The cost of our dietary habits

The world produces plenty of food – over 5,000 calories a day per person. Nevertheless, the sustainability of our food supply is one of the central problems facing the world. As countries become wealthier an increasing fraction of the world’s agricultural output is fed to animals, which typically turn eight calories of food into only one calorie of meat. Can the world’s total food supply expand fast enough to accommodate the increasing percentage of calories going to feed animals? A new paper suggests that a 2050 world that has global agricultural productivity as good as the US today, but also copies the US’s dietary patterns, would need nearly double the global land area devoted to arable crops in 2050. This is impossible to achieve without large scale further destruction of vital forests.[1] Over the past four decades, a growing fraction of world food supply has been diverted to meat animals. Nevertheless, the typical person has access to about 2,750 calories today, up from 2,250 forty years ago. This increase has occurred as a result combination of four interlinked factors.

1)      The amount of land used for growing food has increased by about 35%. This increase has, of course, partly come from the destruction of forests, pushing many gigatonnes of carbon into the atmosphere.

2)      Yields per hectare have risen, and are still rising, at  between 1 and 2% per year.

3)      The population has grown sharply

4)      Lastly, diets have changed, implying a need to produce more primary calories in the form of crops for use by animals.

The paper has a very interesting and elegant way of expressing the impact of each of these forces. It estimates the impact on agricultural land area of each factor, showing how the extra cropland was used. Total land area devoted to arable crops rose by nearly 270 million hectares from 840 to about 1,110 million hectares.

Force at work Impact on global arable land area
   
Increase in population +682 million hectares
Increase in animal products in human diet +239 million hectares
Improved agricultural technology, including irrigation -654 million hectares
Net land extra land area devoted to arable crops +267 million hectares

 

We know that global population is likely to increase sharply between now and 2050. The paper assumes that the number rises by about 2bn to around 9bn. (Many people will regard this as improbable, seeing a figure of around 10bn as more likely.) If the rest of world ends up with US style dietary habits, expressed in terms of animal products consumption and overall calorie intake, but also is as good as the US is today at  producing food, then 9bn people of 2050 will need almost double today’s arable land area. If the global patterns are of Western European dietary and agricultural productivity, then the increase is about 70%.

The FAO says that arable land area can be increased by 5% from today’s levels without further loss of forest. The implication is therefore that the world is set on a collision course as rising prosperity meets insufficient land area to meet demand for animal products. The price of food will continue to rise sharply, probably pushing large numbers back into malnutrition. Or the world continues to cut down its forests, increasing carbon losses and also affecting local and regional rainfall patterns. Both routes are terrifying.

 


[1] Global changes in diets and the consequences for land requirements for food. Thomas Kastner et al, Proceedings of the National Academy of Sciences, April 2012

GM cotton: an expensive mirage for Indian farmers

India first allowed the use of GM cotton seeds in 2002. Only ten years later, almost the country’s entire crop is grown using genetically engineered seed. This remarkably fast transition was driven by small farmers deciding that GM seed would improve profitability and reduce insecticide use. Scientists and agronomists initially agreed, producing evidence that the insertion of a natural insecticide (Bt or Bacillus Thuringiensis) into the genes of the plant was the best way of improving India’s historically low cotton yields per hectare. But the last few years have seen optimism fade rapidly as yields have stabilised or fallen and insect resistance has increased.  An Indian anti-GM pressure group produced research this week showing that Bt cotton productivity now appears to be falling. (1) As global population increases to about 10 billion in 2050, the world must find ways of increasing the productivity of the limited reserves of usable cropland. Little land is available for conversion from other uses so yields per cropped hectare must grow at close to the rate of population increase. In the past this has proved possible, partly as a result of improved agronomic techniques and hybrid seeds and partly from greater irrigation. Does genetic modification offer a means of continuing the increase as fresh water supplies become stretched? The evidence has been mixed across the world but the Indian experience with cotton is a powerful indication of the issues that can result from GM introduction.

Cotton cultivation in many countries requires huge inputs of pesticide to counter the threat of multiple pests that can reduce yields to virtually nothing. Monsanto’s GM cotton contains one or more genes that produce large concentrations of the natural Bt insecticide in the plant’s leaves. The purpose of the genetic change is to reduce the need for the farmer to spray expensive insecticides which can also severely affect human health.

India has often been touted as strong evidence for the success of Bt cotton, perhaps the country’s most important cash crop. The chart below shows why. Until the turn of the millennium, yields of cotton lint had stagnated at around 300 kilogrammes per hectare of cultivated land. Bt cotton was first officially planted in 2002, though black market seeds were probably in the soil a year earlier. National cotton yields then climbed sharply to levels well over 50% higher. At first sight, the coincident increase in GM plantings and yield increases seems strong evidence for the success of GM.

(Source: Cotton Advisory Board of India for yield figures, SAGE for percentage of GM plantings)

The Indian NGO group, Southern Action on Genetic Engineering (SAGE) points to the possible error in this conclusion. The large part of the yield jump occurred in the first two years after GM introduction. But by that stage only 6% of the cotton planted was Monsanto’s Bt variety. It couldn’t have been the introduction on GM on little more than one twentieth of the land that caused the national increase. Other factors must have played an important role.

The peak year for production per hectare was 2007/08 when yields hit 554 kg per hectare. At this time, 62% of plantings were GM. Since then, the yield has fallen in most years, and is forecast to be 481 kg per hectare in the period to September 2012. SAGE points out that although almost all cotton land in India is now GM, the average yield per hectare will be about the same this year as in 2007/08, when only 6% was planted with GM.

They conclude that GM isn’t helping cotton yields and they are now not alone in their argument. Other NGOs have joined in, railing at the government for encouraging the adaption of Bt cotton a decade ago. But despite the stagnant yields has GM helped in other ways, such as by decreasing the cost of insecticides? The SAGE report says that farmers are now spending 50% more on their agricultural inputs. The seed is more expensive and pesticide use has risen.

So what did cause the sharp rise in yields in the early part of the last decade if it was not the use of GM seeds? One candidate is the increased use of irrigation in Gujarat state. In 2001/02, Gujarat produced 20% of Indian cotton at a yield of 327 kg per hectare, barely above the national average. By 2011/12 projections are for Gujarat yields to be 660 kg per hectare, with the state accounting for 33% of national output. Irrigation seems to have had more impact than GM.

