve been thinking about this for a decade, and was determined not to miss the boat. This sort of action gives me hope that a climate change revolution really is possible, even for non-leaders like me, by doing things from the bottom up and locally.  I feel incredibly lucky to be able to take part.”

Edward Chapman, one of the Devon organisers, actually discouraged publicity outside the area, saying he wanted to make sure as much money as possible came from individuals living close to the turbine.

He remarked on how early publicity for share issue had galvanised more support from local people. “The team of volunteers who assembled after the first open meeting back in January did an amazing job - the village was covered in banners and posters and they opened the “pop-up” shop for a week.”

The two schemes independently decided to offer investors an annual return of about 4% on their investment. This leaves large surpluses available for local schemes to reduce fuel poverty and meet other energy priorities within the community. Osney says it will put a total of £2m into energy projects in West Oxford during the forty year life of the hydro plant, more than three times the initial cost of the scheme. South Brent has its eye on using the money from the wind turbine to provide the seed funds for its own large hydro power scheme as well as insulating local homes.

The volunteers that have driven the two schemes forward were already experienced renewable energy investors. The Osney group had raised the money to invest in several large solar photovoltaic arrays on local buildings while one of the South Brent directors had rebuilt some of the village’s small electricity-generating water wheels and another works as a surveyor for a large renewable energy company.

In South Brent about 130 people put money into the wind turbine from a village population of only 3,000. Although other Devon wind turbines have been fiercely resisted – including some planned by other community groups - few voices were ever raised against the proposal. At Osney, over half the money came from less than a mile from the weir at which the generating plant will be built.

The average amounts invested were broadly similar in both cases. The Thames scheme raised an average of just over £3,000 per investor compared to £2,300 in Devon. All the Osney shareholders are individual people. A few companies and trusts invested in the South Brent wind turbine - usually buying relatively few shares - but over 95% of the investors are individuals.

The big brother of these two ventures is the Westmill Solar cooperative, which raised £4m from 1,600 small shareholders in the summer of last year to buy an existing solar farm near Swindon. The profile of the investors is similar to the two newer schemes. At £2,500, the average investment is about mid-way between the Osney and South Brent figures. Three quarters of the Westmill investment came from within twenty five miles.

The experience in Germany shows what might be achieved by encouraging such community power companies.

By the middle of 2012 over 500 energy cooperatives were operating in the country, with almost 170 founded in 2011 alone. Although the pace of growth is faster there, other features are very similar. At around £2,800, the average size of shareholding in these ventures is about the same as in the UK and, like here, over 90% of investors are private individuals. The typical dividend is 4%, similar to the rate proposed at Osney and South Brent.

Even in Germany, cooperatives still produce less than one tenth of one percent of the country’s electricity. However, the speed of growth suggests that local energy companies may eventually produce a respectable amount of the country’s power.

According to a recent survey [LINK??], the prime purpose behind the German cooperatives is not to make shareholders rich but to promote renewable energy and to keep money in the local economy. The same survey showed that the most important reason that the founders decided to form cooperatives, rather than conventional companies, was because of the democratic ‘one member, one vote’ nature of the decision taking. If my straw polls are any guide, it’s the same in the UK.

The experience at Osney and South Brent suggests that deeply rooted, cautiously run and philanthropic energy ventures can raise significant amounts of capital from local investors – even if the promised financial returns are quite limited.

(With many thanks to the volunteers in Osney and South Brent, particularly Saskya Huggins and Edward 'Joddy' Chapman, who answered my incessant questions).

Small renewables about 0.6% of UK electricity consumption

What percentage of the UK’s electricity is generated by small power plants supported by Feed In Tariffs?  I think the answer is about 0.6%. At current rates of growth, this will rise to about 1% by this time next year. Most power plants supported by Feed In Tariffs (FiTs) are small, often very small. Their output isn’t recorded in statistics of electricity generation. In fact most of the time the PV panels on your neighbour’s roof are reducing her electricity consumption rather than producing a flow of electricity into the power network. But knowing the rated power of installations claiming FiTs, and estimating how much yearly electricity each kilowatt produces,  we can guess the total amount of power produced over the course of a year.

The March FiT statistics have just been published. The total capacity of all installations registered under the scheme is now about 1.8 gigawatts (slightly larger than one of the new nuclear power stations planned for Hinkley in Somerset). Most of this capacity is solar PV.

Technology	Share of total FiT installation capacity
Solar PV	88%
Wind	7%
Anaerobic digestion	2%
Hydro	2%

The imbalance is even more pronounced if we look at the number of installations. Solar PV is 99% of all sites claiming FiT because these installations are typically much smaller than wind or other technologies. Over 1 household in a 100 now has solar panels on the roof but these are generally below 4 kilowatts in size. A new wind turbine claiming FiTs might be hundred times the potential power.

PV panels don’t work at night, and barely  function on a cloudy December day. In fact, solar panels produce an average of about 10% of their rated capacity. So a 4 kilowatt array on a roof will, over the year, average about 400 watts. It’s more in Cornwall and less in Aberdeen but this is a roughly correct average.

We can use similar estimates for the other main feed-in technologies: wind, hydro and anaerobic digestion. My figures are in the table below

Technology	Estimated output as percentage of rated capacity[1]
Solar PV	10%
Wind	25%
Anaerobic digestion	70%
Hydro	40%

The smaller technologies have higher percentage outputs, meaning that they contribute more to the electricity generated under the FiT scheme.

Simple multiplication produces the following estimates of annual electricity output from the currently installed FiT plants.

Technology	Electricity  generation estimate (GWh)
Solar PV	1,381
Wind	281
Anaerobic digestion	234
Hydro	117
TOTAL	2,013

The total amount of electricity consumed in the UK in 2012 was about 317 GWh. (The amount generated was greater because of losses in distribution and in running the power stations themselves). Therefore the electricity generated under the FiT scheme was about 0.6% of all electricity used in homes, offices and businesses.

The amount of generating capacity inside the FiT scheme rose by 65% in the year to March 2013 and growth is fairly steady. Wind and AD grew much faster than the average, albeit from a small base. If the growth continues, all FiT installations in March 2014 will supply about 1% of UK electricity in the following year.

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[1] Please tell me if you think these estimates are wrong

National Trust inconsistent in opposing all wind farms while saying it supports renewable energy

(A version of this article was published on the Guardian web site on Friday 19th April) (All praise to the National Trust for its recently announced commitment to increasing the use of renewable energies at its properties. The promise to produce over half its power and heat from heat pumps, wood, solar and hydro-electric power by 2020 is a model for all organisations. But at the same time as cutting its use of fossil fuels it is actively opposing others who want to do the same on land adjacent to its own. And as the largest environmental organisation in the UK with four million members its overall influence on the development of renewable energy is not benign.