SAGE and other groups have identified several reasons for the apparent failure of GM cotton. First, the insects targeted by the Bt genes have already developed resistance in some parts of India. Other GM crops tagged with Bt genes, such as maize, have begun to see similar problems and so the adaptability of cotton pests should not be a surprise. Second, other pests have moved in to take over. Indian agronomists report increasing problems with pink bollworm, jassids and leaf curl. (As one commentator pointed out ‘in a contest between Monsanto and Darwin, Darwin will always win). Third, GM may have induced a short period of increased yield  but this came at the price of decreasing fertility as soil nutrients were drained by the faster growth. To remedy the deficiency farmers will need to increase the use of artificial fertilisers in the future.

We cannot rule out GM on the basis of a poor history for one crop in one country. But the evidence that GM can sustainably increase agricultural yields is still strikingly inconclusive.

(This is part of Chris Goodall’s forthcoming book, Sustainability: All That Matters, to be published by Hodder later this year).

Heathrow expansion: the lack of flights to Chinese cities is not a good argument

The owners of Heathrow want to expand the airport and have started another campaign to get a third runway built. (The impact on carbon emissions is calculated here.) Sensing that senior politicians are increasingly susceptible to their blandishments, BAA commissioned yet another piece of analysis to show expansion would help the UK’s economy. It takes about five minutes to demolish the arguments that they put forward. 1)      The UK needs more connections to emerging markets, China in particular. The lack of capacity at Heathrow is choking off UK exports because people cannot get to large Chinese cities.

Here’s a quote from BAA’s recent press release

Colin Matthews, CEO, BAA, said: “The centre of gravity in the world economy is shifting and we need to forge new links with emerging markets. Instead, we are edging towards a future cut off from some of the world’s most important markets, with Paris and Frankfurt already boasting more flights to the three largest cities in China than Heathrow, our only hub airport.

BAA has made great play of this point over the last year. First, a September 2011 report from Frontier Economics and now a similar document from Oxford Economics tell us that the UK connects to fewer cities in China than Frankfurt does. (Why BAA has to use two   consulting firms to make this point is unclear).

Look carefully below at the data that backs this assertion up, published by BAA itself. Yes, you can get directly from Frankfurt to Guangzhou and Shenyang as well as the cities to which London connects. But please also note that the yearly flights from Heathrow to Hong Kong are almost three times as frequent as the most connected other link (Shanghai –Paris).

Airlines operating into London have worked out where the demand lies and have voluntarily chosen to go to Hong Kong and not to other Chinese cities. It isn’t a shortage of capacity at Heathrow that is stopping connections to Chinese cities, it is a lack of potential passengers. Airlines have decided that it makes more commercial sense to fly to Hong Kong than to Shenzhen.

There are over five thousand flights a year from Heathrow to China compared to less than three and a half thousand from Frankfurt. Any one  of these flights could switch from Hong Kong to elsewhere but the airlines choose not to. To put at its simplest, it is not the lack of a third runway that stops the UK having connections to more Chinese cities.

City Population (millions) Connectivity (flights per year)
2007 2025 LHR AMS FRA CDG MAD
 Shanghai
15 19.4 621 589 1110 1323
 Beijing 11.1 14.5 698 658 1032 964 104
 Guangzhou 8.8 11.8 311 211 290
 Shenzhen 7.6 10.2
 Wuhan 7.2 9.3
 Tianjin 7.2 9.2
 Hong Kong 7.2 8.3 3,539 720 778 1145
 Chongqing 6.5 8.3
 Shenyang 4.8 6.2 364
 Dongguan 4.5 6.2

 

Source: Frontier Economics, http://www.frontier-economics.com/_library/publications/Connecting%20for%20growth.pdf. LHR = Heathrow, AMS Amsterdam, FRA Frankfurt, CDG Paris, MAD Madrid.

2)      The lack of connections is stunting economic activity because Heathrow is of reducing importance as a hub airport.

Air Malta flies twice a day from Heathrow to Valetta, the main city in Malta. Malta has about 0.4 million people, less than a thousandth of China and its GNP is commensurately small. Air Malta has access to these slots because of ‘grandfather’ rights acquired generations ago. In a rational world, Air Malta would be priced out of its Heathrow slots and would transfer to Stansted, which nobody says is full. But it sticks at Heathrow, blocking the flights that the airport wants to go to Rio or Dallas or Delhi. Yes, of course Heathrow is at bursting. It has been for decades. But the reason isn’t shortage of capacity but because of the ludicrously inefficient failure to auction takeoff slots leaving a number of operators such as Air Malta using up the most valuable landing rights in the world.

3)      More widely, lack of capacity is constraining business.

By ceaseless repetition, BAA hopes to convince us that business travel is growing and the constraints on Heathrow represent a major impediment to economic growth. It doesn’t tell us the uncomfortable fact that flying for business purposes is down about 25% since the turn of the century. UK residents made 8.9 million business trips abroad by air in 2000 and 6.6m  in 2010.[1] It is leisure travel that keeps airports busy, not harried business travellers. Business air travel is falling fast and will probably continue to do so.

4)      Tourism is affected by Heathrow’s shortage of space.

Maybe. But Heathrow isn’t a tourist airport. There’s no reason why visitors cannot comfortably fly into the other London airports. There is space elsewhere, not least because total passenger numbers are down over 10% since 2007. In Q4 2011, UK airports handled a total of 49.1 million passengers compared to 54.7 million in Q4 2007.

 

We expect commercial companies to argue their case and Heathrow’s operators have every reason to want to get more revenue from airlines flying out of the airport. The disturbing thing is that reputable economics consulting firms are prepared to act as highly paid lobbyists for businesses such as BAA. And, even more unfortunately governments haven’t the courage to contest the lamentably weak points made by these lobbyists.

Another series of misquotes from Bjorn Lomborg

Articles by Bjorn Lomborg usually include more than a grain of truth. They also contain a mass of gross inaccuracies and misstatements of what others say. His recent article on the economics of wind power is entirely typical. I have tried to locate the sources for each of his assertions in this piece, focusing on those points at which he used a figure or a range of numbers. I found that in only one paragraph was his source material correctly quoted: the paragraph on the Gordon Hughes paper for the Global Warming Policy Foundation. In all other cases, his statements were not an accurate representation of what the original author(s) said. In some cases the inaccuracies and misstatements were not important. But in others he substantially altered the meaning of the original author or misquoted the text.

There is an almost pathological problem with Lomborg's writing. He simply doesn't seem to care about accuracy in the use of data or  fair representation of quotations from sources. I have tried to briefly summarise his errors below. His text is in bold. Where I have extracted material directly from his source the words are in italics. My comments are in standard font.

  1. 1.       ‘Using the UK Electricity Generation Costs 2010 update and measuring in cost per produced kilowatt-hour, wind is still 20-200% more expensive than the cheapest fossil-fuel options. And even this is a significant underestimate.’

 Contrast this with a direct quote from the source that Lomborg says he has used ‘Onshore wind is the current least cost zero carbon option with a total cost of £94/MWh, which puts it between CCGT and coal. A modest real cost reduction over the next decade means that it is projected to undercut CCGT to be the least cost substantive renewable option.

Source: http://www.decc.gov.uk/assets/decc/statistics/projections/71-uk-electricity-generation-costs-update-.pdf

Bjorn Lomborg is not properly stating the current consensus on the costs of onshore wind in the UK. Sea-based or offshore wind is more expensive than gas or coal but land-based turbines are now only slightly more expensive that fossil fuels plants and the study to which Lomborg refers actually says that wind will become cheaper than (gas) CCGT power stations, usually regarded as the ‘cheapest fossil-fuel option’.

  1. 2.    ‘At the same time, people increasingly protest against the wind farms in their backyards. Local opposition has tripled over the past three years……’

Mr Lomborg’s conclusion mirrors the first sentence in a Guardian article. But the Guardian was mis-stating the results of its research. The percentage of people ‘strongly opposing’ the idea of a local windfarm has risen from 7% to 21%, but the number of people ‘tending to oppose’ has fallen from 9% to 6%, implying that the percentage opposed has risen from 16% to 27%.

Local opposition to onshore windfarms has tripled since 2010, a new Guardian poll reveals, following a series of political and media attacks on the renewable technology. However, a large majority of the British public (60%) remains firmly in favour of wind power, while also opposing the building of new nuclear or coal power plants in their local area. The poll shows that the national debate over wind energy is becoming sharply polarised, with the percentage of Britons strongly supporting the building of a new windfarm in their area going up by 5%, and the percentage strongly against rising by 14%.

Source: http://www.guardian.co.uk/environment/2012/mar/01/local-opposition-onshore-windfarms-tripled

  1. ……and local approval rates for new wind farms have sunk to an all-time low.

This is almost true. Planning permission rejections are on an increasing trend. But last year saw a small rise in the percentage of UK schemes approved from 49% to 54%.  (However measured by the amount of capacity, measured in megawatts, Lomborg is right) See Table 4 in

http://www.bwea.com/pdf/publications/SOI_2011.pdf

  1. 4.    ‘The UK Carbon Trust estimates that the cost of expanding wind turbines to 40 gigawatts, in order to provide 31% of electricity by 2020, could run as high as £75 billion ($120 billion). And the benefits, in terms of tackling global warming, would be measly: a reduction of just 86 megatons of CO2 per year for two decades.’

Only three mistakes here. One, the Carbon Trust report is only about *offshore* wind not about wind in general. Two, it deals with an estimated need of 29 GW of offshore wind, not 40. Three, 86 million tonnes a year (‘megatons’ in Lomborg’s language) is 17% of the UK’s entire CO2 output, an amount which cannot remotely be described as ‘measly’. (Additionally, the figure of 86 million tonnes a year does not actually appear to be included in the Carbon Trust report).

More important, the Carbon Trust’s report was designed to show how the high cost of offshore wind could be reduced . It says, for example,

The investment required to deliver 29GW of offshore wind can be reduced by 40% – from £75bn to £45bn.

 Source: http://www.carbontrust.co.uk/Publications/pages/PublicationDetail.aspx?id=CTC743

  1. 5.    ‘Whereas wind power, on average, supplies 5% of the UK’s electricity, its share fell to just 0.04% that day.’

Wind power currently supplies much less of the UK’s electricity than Lomborg states. In the very windy month of December 2011, it reached over 5% but typical figures are perhaps half this.

  1. 6.    ‘This is also why simple calculations based on costs per kWh are often grossly misleading, helping to make wind and other intermittent renewables appear to be cheaper than they are. This has been shown in recent reports by KPMG/Mercados and Civitas, an independent think tank.’

(I have removed brackets and a paragraph break).

The Mercados report was disowned by KPMG. Please see http://www.carbonbrief.org/blog/2012/03/not-the-kpmg-report-a-tale-of-two-consultancies for Carbon Brief’s analysis of the position.

The Civitas report was written by Ruth Lea and used figures produced by a single individual who used to work for National Grid. I wrote about the problems with Ruth Lea’s analysis here: http://www.carboncommentary.com/2012/01

  1. 7.    ‘Contrary to what many think, the cost of both onshore and offshore wind power has not been coming down. On the contrary, it has been going up over the past decade. The United Nations Intergovernmental Panel on Climate Change acknowledged this in its most recent renewable-energy report.’

The IPCC actually says that wind power costs went up from 2004 to 2009 not that they has increased over the past decade. The rises from 2004to 2009 were largely driven by a mismatch between supply and demand as the rate of wind power installation increased sharply. Since 2009, costs have fallen sharply for the countervailing reason. Moreover, the IPCC report mentioned by Lomborg says that:

Recognizing that the starting year of the forecasts, the methodological approaches used, and the assumed deployment levels vary, these recent studies nonetheless support a range of levelized cost of energy reductions for onshore wind of 10 to 30% by 2020, and for offshore wind of 10 to 40% by 2020.

http://srren.ipcc-wg3.de/report/IPCC_SRREN_Full_Report.pdf page 590

  1. ‘Likewise, the UK Energy Research Center laments that wind-power costs have “risen significantly since the mid-2000’s.’

The text from the ERC referred to is solely concerned with *offshore* wind, not onshore. The ERC does not say wind power costs have risen overall. The focus on offshore is clear from the title of the report:  ‘Great Expectations: the cost of offshore wind in UK waters – understanding the past and projecting the future’,

Moreover the report is optimistic about future trends in offshore costs, saying that the ‘deployment of offshore wind is more advanced than any other emerging low carbon option, and there is evidence to suggest that a plateau in costs may now have been reached. The report cautions that costs are likely to come down slowly at first, but that material reductions are available if the right incentives are in place’.

http://www.ukerc.ac.uk/support/tiki-read_article.php?articleId=613

  1. 9.    Like the EU, the UK has become enamored with the idea of reducing CO2 through wind technology. But most academic models show that the cheapest way to reduce CO2 by 20% in 2020 would be to switch from coal to cleaner natural gas. The average of the major energy models indicates that, downscaled for the UK, achieving the 20% target would imply a total cost of roughly £95 billion over the coming decade, and £18 billion every year after that.