The Trust is currently fighting against 25 wind farm proposals close to its houses or landholdings. Its determined and (so far) successful opposition to four wind turbines within sight of the majestic Lyveden New Bield ruin in Northamptonshire is a good example. The four proposed wind turbines would be easily visible from the property. To many, this is reason enough for the National Trust to lead the opponents of the scheme in court battles. The problem is that the annual electricity output of this small wind farm would be similar to the National Trust’s total renewable energy production in 2020. In other words, all its heavily publicised efforts to improve its own energy performance are outweighed by its block on just one commercial wind farm. Overall, the wind projects opposed by the Trust – some of which are large farms substantial distance offshore – offer the prospect of several hundred times as much energy as it could conceivably generate from other technologies on its own land.

The National Trust owns 250,000 hectares, about 1% of the total area of the UK. A large fraction of this land is in windy coastland areas suitable for the development of wind energy. By its almost blanket opposition to the development of turbines, onshore or offshore, within sight of its landholdings, the Trust is slowing the growth of the UK’s lowest cost form of renewable electricity generation. It reserves the right to comment on proposed wind turbines that are up to 15 kilometres from the nearest National Trust property implying, one suspects, most the western coastline of the UK is within its purview. In fact it goes further:  the Trust’s list of wind farms that it is ‘keeping an eye on and/or opposing’ includes the offshore Celtic Array, which will be at least 19 km from the nearest part of Anglesey.

The number of days each year when this wind farm will be actually visible from rainy west Wales will be few. Nevertheless Simon Jenkins, the chair of the National Trust, has asserted an unqualified and almost feudal right to complain about prospective wind turbines that ‘blot the landscape when seen from our territory’. (Source: Financial Times, March 8 2013).

In contrast, the Trust itself regularly comments on the need to reduce the UK’s emissions. It recognises that climate change is likely to have more effect on its historic houses than other buildings, commenting that ‘The National Trust is already experiencing the impacts of climate change at many properties, such as flooding, storm damage, rainwater incursion, vegetation change and habitat changes.

So I asked the Trust why it rarely, if ever, actually supported wind development anywhere in the UK. It responded by providing details of just three applications that it had backed. The first was a Devon wind farm that was, in the Trust’s own words, hardly within sight of its land: ‘open visibility’ it said ‘is largely restricted to the very southern end of the park’. The others were similarly only just within view of the Trust’s properties.

More generally, The Trust told me that it did not have the resources to actively back wind developments. Like others, perhaps, I found this a strange comment from an organisation with an income of £400m a year, four million members and a clear awareness of the threats from climate change. It is prepared to throw huge sums at resisting wind farms it doesn’t like but won’t even write a letter to support even the most inoffensive developments.

No one should doubt the Trust’s own commitment to increasing the use of small scale renewables at its own properties. But therein lies the problem. Small scale renewables will never provide the amount of low carbon electricity that the UK is committed to generating by 2020. Wind power, particularly onshore, is quick to develop and relatively low cost. And it is effective: turbines provided 15% of the UK’s electricity during last Sunday and new output records are being set by the week. We urgently need the Trust to move away from its unthinking opposition to commercial wind power. Its moral influence in the UK is unmatched and a more rational view of the importance of wind is long overdue.

Another success for community renewable energy: Osney raises its cash in ten days.

The community micro hydro scheme at Osney, near the centre of Oxford, has reached its target of £250,000 investment from local shareholders within ten days of starting its fund-raising. Work commences on a 49 kW Archimedes screw at a weir on the River Thames in a few weeks’ time. The target return offered to investors is only 4%. This is more proof that community renewable energy projects can raise money locally at rates well below the cost of bank finance. Many congratulations to the team that have been working on this complex project for several years. And praise to the Environment Agency for making it possible – here and around the country – to develop well-designed river micro hydro. The Osney weir is an expensive project for the electricity it hopes to generate. The full cost is around £600,000 for the 49 kW output with bank debt covering the £350,000 not raised in the share issue. The cost per kilowatt is therefore over £12,000, more than the £8-£10,000 that I estimate for the easiest locations. (Compare this to the price of about £500 a kilowatt for new large power stations using gas as their fuel). Based on five years flow data on the Thames, the output from the Archimedes screw is projected at around 159,000 kWh a year, a capacity factor of around 37%, which is a decent figure for a lowland site.

The Feed In Tariff for a hydro installation of this size is about 21p per kilowatt hour. Most of the electricity produced will be sold to the Environment Agency for local use. Total income from all sources is expected to be about £50,000 a year, or a return of about 8% in total. This will rise with inflation in Feed In Tariffs and in electricity prices.

Earlier this year, I tabulated the prospective rates of return on the community projects I could identify. Rather to my surprise, I found that genuinely community-based projects appeared to be able to finance themselves by offering rates of return as low as 4 or 5% to the investor (and the investment back in twenty years or so). Osney has confirmed this figure. The project is expecting to raise £350,000 in debt at a cost of around 6.5%.

This the strange part of community financing. It is possible to fund projects using shareholders money for less than the cost of bank debt. This is even though shareholders take more risk and have less rights to their capital. Quite sensibly, having raised the minimum sum they need in less than two weeks, the organisers are now asking whether they should raise more money in share capital and less in bank debt. I suspect that they could completely avoid having any bank money at all.

Why are people prepared to put their money into far from risk-free projects for a return that is quite small? The obvious answer is that other opportunities are so limited at the moment. But this doesn’t appear to be the complete reason. Other factors include

a)      The corporate structure chosen by the Osney project is an ‘Industrial and Provident Society for the benefit of the community’ or ‘bencom’. This means that investments in a renewable schemes using the Feed In Tariff can offer shareholders what is known as EIS relief, cutting the net cost by 30%. Put in £1,000 and it will only actually cost £700 if you are a UK taxpayer. (To be clear: all hydro projects and anaerobic digestion are always eligible for EIS relief. Wind and solar don’t qualify unless the scheme is an Industrial and Provident Society).

b)      The shareholders know and trust the dedicated team that has taken the project this far.

c)       The potential return to the wider community is large. Osney intends to return the share capital to investors after twenty years. The weir will continue to work for another twenty, and the cash will all go to community energy and efficiency projects. The total amount given to the community is estimated at over £2m over the whole lifetime of Osney hydro.