This is the most damming part of Lomborg’s piece. In the first half he rails against the cost of wind energy, saying in extract 4 above that the cost could be ‘as high as £75 billion’ to achieve a 17% reduction in CO2 output. But in this extract he says that it would be cheaper to use gas power stations to cut CO2 by 20% even though the cost is ‘roughly £95 billion over the coming decade’ and much more thereafter. He doesn’t appear to recognise that his own sources suggest that wind is a highly cost effective means of meeting the UK’s obligations.

 

 

British Airways biofuel plans - wrong by a a factor of ten

The world’s airlines face a painful challenge; of all the main energy sources, aviation fuel is going to be the most difficult to replace with low carbon equivalents. As the number of flights increases in the industrialising world, it is not far-fetched to see aviation using up the entire global CO2 budget in 2050. Some of the more progressive airlines can see the clear need to experiment with making an equivalent liquid fuel made from biological sources. British Airways is to be congratulated for examining the feasibility of using a gasification process to create a kerosene-like fuel from domestic waste. Unfortunately its sums are wrong and the amount of energy available from municipal rubbish (garbage in US terminology) is only a few percent of what BA rcentlly claimed to The Guardian. According to Damian Carrington writing in his blog on the Guardian web site, the airline thinks that the UK produces about 200 million tonnes of waste that is usable for conversion into aviation fuel.[1] BA’s head of environment says that half a million tonnes of this rubbish used in its new gasification plant can produce about 50,000 tonnes of aviation fuel – a ratio of about ten to one. In addition to the liquid fuel, the new BA unit will generate about 33 megawatts of electricity.

These numbers aren’t right. The UK does produce about 200 million tonnes of waste a year, but only a small fraction of this is in the form of hydrocarbons that can be converted to energy-laden fuels. Very roughly, about half the waste is from construction and demolition sites. This is mostly used concrete and stone. Not even the world’s most advanced energy conversion technology can take an inert lump of concrete (composed largely of calcium, silicon and oxygen) and turn it into molecules of carbon and hydrogen.

To make a hydrocarbon fuel¸ BA needs waste material of containing the right chemical elements. Potential sources of liquid fuel include food waste, rubber, textiles, paper and other products containing carbon and hydrogen. This type of waste very largely arises from household collections and to a much lesser extent from garbage from restaurants and cardboard from shops. In the last financial year to April 2011, the UK’s households produced about 23.5 million tonnes of waste, not much more than 10% of the total national figure[2]. About 9.5 million tonnes of this was recycled, composted or reused, leaving about 14 million tonnes of true waste.

In addition to this, just under 4 million tonnes of other waste collections, not from households, were of animal or vegetable origin. (If it isn’t of this origin, it won’t contain usable amounts of carbon or hydrogen for fuel). So the absolute maximum amount of UK waste available to be converted into complex hydrocarbons for fuel is about 13.5 million tonnes. This number is tending to fall quite rapidly as households produce less waste each year and, second, this rubbish is increasingly recycled or reused. But even today’s maximum figure of 13.5 million tonnes is less than 7% of BA’s claims for the weight of available UK feedstock for its plant.

The second problem is the efficiency of conversion. The energy value of municipal waste is generally thought to be between 6 and 7 gigajoules per tonne. This is about a seventh of the value of aviation fuel. In other words, for every seven tonnes of waste, we can only conceivably get one tonne of aviation fuel. This is a law of physics; we cannot create energy. Moreover the process of changing waste into fuel must involve losses of energy – all energy conversion processes result in the production of low grade waste heat. The very best gasification technologies only capture 50% of the energy in the feedstock and the BA plant is probably much less. So the ratio of tonnes of waste in to tonnes of fuel out will be, at best, about fourteen to one and probably far worse. In other words, instead of the BA fuel production process producing 50,000 tonnes of aviation kerosene from half a million tonnes of rubbish, it can only possibly produce 30,000 tonnes. This is still a worthwhile amount, but significantly below what BA says.

These two adjustments – the actual amount of waste available and the lower efficiency of conversion – will reduce the possible yield from UK rubbish from 20 million tonnes to about 1 million tonnes of fuel. This lower figure is about 8% of the UK’s total use of aviation fuel. Moreover, we are reducing domestic waste every year and are getting systematically better at recycling. Recycling an object is almost always more efficient in energy terms than converting it into fuel. We therefore can’t discourage recycling just because BA needs feedstock for its waste plant. In a few years it is not inconceivable that the UK’s total amount of carbon-based waste falls to well 10 million tonnes. Concomitantly, the absolute maximum fuel output will fall to not much more than 5% of aviation needs.

These numbers should not be a surprise to us. The false promise of biofuels (such as aviation fuel from municipal waste or ethanol from corn) is that we will get low-carbon energy from a plentiful supply of biological material, whether it be waste or US corn crops. The promise always fails when it hit biological limits. Our needs for transport fuels are simply far too great - by between one and two orders of magnitude -ever to be met from organic sources such as waste or agricultural crops. We cannot both feed the world and power our airplanes with biofuels.

 

Community renewable energy

The previous post on this website has prompted a number of calls from communities wanting to build their own renewable energy installation similar to Eden’s employee project.  Alongside the not-for-profit electricity retailer Ebico, I am very interested in helping to get these projects completed. Together, we can provide help with the financial analysis of a proposal (is it viable? can it be financed?), writing of the business plan, approval of the investment document (alongside an FSA registered accountant) and assistance in marketing to investors. We have three key advantages.

  • we know about the electricity market
  • we understand renewable energy and its finances
  • and we are strongly commercial, wanting to get as much generating capacity installed as quickly and as cheaply as possible.

It may be worth writing down our view of the best way of getting projects completed

  • use an ordinary limited company. Cooperatives and other non-standard ventures work well but the cheapest and most effective structure will generally be a private limited company. They can be surprising flexible: for example, you can write the company documents in a way that will ensure that the shares stay in the hands of people within the community.
  • if you want outside money, it is always much easier to find it if you offer a commercial rate of return. Some people will invest in a venture because they approve of its objectives. Most people are financially pressed and want to get the most for their money.
  • go for simplicity at every opportunity. No complicated structures, avoid multiple objectives. A simple statement, such as ‘we want to build a wind turbine that provides enough power to meet the typical needs of our village and gives a good return to local investors’ is fine. Complex or contradictory objectives are always a problem, not least because they make investors scared. You can have strong social objectives but the business has to make reasonable money for its shareholders first.
  • planning permission is not always the problem that it seems to be. Local authorities will usually (but not always) be intensely sympathetic to projects that have high levels of community support. It’s worth spending time getting that support as early as possible.
  • all of us need to be paid for what we do, but costs can be held down at every turn. The financing of a community renewable energy installation needs to be done quickly, efficiently and using well-established routes.

If these views are similar to yours, and you want to build a wind turbine, a PV farm, an AD plant, a biomass heating system or a run-of-river hydro installation as part of a community, employee or other group, please do get in touch. We would love to help.

The UK’s first employee-owned renewable energy installation

A new 50 kilowatt PV array at the Eden Project has just become the UK’s first employee owned renewables installation. Ebico, the Witney-based social enterprise that is the UK’s only not-for-profit electricity supplier, lent money to a new company that put 200 panels on the roofs of some of Eden’s storage buildings. Employees are now able to buy shares in the new business and the proceeds of this unique offer will be used to pay back Ebico. Savers putting in as little as £200 each will share in the feed-in tariff income for the next 25 years. Returns are projected to be over 10% per year for small investors. Feed-in tariffs, particularly for solar PV,  have been attacked because they subsidise richer householders at the expense of the rest of the population. The aim at Eden has been to show that renewables can also be of financial benefit to people not able to afford to put PV on their own roofs. I helped structure this deal and wrote the document that offers the shares to employees.

The recent changes in the solar PV tariffs mean that installation such as the one at Eden are less attractive to small investors. Other technologies, such as wind and anaerobic digestion, are now much more appropriate for employee or community financing. The returns to investors can be at least as high as we project for savers buying shares in the PV array at Eden.

The aims of feed-in tariffs are to encourage smaller renewable energy installations, push down the cost of new low-carbon technologies and, third, to assist in the decentralisation of electricity supply. The solar PV tariffs worked extraordinarily well at building up an efficient and competitive base of installers and reducing the price of household installations by about 50% in the space of two years. Anybody wanting an array on the roof of their house in 2009 would have got a quote of about £5,000 per kilowatt. Today, that price can be below £2,500 for a larger installation. There is no doubt that the PV tariffs successfully met the first two of the three aims that the government had for the tariffs.

What about the third objective- the decentralisation of electricity supply? The evidence here is mixed. Although hundreds of thousands of household PV installations have taken place, the impact on the electricity supply of the UK has been of the order of 0.1%. Wind turbines owned by community companies must surely be the next step. One 500 kilowatt wind turbine, the sort of size that might sit  on a small hill at the edge of a town, can typically provide the same power output as three or four hundred domestic PV installations or twenty five times as much as the Eden array.[1]

The striking thing about community ownership of wind turbines is that local resistance disappears if people have a financial stake in their success. One wonderful Dutch study even showed that people ceased to hear the swishing noise of the blades if they had some ownership of the wind farm. Community ownership is the only way we are ever going to see the UK use its under-exploited resources of onshore wind. Today, the costs of the subsidies for renewable energy are borne by everybody but the benefits are largely flowing to the large electricity companies and richer householders. Larger scale community energy installations, such as the one at Eden, can achieve rapid growth of low carbon energy sources and also remove the regressive element in the feed-in tariffs.


[1] The 50 kW Eden array will deliver about 47,000 kilowatt hours a year, or just under 1,000 kilowatt hours per kilowatt capacity. A well sited wind turbine will deliver a ‘capacity factor’ of over twice as much.

Air Source Heat Pumps: more evidence of problems in cold weather

Air source heat pumps are a risky choice for householders trying to save money and CO2 emissions. This piece looks at the experience of one householder in the south of England who has kept detailed meter readings over the last few weeks. The findings are disturbing. The recent low temperatures (early February 2012) have shown that the costs of running a heat pump can be unacceptably high in cold weather. Anybody considering this new - and apparently eco-friendly technology – should be very wary indeed about their energy bills in deep winter. In fact, they should consider turning off the pump and going back to electric radiators when temperatures drop. The date in this article come from a home of about 90 sq metres (approximately 1000 sq ft), which is about 20% larger than the UK average dwelling. Because the house is detached, with a larger exposed wall area, energy bills are likely to be higher than a terraced house or a semi-detached of the same size.  But the householder has done substantial eco-renovation on the house, including filling the cavity wall and insulating the floors and loft. The windows are double-glazed. His final action was to install a new air source heat pump, put in place by specialists. He knew that a heat pump could only possibly be effective in a well-insulated house but he thought his work would mean that his family would benefit finacially from the new heating system. So far, this hasn't been the case

My rough calculations suggest that this well insulated house probably loses about 200 watts per degree of temperature difference between the inside and the outside. That is, if it’s 10 degrees outside and 20 inside, it will need a heating system that provides 2000 watts, or 2 kilowatts. The key question : is a heat pump a good way of providing this?

The big advantage of this relatively new technology is its potential ability to use relatively small amounts of electricity to create larger amounts of heat. (No – this doesn’t break the laws of thermodynamics, see here).  The effectiveness of using heat pumps to cut our energy bills depends crucially on how much heat you get out for every unit of electricity you put in. Manufacturers will usually quote ratios of three or four. This householder’s experience suggests that the real figure may be as low as 2 or below.

At that level it makes no sense in cash or carbon terms to use a heat pump. Even for homes with cheap rate meters (‘Economy 7’) for night electricity, the average 24 hour price of power is about 8.5p per kilowatt hour at the moment.  Mains gas - which isn’t available around the home whose electricity usage I am reporting here - is about 3.5p per kilowatt hour. In other words, a heat pump which converts one unit of electricity into only two units of heat costs more than 2 units of gas. The carbon dioxide emitted at the average power station to produce a unit of electricity is also over twice as much as the direct emissions from burning gas in a home boiler. If the figures at this home are typical, heat pumps don’t work well in the UK. (This is a strange finding – they really do work well in some other countries such as cold Sweden and nobody seems to be sure why things aren’t the same in the UK).