It has taken twelve years to bring the project to the current state. Community projects like this need huge (and unpaid) commitment from a team of volunteers battling planning regulations, slow-moving councils and landowners and even, in the Osney case, local environmentalists wanting to protect an individual tree from being lost during the construction of the hydro plant. Nevertheless, this complex scheme shows how scale of  the latent demand for genuinely community-based renewable energy.

UK greenhouse gas emissions are falling, not rising.

Whatever George Monbiot says, it simply isn’t true that UK greenhouse gas emissions are still growing rapidly. Monbiot is right to insist that we move from focusing just on UK-based emissions and include the impact of our imports. But even if you include the embedded greenhouse gases in goods brought into the country, domestic and imported emissions have fallen sharply since 2004. The latest data is as follows.

Source:https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/85869/release-carbon-footprint-dec2012.pdf

Yes, the share of CO2 emissions represented by imports (the blue area in the chart) has grown sharply since 1993. And 2010 saw a clear uptick. However, even with the rise of ‘embodied’ CO2, the grand total has decreased significantly since 2004. Total emissions of CO2 were down from a peak of 852m tonnes to 722m tonnes in 2010, a fall of 15%. It’s important to note that the steep decline began four years before the economic contraction started.

The chart above just covers CO2. The same pattern applies if you look at all greenhouse gases.

The Monbiot theme worries me. He suggests that material consumption is rapidly increasing and, therefore, that our environmental problems will be mitigated by a reduction in the goods we buy. I suspect that nothing turns people away from environmentalism more than its consistent refrain that we are all guilty of destroying the planet by our increasingly profligate consumption.

He doesn’t say this directly, but he implies that UK imports from China are a particular issue, exemplifying why we need to change our ways. He might be startled by another chart.

Source:https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/85869/release-carbon-footprint-dec2012.pdf

The emissions in China arising from production for the UK market are neither rising, nor particularly large. Emissions from ‘Rest of the World’ countries are over twice as great, partly driven by methane emissions in agriculture. Meat, I suggest, is more of a problem than iPads, even if you believe George’s story.

Your solar panels are probably working properly

Several householders have asked whether the performance of their PV system indicates problems with their solar panels. The recent electrical output from their roof has been well below expectations. If the output from my panels is any guide, the problem lies in the cloudiness of the last year, and not the system itself. I’ve recorded the output figures from my PV system each month for the last nine years and this annual period has been by far the worst on record.

In ten out of the last 12 months, my panels have produced less than average output for the month. March’s output was strikingly low: 68% of the average figure for the month.

The last year’s electricity production was 90% of the nine year average. Our (badly oriented) 2 kW system produced less than 1,300 kWh, compared to the norm of around 1,430 kWh. You’d expect some small degradation in performance as the panels age but the last twelve months have been unusually cloudy.

The graph records annual output from our PV system over the last nine years with kilowatt hours on the vertical axis.

No net savings from energy policies

The government says its policies are saving householders’ money on their energy bills. Although subsidies for lower carbon generation increase costs, DECC contends that its energy efficiency schemes have outweighed the impact. It says that gas bills have been held down by improvements in home insulation and better boilers. However the government ignored the evidence that homes are heated to lower temperatures than they were a decade ago. The apparent savings in gas bills are driven as much by lower thermostats as improved efficiency. As retail energy prices rise, policy makers are under increasing pressure to show that financial support for low carbon generation and other measures aren’t the driving force behind the cost increases faced by householders. Their case is that wholesale price changes, particularly of gas, are driving the inflation in home energy costs. They’re right: wholesale gas prices a decade ago were a third of what they were in 2004 while low-carbon support schemes have added less than 10% to retail energy costs.

Over the last few years, DECC has wanted to make a second, and much stronger, claim. It has repeatedly asserted that by 2013, the net impact of government policies would be to reduce average home energy costs.  The impact of costs imposed on the consumer would be less than the benefits of other policy interventions. On 27^th March, the government duly announced that this aim had been achieved. (This is expressed schematically below).  Energy bills in 2013 will be 5% lower than they would have been without any form of government intervention. Simplified to the greatest possible extent, DECC says that this year’s bill additions will be outweighed by the benefit of past subsidised home insulation (about 50%), regulations that obliged central heating engineers to install better boilers (about 30%) and more energy efficient electrical appliances (20%).

Importantly, the calculations seem to assume that all gas bill reductions are due to better insulation of the home or improved boilers. Without this claim, the government’s assertions that policies have cut overall costs to householders are hollow.

In fact, rising gas prices have obliged many householders to run their heating at much lower temperatures than before. The following chart is drawn from information provided in another DECC document.[1] After wobbling around 18-18.5 degrees centigrade for the early years of the last decade, having previously consistently risen since 1970, internal home temperatures have declined every year since 2005, approximately the moment gas bills started to rise sharply. This is what we’d expect: homeowners are reacting to the increased cost of energy by reducing their use. (Very unfortunately, of course, this has also had the effect of causing cold-related illnesses and deaths).

The information in this chart isn’t measured directly but is estimated from other research. It may or may not be accurate but the point is that the numbers are DECC’s own figures, which it choose to exclude from its own analysis of bill savings. I’m saying that it should have incorporated the impact and reduced its estimate of savings from insulation and other programmes.

One recent academic study went so far as to suggest that all the observed recent reductions in gas use are entirely due to increasing prices. None are actually the result of government sponsorship of cavity wall insulation programmes, more efficient boilers or thicker levels of loft insulation.

This seems unlikely to me. Gas use in homes, adjusted to reflect annual variations in outside temperatures, has fallen about 20% since 2005. Household heating (expressed as the average difference between internal and external temperatures in homes) has only fallen by about 10%. So, by implication, efficiency measures have (very roughly) saved about 10% of all domestic gas use. A decent improvement but not enough for DECC to correctly claim that the net effect of policies has been to reduce energy costs to below where they would have been. My guess is that instead of saving 5% of costs, the net impact of policies has been to raise bills by between 1 and 2%. Consumer welfare has also seriously suffered as homeowners have run their houses at lower than desired temperatures.

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[1] The United Kingdom housing energy fact file, 2012. DECC January 2013..

Time to stop promoting air source heat pumps and ask why they don't work in the UK

(24th October 2014. Some of the comments submitted here in recent days have been abusive and off-topic. I will remove all comments placed on this post until November 3rd 2014 in order to let things calm down. I know that many people find the expertise available from some of the regular correspondents here extremely useful so I will open things up again on November 4th 2014. Please completely avoid personal remarks, unpleasant accusations and off-topic comments on the quality of climate science).   

(24th July 2013. Several commenters have kindly provided detailed analysis of some of the reasons why air-to-water heat pumps may be costly to operate. Others state that the technology is not at fault and blame the poor quality of the installation. Thank you very much to all those who have given time and thought to this issue. May I strongly recommend reading the full range of comments below the text? Chris)

When temperatures in the British Isles drop to unexpectedly low levels, the pattern of traffic on this web site changes. One set of search terms dominates the inquiries. Readers are looking for information on why their air source heat pump is costing so much money to run. Sold to them as a way of saving cash, readers often seem to find that the price of heating their home has suddenly increased, sometimes quite dramatically. And, moreover, the pumps don’t heat the house properly.

Today (March 25th 2013) is unusually cold across Britain and the search term ‘problems with air source heat pump’ is the single most common inquiry. Colder countries that have been using heat pumps for decades seem to be able to install them in ways that mean that homes have inexpensive and reliable heating. In the UK, with its badly insulated houses, air source heat pumps seem to be a complete disaster for many unlucky purchasers.

Below, I copy a letter I’ve just received from a lady living in the Orkneys off the northern tip of Scotland giving her experiences. Readers may also be interested in the comments added at the end of a previous post on heat pumps, including the most recent one from Jane Smith, submitted today. Despite the increasing evidence of systematic problems with air source heat pumps, government bodies such as the Energy Savings Trust continue to say that they will save money for householders living off the gas grid. Heat pumps are also part of DECC’s ‘Renewable Heat Incentive’, a scheme that is intended to subsidise the installation of suitable and effective technologies for householders. The continuing official support for heat pumps in the face of repeated failure needs to be challenged.

(Published with permission from Ms Switsur)

Hi Chris,

I don't need a reply to this, I am just having a grouch which might interest you.

AIR SOURCE HEAT PUMPS are USELESS for anyone on a low income. I am 72. I have £130 a week total income (Pension and Pension Credit). My house had no central heating. The Energy Savings Trust conned me into having the Government Grant of £6800 and paying £2000 extra myself to have air source central heating.

It took 11 months to install because the plumber obviously didn't know what he was about.

The first winter my leccy bill was nearly £400, and I thought it was my fault for not using the system properly, and it took me a very long time to realise that the installer had left the hot water boost permanently on.

This winter I really, really tried to economise, turning rads down and only having it on in the cheap periods. Result? a bill of £420. As I also had unexpected vets bills and an insurance excess of £250 to pay because my car slid in the snow and did some damage, I could not pay the bill - there is only £90 left to pay but (the suppliers) are saying they will cut the leccy off if I don't sign up to their payment scheme. I can't afford their payment scheme anyway because it is double my weekly payment.

My electricity costs are now more than 20% of my total income even thought I was promised I would save money. I HAVE SWITCHED THE SYSTEM OFF and gone back to coal. 11 months of torture while the thing was installed, £2000 of debt to pay my share, and I am back exactly where I started.

Please do advise people on low incomes not to bother with it. It didn't heat the house adequately in cold weather anyway.

Thank goodness I have an open fire!

Regards, Julie

Julie Switsur Ardage Burray Orkney KW17 2SS 

We need to store surplus electricity as gas

(The comments underneath this article are particularly interesting. I recommend reading. Chris.) Whatever renewable energy advocates say, the intermittent nature of solar, wind and marine energy production represents a difficult problem. Although we can adjust electricity demand to match supply to a far greater extent than we do today, the huge expected growth in UK offshore wind power is going to give the electricity grid major problems. When the gales blow, we’ll be dumping power but running short of electricity on cold, still days.

That’s why the recent contract win by ITM Power, the Sheffield hydrogen electrolysis company, is so interesting. ITM is supplying some of its units to a 360 kW hydrogen production plant in Germany that take surplus electricity, convert it into hydrogen and feed the gas into the national gas grid. (Please read the comments for discussion of some of the problems this might cause). In a second stage, hydrogen can be converted to methane, the main constituent of natural gas, and injected into the grid or into storage caverns. The Germans have been quicker to recognise than other countries that the gas network can store far more energy than any other media. Forget batteries, compressed air storage or pumped water: the national gas grid has a capacity several orders of magnitude greater. And the network and its storage sites already exist. No need to spend billions on new facilities. Complete reliability.

The problem

We can see the issue already. When the wind is strong the UK grid sometimes cannot cope with the electricity produced. Wind farms are paid to disconnect. We mustn't exaggerate the current problem: the amounts are small and paying generators to shut down has long been a feature of all electricity grids. But as the capacity of working wind farms rises from 7 gigawatts now (providing – at peak – about 20- 25% of UK summer night demand) to thirty gigawatts and beyond we know the problem is going to get more and more severe. Electricity is wasted, increasing the long run cost.

And, of course, the reverse situation is also a problem. Cold December weather is often correlated with low wind speeds. Those thirty gigawatts of turbines might be only producing 1 or 2 gigawatts of power at times when electricity is really needed. Fossil fuel power stations will have to work instead. Most of the time these plants will stand ideal, and creating the right incentives to build them is proving one of DECC's many challenging problems.

Most analysis of renewable energy deployment suggest that the UK and other countries need to invest heavily in energy storage and/or massive increases in the capacity to ship electricity around Europe. At the moment, we have very little storage of any form. The two large ‘pumped hydro’ plants provide a few gigawatts for a few hours. In Germany, the total amount of non-fossil energy that can be quickly converted into electric power is about one twenty fifth of one percent of annual electricity demand.

Some expansion of pumped hydro is possible; I’m told Japanese companies are pumping water up sea cliffs ready to be released when power demand rises. A few more large reservoirs are possible in the UK. But getting to the energy equivalent of more than a day’s supply of electricity is almost impossible to envisage. We could use a 100% electric car fleet to provide power but one German study suggested that this would provide, in total, only about a third of a day’s power. Other battery sources would be astronomically expensive.

Unfortunately, those periods of calm in mid-winter can last weeks or more in the UK, and longer elsewhere. The main potential sources of energy storage are insufficient.

The answer

This is why we need to consider the possible role of the gas grid. In the UK, total gas demand is very approximately 3 times total electricity use. (I’m using rounded figures only here).

Total demand	Power source
Electricity	400 TWh
Gas	1100 TWh
Of which, used for electricity	c. 300 TWh

Most countries, but not the UK, have maintained substantial gas storage. Gas is bought when cheap, usually in the summer, and put into depleted hydrocarbon reservoirs and other storage reservoirs for use in winter and to meet unexpected needs. German has storage capacity of about 200 TWh. A gas power station is about 60% efficient, meaning that German gas storage could provide the energy to meet about 100 days of continuous UK electricity demand.