The failure of many air source heat pumps to save money in Britain must, I suspect, be down to poor expertise among installers. Heat pumps are fiddly to operate and require delicate adjustments. Unfortunately, until this problem is solved, no householder will be prepared to be the guinea pig for a technology that often seems to struggle in (relatively) cold weather. Some sources suggest that the problem arises because the pump ices up - but this doesn't explain why the same problem doesn't occur in colder countries

The numbers

We’ve had a wide range of external temperatures over the last couple of weeks. It started quite warm but the last few nights have been very cold by UK standards, with the thermometer dipping to as low as minus 7 degrees in the local area.  As the chill worsened, the efficiency of the heat pump dropped dramatically.

Dates of measurements Average amount of heating required over 24 hours* Estimated heating need for the house over 24 hours** Typical daily  electricity use*** Implied ratio of electricity input to heat output (‘coefficient of performance’)
Around 23rd January 10 degrees 50 kilowatt hours 25 kilowatt hours 2
Around 28th January 15 degrees 75 kilowatt hours 50 kilowatt hours 1.5
Around 3rd February 20 degrees 100 kilowatt hours 100 kilowatt hours 1

 

*The difference between the average external and internal temperatures

** The average heat loss from the house’s walls, windows, door, floors and roof per degree of temperature difference multiplied by the average temperature difference.

** The metered use of electricity over a typical 24 hour period

In the early part of this short study period, the electricity consumption figures were poor but not excessively so. The family was getting 10 degrees of heating of his house from the pump for about 25 kilowatt hours a day. This meant the ratio of heat output to power input was about 2, well below the level promised by the manufacturer but still nearly enough to justify using a heat pump. But as the thermometer fell, the bills went up. He was getting about 100 kilowatt hours of heat for each 100 kilowatt hours of electricity he used. This means that in cold weather the unlucky householder is spending eight or nine pounds a day on electricity (multiplied up, £250 a month) but, even more strikingly, he would be better off if he simply installed a few electric heaters in the main rooms. In fact, if I were advising him, I’d say he should turn off the pump whenever outside temperatures fall below about 7 degrees.

The householder has been worried about the performance of his expensive new heat pump since it was put in. He’s had the people who installed it round, as well as the main contractors for the insulation improvements, just  in case they could find out whether the house had major temperature leaks. His concerns seem warranted because his pump is costing far more than it should do. This story  is repeatedly heard across the UK – it’s now time to really find out why many of the heat pumps installed in houses come nowhere near achieving the benefits claimed by manufacturers.

A new way to store energy - liquid air

A venture capitalist idly glancing through business plans probably wouldn’t give an energy storage business a second glance. All the glamorous companies are focused on finding cheap ways of making low cost energy. Storage is down-market, and ever so slightly dull. This will to have to change. Without cheap, robust and very large scale electricity storage, electricity grids are going to find it very difficult to cope with the unpredictability of vastly greater supplies of electricity from wind, wave or sun. HIghview Power, a UK company that has operated in what private equity calls ‘stealth mode’ for several years, went public yesterday with an intriguing proposal for a new form of energy storage – air liquefaction. The energy commentators read the press release and politely yawned. Were they right?

The economics of this technology look interesting. What is even more compelling is that you could bolt together a large plant using conventional components freely available today from a variety of major suppliers. Unlike some of the really wacky suggestions for storing energy, we pretty much know that Highview’s ideas will work.  A 350 kW pilot plant alongside the Slough power station has been through extensive testing for the last six months or so.

So how does it operate? You take ambient air and put it through a liquefaction plant using electricity. (Hundreds of these plants around the world today make liquid nitrogen, oxygen or natural gas).  Liquefaction works by expanding a gas, which causes its pressure, and thus its temperature to fall. This technology is a hundred years old. The process uses substantial amounts of energy.

Allowing liquid air to expand increases its volume many hundred fold. This will produce high pressure in any sealed container. If the gaseous air is allowed to escape through a turbine, electricity can be generated. This second phase produces about 55% of the input energy, says Highview. This relatively low number can be improved to perhaps 70% by using waste heat from nearby  industrial processes, such as the hot water from the cooling processes in a nuclear or fossil fuel power station.

How does efficiency this compare? Here are some very rough figures for other means of storing electricity.

Pumped hydro 70% Water is pumped uphill to a reservoir. When electricity is needed it flows through turbines back into the lower reservoir
Lithium ion batteries 80% Lithium ion cells are used in electric cars and electronics. They are still expensive and have limited life
Compressed air 60% but perhaps more Spare electricity drives a compressor. The air is stored at high pressure in deep caves. When released it drives an air turbine.
Hydrogen 40% Electrolysis uses electricity to make H2 and O2 from water. Hydrogen in a fuel cell generates electricity.

(A previous article on Carbon Commentary assessed the economics of using stored hydrogen for electricity production).

The huge advantage of Highview’s plant, if it works as planned, is that each of the main alternative storage technologies have intrinsic problems. Hydrogen is inefficient and the equipment is expensive. Compressed air requires large amounts of storage. Lithium batteries are expensive and don’t like being discharged too often. (Other battery systems are less problematic but they have other disadvantages). Pumping water uphill is cheap and well-understood. There just aren’t many places where it can be done economically.

Highview quoted me a figure of £1,000 per kilowatt of output power. Let’s be clear about what this means. The Slough pilot plant can produce 350 kW of electricity. So the cost of a commercial plant would be about £350,000. (The cost of the pilot was much greater, of course). The Slough kit can deliver about 2.5 megawatt hours when fully charged. That is, it can work for seven or eight hours at full power. If it can be achieved, £1,000 per kilowatt of electric power is highly competitive with most other storage technologies, particularly since operating costs are so low.  A large pumped hydro plant would be comparable, but hydrogen could be four or five times as expensive.

Build an air liquefaction plant and expansion plant to Highview’s designs and what do you get? A megawatt plant would have a capital cost of a million pounds or so. To be cautious, we’ll assume £2m. This plant can be used in several different ways.

First, it can respond to short-term grid problems. Highview says it might take the plant a couple of minutes to start producing useful power to respond to a power station failure or grid problem. This isn’t quite fast enough for the real (but rare) emergencies when gigawatts suddenly disappear from the grid. But is good enough to help respond, for example, when wind farms start having to close because of excess wind speeds. The reverse situation, when National Grid has to pay wind operators to close down because of an excess of national electricity supply, can be addressed by Highview plants. They can also absorb surplus power while the generator close down other sources of supply.  National Grid pays for the small producers, such as the emergency diesel generators at hospitals and sewage farms to be available to produce electricity at less than half hour’s notice. The disadvantage is that these facilities can’t take in surplus power whereas Highview's plants can act like batteries, either taking in electricity or discharging.