In the UK, the malfunctioning energy markets have held back investment in storage and we can only store about 18 days continuous gas use. But sites have been found, and planning permission often granted, to multiply this fourfold.[2] This is enough to overcome all the problems of intermittent renewables.

This, of course, is similar to what the government already intends. New gas-fired capacity will be given payments just for being ready to fire up when the wind stops blowing. The real innovation that the Germans are beginning to explore is to use the gas grid both as a back-up to wind in calm condition AND as storage for energy when the wind is too strong.

This is why the ITM Power contract is so intriguing. Its units will be employed to turn surplus electricity into hydrogen through simple electrolysis, the splitting of water into its components, hydrogen and oxygen. The intention is then to put the hydrogen into the gas grid, mixing it with the methane already there. (I didn’t know this, but it seems that 1 or 2 percent concentrations are safe). This means we’ve potentially got energy storage from surplus wind in the gas grid. At times when wind is over-abundant, and usually this means wholesale electricity is cheap, the wind farm output can be diverted to electrolysis in a process that is about 80% efficient. (This means that 100 kilowatt hours of electricity can be converted into hydrogen that when combusted produces 80 kilowatt hours of heat). We've got some storage, and energy that would otherwise have been dumped or sold for less than nothing.

But, you might say, adding 1 or 2 percent hydrogen into the gas grid doesn’t provide enough storage for more than a few days. The logical next step is even more interesting, and just beginning to be explored in the Germany and Austria. Hydrogen can easily be converted to methane using a well-understood process. Find a source of CO2 (not scarce) and hydrogen be turned into conventional natural gas. Except that, in effect, it is 'renewable' because it is sourced from water and CO2.

2H₂ + CO₂ = CH₄+O₂

Very roughly, this methanation process is also 80% efficient . That is, 100 units of chemical energy in the hydrogen turn into 80 units of chemical energy in methane. Conceivably the lost heat could be reused, possibly in a simple Organic Rankine Cycle (ORC) plant to produce electricity. More about all this here.

The storage process is complete. When the wind is blowing, the surplus electricity gets converted into hydrogen and then methane. The total efficiency is about 64% (80% times 80%).This isn’t great, but the wind farms’ power might otherwise be wasted. And it is not much worse than other conceivable large scale energy storage mechanism.

If the UK wants thirty gigawatts of wind (equal to total UK demand on a summer night), we have to find a way to enable electricity to gas conversion to happen at a very large scale. It seems to me that there is no alternative if we want to use renewables, decarbonise the power supply and keep the lights on as well. Electricity-to-gas hugely increases the capacity of the electricity grid to cope with intermittent renewables and provides ‘zero-carbon’ gas to power stations in times of low wind. Perhaps critically, it also helps stabilise the price of gas and reduces the UK’s increasing dependency on imports. We can engineer the market so that gas-fired power stations can work most of the time on ‘zero-carbon’ methane, reducing the overall cost of renewable power.

Electrolysis and methanation are relatively cheap. I can’t see a good reason not to go down this route. Am I missing something?

http://www.oxfordenergy.org/wpcms/wp-content/uploads/2011/08/NG-54.pdf

UK storage estimates

http://www.uni-kassel.de/upress/online/frei/978-3-89958-798-2.volltext.frei.pdf

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[1] http://www.itm-power.com/news-item/first-sale-of-power-to-gas-plant-in-germany/

[2] See http://www.oxfordenergy.org/wpcms/wp-content/uploads/2011/08/NG-54.pdf

When talking to investors and to customers, British Gas tells very different stories

(Published on Left Foot Forward, 1.03.13)  

Home energy prices went up sharply in late 2012. The excuses used by the Big 6 suppliers focused on the adverse implications of the need to pay for the government’s environmental policies, such as the support for renewable energy and better home insulation.

British Gas told its customers of a 6% rise in prices in November 2012, giving a long explanation of the reasons why prices had to rise. Unfortunately for company, we can now check some aspects of its story against what its parent, Centrica, has just told its shareholders about its financial performance in the UK during 2012. As we might wearily expect, the disparities between the two accounts are striking. Below are six statements extracted from the press release that announced the price rise, followed by a summary of Centrica’s comments today (28.02.13).

1)     Even after this increase, our margins after tax in 2012 will only be 5p in the pound

The actual figure for 2012 was 6.6%, over 30% greater than British Gas said. In cash terms, operating profit was up 11% to £606m for the UK domestic energy supply business.

2)     Prices in the wholesale market for gas this winter are around 13% higher than those paid to secure gas for last winter

According to Centrica, the average price of gas was 58 pence per therm in 2012, unchanged on 2011’s figure.

3)     The cost of the Government’s policies, including: CERT, CESP, ECO, FIT, the Renewables Obligation and the Warm Home Discount have added around £25 to the cost of supplying the average household in 2012

The figure quoted by Centrica is actually £19, just under a quarter less than the figure used in the price announcement. The error was compounded by the failure to acknowledge that ECO (the Energy Company Obligation) didn’t actually exist at the time of the price rise. British Gas, along with several other suppliers, used forecasts of higher future environmental costs as pre-emptive justification for its cost hikes. Government denies that the new policies coming into force in 2013 will be any more costly than the old schemes.

4)     On average, the cost of delivering energy to the home has increased by around £25 in 2012

Actually, the figure was £34 a home, 35% more than British Gas said. The point is not the amount of the increase, which is relatively trivial as a fraction of the typical domestic bill, but the wish to play down the part played by necessary capital investment in forcing up prices. British Gas exaggerated the cost of environmental and low-carbon measures while underplaying the importance of the improvements in the electricity and gas grids.

5)     The company is making every effort to reduce its own operating costs, which are falling.

Centrica says that the operating costs per British Gas domestic customer rose from £102 to £104 a year during 2012.

6)     Despite the increase in prices announced today, assuming seasonally normal weather conditions, British Gas Residential profits in the second half of 2012 are expected to be around 15% lower than for the same period of 2011

Second half year profits from serving UK residential customers fell not by 15% but by 0.8%. The fall was from £263million to £261m.

More generally, Centrica paints a picture of growing profitability in its stable UK business supplying homes and businesses. Cash flows are healthy and the future secure. There’s not a word about the any of the problems used in the press release to justify hiking prices. If the energy companies want us to trust them, they shouldn’t be telling one story to their investors and a completely different one to their customers.

If we want nuclear, we need EdF to get at least £100 a megawatt hour. Painful but necessary.

The UK government appears to have given up on nuclear power. Although simple arithmetic shows that EdF cannot afford to build the proposed new power station at Hinkley in Somerset without a guaranteed price of at least £100 per megawatt hour, the Treasury is refusing to move from a figure of £80. (Since this post was written on 17.02.13, the Guardian has reported that the UK government has moved part-way towards Edf's position) If it persists, the effect of the government’s policy will be to ensure that new nuclear power stations will never be built in Great Britain. Nuclear power requires subsidy. The huge cost overruns at the stations currently being built at Olkiluoto in Finland and Flamanville in France mean that the UK government has had to guarantee a high and permanent price for the electricity from nuclear. Without such a commitment the French power company EdF will not be able to find the capital to finance the €14bn required to build the two proposed reactors in Somerset. These power stations might produce about 6% of the UK’s requirements so the current stalemate has disastrous implications for plans to decarbonise electricity production.

The economics of nuclear power

A nuclear power station costs relatively little to run. The cost around the world’s existing plants is about £10 per megawatt hour (1p per kilowatt hour). Similarly, the price of uranium fuel is well known and averages about £5/MWh (0.5p per kilowatt hour).  Waste disposal and the cost of dismantling the power station in fifty years’ time are less certain but are insignificant in the context of the total bill. The overwhelmingly important element in the production of nuclear power is the price for initially building the plant.

At present, the evidence is that the first new single nuclear power station will cost about £7bn. This is the UK currency equivalent of today’s estimates for completing the two nuclear power stations in development, one by EdF, in France and Finland. Future UK nuclear power stations might be less expensive but a reasonably conservative assumption is that the budget for Hinkley will be at least as great as at Flamanville in France.

These assumptions are all we need to make a simple financial model of EdF’s position. Put as baldly as possible, the company will invest £7bn over a construction period of about 7 years and then get back an annuity from the operating profit of the power station. EdF will be quite confident that the plant will operate 8,000 hours a year or about 90% of the time. Multiply the price of electricity by the power generating capacity of the power station (1,600 megawatts or 1.6 gigawatts) and by the number of operating hours a year and we can calculate the number of megawatt hours the new plant will produce each year.  Deduct the costs of operating the plant and we have an estimate of the operating profit it produces.  This is the profit that EdF needs to create each year to pay its shareholders and banks for the capital it has used to build the power station.

The cost of capital

In the language of finance, EdF need to earn the ‘cost of capital’ for the money used to build Hinkley. The part of EdF’s business that buys electricity (in France and other countries such as the UK) and then sells on homeowners and businesses  is a simple and reliable business whose profitability doesn’t change much each year. This activity has a low cost of capital, perhaps not much more than 7% at the moment.

Building a new nuclear power station at a huge cost is a different matter entirely. EdF faces a range of potential events that will disrupt the flow of cash from the new plant. These include the possibility of cost overrun, major maintenance issues or enforced shut-down of the power station or even a change in corporate tax arrangements. The cost of capital for EdF’s UK nuclear business will be well over 10% and perhaps as high as 15%.

A simple spreadsheet enables us to estimate the return on the capital that EdF will generate at various levels of guaranteed price for its nuclear electricity. In the table below, I have estimated the return on capital averaged over the 50 years of the power station’s life.[1]

Guaranteed price for electricity per megawatt hour	Average return on capital
£80	8.0%
£90	9.0%
£100	9.9%
£110	10.7%

If my figures are even approximately correct, EdF simply cannot afford to build Hinkley if the UK Treasury only allows a price guarantee of £80 a megawatt hour. Even £100 generates a return of less than 10%. The analysts at the Treasury will know these numbers, of course.

The implication is surely this: the Treasury doesn’t want the UK to have new nuclear power stations, or certainly not the EPR type offered by EdF. Its belief appears to be that electricity generated from gas will be cheaper (and without a high carbon tax this is almost certainly right).  As a result it is putting impossible demands on EdF. The negotiations will break down, and the UK will probably fail to achieve even weak targets for decarbonisation of the electricity supply by 2030.

(19.02.13. Since this piece was written there have been some indications that the Treasury will move towards EdF’s position. Nevertheless, my guess is that the Hinkley Power stations will never get built because the capital markets will not support the investment required by EdF.

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[1] This is the ‘internal rate of return’ of the EdF Hinkley Point project at various levels of guaranteed electricity price.

How much proof do we need that biochar can double food production on some tropical soils?

Experiments around the world are examining the impact of biochar on food production. On poor tropical soils the effect of adding organic matter that has been intensely heated in the absence of air (making biochar) continues to startle researchers. The latest surprise comes from trials in East Africa administered by the US biochar company Re:Char. In Kenya local farmers are showing that soils treated with biochar in year 1 had substantial further yield increases in year 2. An acre of land treated with biochar produced nearly 150% more grain than a similar area using conventional artificial fertiliser. On the biochar-laden soil the only fertility supplement used in both years  was sanitised human urine, which contains copious amounts of phosphorus, potassium and nitrogen.

Biochar isn’t itself a fertiliser. It is a highly stable form of almost pure carbon and can have no direct effect on agricultural productivity. But it does seem to assist soils retain nutrients, and make these nutrients more easily available to crops. The evidence that biochar has profoundly important effects is growing by the week. In addition, it sequesters carbon permanently. Done at large scale across the tropics, biochar may be the lowest cost form of carbon capture and storage.

Biochar

Wood and agricultural wastes, including dung, can be turned into biochar using very simple kilns. These stoves are cheap and easy to use. Re:Char sells subsidised stoves in Kenya which 1,000 local farmers use to make the biochar for their fields.

Heating organic matter in the absence of air drives off gases and liquids. (This is how charcoal is made). This process is called ‘pyrolysis’ and it leaves just the carbon behind (with traces of minerals). Biochar is sponge-like with a huge surface area. One study suggested that one gram of the substance could contain eight hundred square metres of surface. This is probably the source of its success: it can store nutrients and water better than almost any other material. Microscopic fungi living in the biochar can live off material stuck to the biochar surfaces and then themselves provide food to growing plants. By contrast, many tropical soils struggle to retain nutrients and don’t provide a conducive habitat for beneficial fungus growth.

Re:Char’s work

Re:Char’s business formula, which is increasingly  followed by other social ventures, is to sell biochar kilns at full price in the first world, particularly in the US. (I have one on my allotment garden. I have to admit it cost a fortune in transport costs and import duties). A share of the revenue from each sale is given to its Kenyan partner to subsidise the sale of kilns to small farmers. Researchers work with the agriculturalists to measure the results of biochar application and to help spread the word about successes and failures.