Second, they can provide extremely useful ‘peak shaving’. Electricity demand varies throughout the day. Individual large customers pay both for their total usage of electricity and for the amount of capacity they are using at the times when the total UK demand is at its peak. Such a customer might invest in Highview’s system to reduce its annual capacity payments. Each time the real-time grid information indicated that a peak in electricity was being reached (usually at around 5pm in the winter), the air liquefaction plant would be switched to electricity production, minimising the peak demand of the user and hence reducing the payment for maximum capacity used. In countries such as South Africa, which have electricity grids that are sometimes unable to cope with peak demands, Highview technology could be particularly useful.

Third, the plants could use electricity when it is very cheap and sell it when it is expensive. Typically this means storing power at night and then discharging at the early evening peak. But remember that if the efficiency (input electricity versus output electricity) is only 55%, the price difference will have to be large to make this worthwhile.

What the plants cannot do - because they will never have enough capacity to work uninterruptedly for days - is to replace wind power at times when the turbines are stalled because of metrological conditions. We will always need to have gas turbines for these events. Nevertheless, air liquefaction looks to be potentially the cheapest and most robust way of adding the several gigawatts of energy storage capacity that the UK grid needs if it is to deal with the unpredictability of 10,000 offshore wind turbines. At present, I suspect the financial calculations won’t quite provide the incentive to make the investments necessary. But  the future electricity market will only work if there is a strong financial signal that encourages storage investments. It must happen eventually. Venture capital really should be interested.

 

 

Offshore wind warrants our support

Policy Exchange, a right-leaning think tank, has come out with a paper attacking the subsidies for offshore wind in the UK. Its reasoning is that offshore wind will always be too expensive and that the overseas market for British engineering is limited. Both of these assumptions are probably wrong. One credible source sees the cost of offshore wind falling to levels competitive with gas, albeit over several decades. And foreign interest in offshore wind is growing as the best onshore sites are completed. A Chinese study estimated the potential for exploitable wind power offshore is about 750 gigawatts, perhaps ten times the UK’s likely resource. Over the next few years China plans enormous investments in sea-based turbines. Similar opportunities are available in the US.

First, a couple of points as to why should the UK want to specialise in offshore wind. The country’s territorial waters are blessed with relatively high wind speeds compared to even the best onshore sites. The UK’s resources are about 40% of the total wind power available to Europe. Installation of turbines is difficult but the UK is well placed because of its expertise in putting oil and gas platforms safely in place in deep, rough water.

Early development of offshore farms has been expensive in the UK (and elsewhere) partly because of difficult construction conditions, a shortage of fixing vessels, limited competition between offshore turbine manufacturers and low levels of historical reliability of installed equipment. The push to develop larger and larger farms, usually with increasingly large individual turbines, should reduce capital and operating costs as operators get more experience. Perhaps as importantly, a large number of turbine manufacturers are in the process of introducing new models suitable for the rough UK conditions. The scope of steep reduction in costs is certainly present, a point denied by the Policy Exchange author Simon Less.

The engineering consultants Mott MacDonald provided an estimate for the recent Committee on Climate Change report on low carbon electricity. The consultancy gives the following prospective figures for 2040. Gas with carbon capture (CCS) is probably the least costly way of generating  electricity from fossil fuels without adding significantly to CO2 concentrations.

Offshore wind – £60-£96 per MWh Gas with CCS – £95-£104 per MWh

(Numbers on pages 7-9 and 7-10 of http://hmccc.s3.amazonaws.com/Renewables%20Review/MML%20final%20report%20for%20CCC%209%20may%202011.pdf

But you might well ask whether any technology that takes thirty years to get to cost competitiveness is worth backing to that point. The answer is that a large number of expensive wind farms will have been put in place before the experience gained reduces the cost to reasonable levels. (For information, the current wholesale price of winter electricity is about £60 per megawatt hour). Yes, it might take about £100bn to get to the Mott Macdonald 2040 figure but the issue we face is that no technology –other than onshore wind - is likely to be much better. And getting tens of thousands of onshore turbines across all the UK's western coasts is not looking politically feasible.

The Policy Exchange recommendation seems to be that we should spent a lot more on basic research in low carbon technologies.  However the arguments why this would achieve faster and cheaper results than a hard-nosed push for cheaper offshore wind through heavy subsidy of early turbine parks are simply not made in the think tank’s paper.

The more obvious error is to assume that no other countries are particularly interested in offshore wind.  Having opened its first intertidal wind farm just three weeks ago, China says it wants 30 gigawatts of offshore wind by 2020. The exploitable resources of 750 gigawatts compares to the 30-35 that the UK has plans to develop in the next decade or so.  That’s right, China alone sees a market twenty times the size of the UK.

Recent semi-official suggestions are that the cost of the Chinese intertidal farm will run at about £80 a MWh are probably highly optimistic, but show what might be achieved elsewhere in shallow waters.

The US has a similar sense of the value of offshore wind resources, with a figure of just over 1,000 gigawatts being seen as possible at sites with wind speed of more than 7 metres a second average wind speed and in water less than 30 metres deep. Total potential resource might be four times as much, approximately enough to power the whole US at capacity factors of 30%. (It should be admitted that progress in actually building the wind farms off the US coast has been lamentably slow and dogged by controversy. An excellent site off Cape Cod has been blocked by powerful local residents for years).

In Europe, the UK leads in offshore wind but other countries continue to invest in new turbines. 235 wind turbines were installed in European waters in 2011, averaging over 3 megawatts each. Germany, Sweden, Belgium, Denmark, the Netherlands, and Finland all now have offshore wind farms. The German decision to abandon nuclear virtually obliges it to focus on Baltic wind farms as the most significant source of low carbon electricity over the next ten years. The European Environment Agency says total EU installed offshore wind will rise 17 fold by 2020.

The list of other countries beginning to develop wind grows by the month. S Korea has just announced its first major play, a 2.5 gigawatt farm off the south-western coast. Canada has recently announced firm plans for a pathbreaking development off Ontario.

The UK’s enviably rich offshore resources and its leading world position in the development of complex wind projects miles from a coast give the country a major set of potential advantages in exporting construction and engineering skills around the world. The relentless negativity about wind from an intelligent think-tank is disappointing.

Is wind power economic? It very much depends on your point of view.