The aim of the company is to help improve tropical soils, and thus food production, by the use of biochar. In addition, if successful, biochar will reduce the need to use very expensive artificial fertiliser. Biochar seems to stay in tropical soils for a very long time, thus permanently storing carbon. By reducing the need to use man-made fertiliser, the use of biochar also cuts the emissions of CO2 in fertiliser manufacturing. It also seems to assist in water retention in dry seasons.

The company has just released summary results from the second year of Kenyan farming operations. Some details are available here. The most important finding is that biochar works best at heavy dosage (about 6 tonnes/acre or 15t/ha) and when supplemented by sanitised urine. Second year yields on land with high concentrations of crushed biochar in the topsoil and a second application of urine were higher than the first year. The clear possible implication – which needs to be tested further – is that some of the good stuff in the first year’s urine was retained in the soil for second year use. Biochar may be functioning as an absorbent sponge that holds useful fertilisers in the soil and stops them being leached by intense rains. (By the way, my own personal observation is that similar techniques work on central England allotment soils).

The measured yield increases are staggering. Jason Aramburu from Re:Char writes

Biochar was applied in season 1 and then not reapplied in season 2. In season 1, our urine + biochar plots outperformed chemical fertilizers by 27%. In season 2, urine+biochar outperformed chemical fertilizers by 144%, without adding any additional biochar.

Putting six tonnes of biochar into an acre of soil is not a trivial task. It needs three units of raw material going into the kiln to make one unit of biochar. To get optimum dosages of biochar, the farmer therefore needs to process eighteen tonnes of agricultural wastes or wood. This is the average yearly production of several hectares of land. Opponents have focused on the risk that the increasingly clear yield advances offered by biochar might encourage rapid deforestation as farmers cut down trees to obtain raw materials. At worst, this is a temporary problem because the increased production of food in biochar-rich soils is accompanied by a several fold increase in plant stalks, leaves and grain husks. These wastes can provide the raw material for future biochar kilns.

There is no shortage of urine. One person’s typical production of 500 litres a year provides enough potassium, phosphorus and nitrogen to feed an acre.

The world needs hundreds more experiments like Re:Char’s. The benefits of higher food production, lower fertiliser use and huge amounts of carbon storage should be too obvious to ignore. Unfortunately, the lack of clear commercial incentive means that experimental work is proceeding too slowly and the benefits to subsistence farmers are not being harvested as quickly as they should be.

I’ve argued elsewhere that biochar may be the world’s lowest cost, lowest risk form of carbon capture and storage. Results like those from Kenya show the potential advantages to third world nutrition. Let’s have one hundredth of the proposed UK industrial CCS subsidy to be awarded in the next few weeks devoted instead to biochar in the tropics. I guess that the benefits to humanity just might be a hundred times greater.

Still don't think biochar works?

Eric Sorensen of Carbon Roots International in Haiti sent me this impressive photograph. Yes, I know it's not a scientific sample and the soil conditions may be very different but....  

A model community energy project

(Update: 25th March 2013. South Brent successfully completed its fund raising on 22nd March and the turbine will be installed over the next few weeks. Many congratulations to all involved. The outlines of the community ownership scheme should be widely copied elsewhere).

A small South Devon community is half way to successfully raising the £420,000 necessary to build a 225 kilowatt wind turbine on farmland at the edge of the parish.  Investors are promised a 5% return on their money. The bulk of the income from the turbine over the next twenty years is going to fund future renewable projects in the area, such as micro-hydro installation in another part of the parish as well as much needed home insulation improvements.

South Brent Community Energy Society (SBCES) obtained permission for its turbine almost three years ago. After long negotiations with the suppliers of turbines and agreement with the landowners and power distribution companies, fund raising started in the autumn of last year. To meet the planning conditions, it has until early April to raise the rest of the cash. If you’re interested in the project, please follow the link to the prospectus here. I’m not qualified to recommend the investment, but it does seem to me to be a model of how community energy should work.

South Brent is a few miles from Totnes in Devon, currently the scene of one of the most unpleasant battles between pro- and anti- wind campaigners that the UK has yet seen. The South Brent turbine, by contrast, is broadly supported. [1]  There were no objections to the planning permission. It’s to be positioned at a site where the dominant noise will be the A38 trunk road and the nearest house is barely within view. Although not all local residents are happy with the turbine, most seem to be strongly in favour.

Wind speeds were checked on the hilltop site over a period of several years. The average velocity isn’t exceptional for Devon but at 6.0- 6.1 metres per second  it’s enough for SBCES to expect to generate at least 320 megawatt hours a year. The local people driving the project - many with an engineering background  - seem have been conservative in their projections and their central forecast is based on what is generally called P90, the level of wind output that will be exceeded ninety years out of a hundred.

SBCES is organised as a ‘bencom’, a corporate body that has to have the ‘benefit of the community’ as its core objective. Many similar renewables ventures around the country use this legal structure. A Bencom’s assets cannot be stripped by shareholders and it can only pay a rate of return that is sufficient to stop investors withdrawing their cash. The current directors think that 5% - perhaps rising if inflation continues its apparent upward course – is enough to do this. Any investment now is eligible for the Enterprise Investment Scheme , meaning that UK taxpayers can get 30% of their capital back in tax relief.[2] This raises the implied financial return to over 7%

So far, about 75 people have invested in the scheme. Over 80% are from the parish itself. The average investment is not far short of £3,000, higher than similar fund-raising drives for community projects in other places. For local people, the most important incentive to invest is probably the strong commitment by SBCES to fund energy efficiency improvements to community buildings and reduce fuel poverty. They may also invest some of their profits in other renewable projects, such as a micro-hydro power scheme to run a heat pump for heating the parish church. If the wind turbine achieves the expected average ‘P50’ output, the directors of SBCES anticipate a total of over £700,000 to flow back into the community over the turbine’s life.

Another £200,000 is needed before the 22^ndof March if construction is to start before planning permission expires. Please take a look at the prospectus. It seems to me that SBCES, a genuine community project with expert volunteer directors and supporters, is an extremely good model for future small scale energy generation projects.  

(Disclosure: I intend to apply for a small number of shares in this project).

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[1] I attended a well-attended village public meeting. No voice was raised against the turbine plans.

[2] Shareholders in conventional companies (‘plc’ or ‘ltd’) cannot claim EIS relief on renewables projects that claim FiTs. Bencoms can.

'Peak Stuff' updated

Have the UK, and perhaps other mature economies, reached a peak in their consumption of natural resources?  In ‘Peak Stuff’ I put forward evidence that the total use of material resources rose to a maximum a decade or so ago in the UK and has probably declined since. I added to this work in ‘Sustainability: All That Matters’, suggesting that once an economy had acquired a large enough stock of the main industrial metals and minerals, its need for raw materials would fall, possibly sharply. In the case of copper, for example, I looked at the evidence assembled by Tom Graedel and others that showed that 200 kilogrammes of the metal per person appears to give us all we need. In the eighteen months since I did the work on ‘Peak Stuff’ new data has become available. These updated numbers strongly support the theses in the paper and in my ‘Sustainability’ book. The conventional assumption that human wants are infinite, and therefore that economic growth is incompatible with ecological stability, seems to me to be wrong. I think a strong case can be made that growth in mature economies is profoundly good for the environment, partly because it speeds up 'dematerialisation'.

The new data

In this article, I look at six (very disparate) indices of material use in the UK, or OECD, economies. Some are updates of numbers provided in ‘Peak Stuff’ while others are new data series of which I wasn’t previously aware. It isn't comprehensive, or in a particularly logical order, but it does show trends across different parts of the UK economy.

a)      The material flow account

b)      Weights of goods transported

c)       Flows of material into waste

d)      Energy use forecasts from BP

e)      Personal transport trends

f)       Indices for wood product use

a)      The material flow account (MFA)

The MFA is a measure of the weight of materials used in an economy. It sums the number of tonnes of fossil fuels, biomass and minerals used by the UK, both in goods produced locally and in imports. (‘Peak Stuff’ has a discussion of why the MFA is one of the best available measure of the impact of the economy on the natural environment.)

The decline in UK materials use that I noted in that earlier paper has continued. The 2010 estimate for what is called the ‘Total Material Requirement’ (TMR) of the UK economy fell by 5.4% in the year to around 1,615 million tonnes. The peak was 2,138 million tonnes in 2001. Although the UK economy grew little, if at all, in 2010, the 5.4% reduction in TMR shows a continued rapid rate of ‘dematerialisation’. It requires fewer and fewer tonnes of input to create £1 of GDP.

b)      The weight of goods transported

I don’t know that this measure existed when I did the work for ‘Peak Stuff’. It shows Department for Transport estimates of how much is carried in road, rail, air and water transport in the UK. The number for 2010 is down 16% on its recent high of 2007. But the striking thing to me is that this measure is now lower than it was 20 years. In fact, the weight of material goods moved has barely changed since the mid-1960s. It may not be obvious why this data is relevant: if the economy  needs more material inputs as it grows then we’d expect  to see more goods being shipped around the UK. The data suggests otherwise.

c)       Flows of material into waste

In ‘Sustainability’ I pointed out that every manufactured thing (food, metals, minerals) eventually  becomes waste. Although some objects, such as cathedrals, last for ever the weight  of waste being processed is a good proxy for the volume of material being used by an economy. We’re well aware that household waste volumes are falling, but the total waste from industry, construction and sewage processing sites is also sharply reducing. Household waste declined 3% in 2011/12 and latest available statistics (for 2008) show a continuing cut in total waste processed. The fall is over 10% between 2004 and 2008, even though the UK economy grew strongly  during this period.

d)      Energy use forecasts from BP

Most of the charts in ‘Sustainability’ record past data. It’s also powerful to record what industry experts expect to happen in the future. In mid-January 2013 BP released its annually updated energy use forecasts for 2030. The document doesn’t provide estimates specifically for the UK but does predict how much energy the OECD countries as a whole will use in 2030. Although economic growth is expected to resume, consumption of fuels and energy from renewable sources will increase only a very small amount and will actually fall in per capita terms. The cut will be particularly sharp in the 2020-2030 period. Energy efficiency gains, estimated by BP as averaging 2% per year worldwide, and dematerialisation will outweigh any impact of economic growth.

Total consumption of energy in the UK was broadly flat from the mid-seventies to the middle of the last decade. (Not a fact well-enough understood). It’s fallen sharply since 2008 and the reduction continues.

e)      Personal travel trends

The total distance travelled has been flat or declining in most developed countries for some years. (If you are sceptica about this, please read the original paper by Adam Millard Ball on this phenomenon at http://web.mit.edu/vig/Public/peaktravel.pdf)

UK personal trave mileage rose slightly in 2011 according to the latest National Travel Survey but it is still well down on a decade earlier. The number of trips taken per person fell and is now no more than in 1973. Walking and cycling fell until recently but have now stabilised while car trips are down more than 10% since the peak.

f)       Indices for wood use

This is data that I wasn’t aware of when I wrote ‘Sustainability’. It shows that wood products and paper use (including imports) is down almost 25% since the middle of the last decade. The chart for paper consumption is below.

The reaction to ‘Peak Stuff’ was largely to suggest that the evidence I presented was highly selected to show a pattern on falling use of materials. Obstinately, I continue to think that the developed world may well be near to a peak - and probably past it in the UK – of the extraction and processing of fuels, minerals and biomass.

This is the good news. The bad news is that the decline in fossil fuel use in Britain and elsewhere is nowhere near fast enough to cancel out the increase in the developing economies. Although the evidence is increasingly clear that China is generating a unit GDP with lower and lower energy use, the overall world position, at least as forecast by BP, is for a 36% increase in overall energy use by 2030. Renewables and other low-carbon sources take only a 25% share of this much larger total. This looks like locking in a 5 degree temperature rise.

The interest rate on Green Deal loans is so high that home improvements will not save householders cash

The Green Deal  -  announced today -  is dishonest and utterly misleading. The interest rate to be applied on loans to finance eco-improvements is so high that homeowners cannot possibly hope to recoup their costs. On a loan of £5,000 the victim will pay interest on a ten year loan of just under £400 in the first year. (7.96%) Capital repayments are in addition.

The price of gas today is about 4.16 pence per kilowatt hour. (Source British Gas, standard rates for southern England). The average amount of gas needed for house heating in the UK is 14,000 kilowatt hours a year. No insulation measures costing under £5,000 and allowed under the Green Deal will reduce heating need by more than 5,000 kilowatt hours a year, saving a maximum of £208. (5,000 kWh times 4.16 pence). The typical householder will therefore lose several hundred pounds a year from participating in this wicked scheme.

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There is one exception to this. Cavity wall insulation may provide a net financial benefit to householders even if they use the usurious Green Deal finance. (The interest rate on a small loan for cavity wall insulation will cost over 10% a year). But they would be far better taking out a personal loan and repaying it as quickly as possible. The Green Deal has early repayment penalties in addition to its other iniquities.

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More analysis can be found in an earlier post on this site.