Ruth Lea contends that onshore wind is ‘quite uneconomic’ in her report for Civitas. She says that although the direct cost of onshore wind is close to that of fossil fuel sources, this comparison excludes the impact of integrating renewables into the electricity grid. When these costs are added, she contends, wind becomes wholly uncompetitive. This assertion is entirely based on the work of Colin Gibson, a former National Grid engineer, who has made some informal estimates of the cost of integrating wind power into the electricity networks. He suggests that these costs are about £60 a megawatt hour, adding perhaps 70% to the cost of electricity from wind turbines. Ms Lea fails to mention that many, many other analysts and engineers have also estimated the extra costs of adding large volumes of wind power to the electricity system. In this note I suggest that these alternative sources support a view that Mr Gibson’s estimates are wrong by about a factor of four, meaning that Ms Lea’s contention that wind is a very expensive technology is based on shaky foundations.

The task of estimating the relative costs of electricity generating technologies is complex. The result depends critically on the assumptions we make about the cost of investment capital, the amount of bank debt that can be used, how long the generating plant takes to build, the cost of fossil fuels and a host of many other variables. The final numbers, usually expressed as pounds per megawatt hour of electricity produced are, at best, approximations.

Ms Lea uses as her source the figures produced by Mott McDonald, an engineering firm, in 2010. She should probably have the used the more tentative and up-to-date figures generated by Mott McDonald for the Committee on Climate Change in 2011. The 2011 numbers give ranges of estimates for the direct costs of all the main technologies, for both today and in the future. These figures suggest that onshore wind power is broadly competitive with nuclear power. Offshore wind is currently much more expensive but advances in technology are projected to make it competitive over the next few decades. Mott McDonald, whether in 2010 or in 2011, certainly doesn’t see direct costs of wind power as ‘quite uneconomic’ and, to be fair, neither does Ruth Lea.

Wind power is more costly to integrate into the grid than conventional power stations. There are three major types of extra charges and these incremental costs are not included in the Mott McDonald figures.

  • The impact of having to have spare capacity on hand to react to unexpected changes in the outputs of UK wind farms. (Even if the electricity network were entirely powered by large nuclear plants, the UK would still need this spare capacity, ready to ramp up to full power, because of the risk of a station ‘tripping’ and its power not being available to the National Grid. Wind farms are actually less risky than a single nuclear power plant)
  • The cost of having to construct power stations that are used only when the wind is not blowing.
  • Charges arising from having to construct new distribution lines to connect wind farms, often in remote locations or offshore, to the National Grid.

Mr Gibson’s work, on which Ruth Lea entirely relies, suggests that the cost of these extra measures is about £60 per megawatt hour.

Table 1

Spare capacity £16
Power stations sitting idle £24
Improvements to the grid £20
TOTAL £60 per megawatt hour

Other sources give very different figures for the unseen costs of wind generated electricity. From the many available, I have used two reports produced by consulting engineers and by electricity network specialists. As far as I can see the numbers in these reports are representative of the consensus view of wind integration costs.

I don’t claim that these numbers are right, but I do think that Ms Lea should have given reasons why this recent work is less appropriate to use than the rough estimates of a single individual, however competent.

Table 2

Spare capacity £5.3 (1)
Power stations sitting idle £1.91 (2)
Improvements to the grid £7 (3)
TOTAL About £14 per megawatt hour

 

(1)    Sinclair Knight Merz, Growth Scenarios for UK Renewables Generation and Implications for Future Developments and Operation of Electricity Networks, June 2008. (A report for BERR, now the Department of Business, Innovation and Skills.) Page 90

(2)    Sinclair Knight Merz, Growth Scenarios for UK Renewables Generation and Implications for Future Developments and Operation of Electricity Networks, June 2008. (A report for BERR, now the Department of Business, Innovation and Skills.) Page 91

(3)    Energy Networks Strategy Group, Our Electricity Transmission Network: A Vision for 2020, March 2009. This report estimates the gross cost of new transmission infrastructure to cope with dramatically increased renewables generation at £4.7bn. I turned this into a cost per megawatt hour using the calculator in Mr Gibson’s spreadsheet, thus ensuring reasonable comparability with the figure used in Ruth Lea’s paper.

 

The implication of the far lower costs in Table 2 is that we should add about 15-20% to the direct costs of wind power to properly account for the impacts of this source of electricity on the costs of the network as a whole, not 70%. This leaves wind as an entirely economic and carbon-saving technology. Did Ms Lea, a noted climate change sceptic,  use Colin Gibson's very high figures because of her dislike for the renewables policy of the UK government?

If the UK Grid can cope with today's weather, it can probably cope with everything

If the unreliability of wind power really is a problem we would have seen the evidence today (3rd January 2012). Extremely strong westerly winds were predicted to deliver about 3.5 GW of electricity from turbines during most of the last twenty four hours, over 80% of the maximum capacity from the UK’s wind farms. But as has been the case several times over the last six weeks, many of the arrays stopped as excessively high wind speeds triggered automatic shut downs. At five in the morning, Britain’s wind farms were delivering about 2.5 GW, just under 10% of total electricity need and the number was expected to go higher. The opposite happened. After five hours of steep decline as a result of unplanned closures, wind turbines managed a little over 1.0 GW, no more than about 40% of what was forecast yesterday, leaving a shortfall of about 6% of electricity supply. Did the Grid suffer? Did we come close to having the lights go out? No. As the unexpected shortage of electricity became apparent, the price for immediate delivery of power rose from about £30 a MWh to £90 and unused power stations willingly revved up to meet the extra demand.

The crucial indicator of whether the Grid was under stress barely moved: the frequency of electricity supply remained close to 50 Hertz. An unexpected loss of large amounts of power will usually result in a fall in the frequency of Grid electricity but a close look at the numbers every few seconds from 5 to 10 am shows no obvious perturbation. Grid frequency stuck to about 50 Hertz for the entire period. The electricity supply system settled down with first gas fired power stations and then coal plants from 8 o’clock meeting the unexpected gap in supply.

By ten o’clock in the morning, things had settled down. Then the next unplanned event happened. Some of the wind farms started coming back online. The amount of power generated by wind rose almost as fast as it had fallen earlier in the day. By four in the afternoon the electricity from turbines was back at nearly the same level as five in the morning. Once again, Grid stability was unchallenged. Spot prices spiked up and down as operators adjusted to the new supply but the key indicator, Grid frequency, was unaffected.

Now, at 10.30 in the evening, wind is providing about 7% of the UK’s total needs. During the last day, the country’s 3,000 turbines have averaged about 5.5% of all power. However this number has varied by a factor of three during the day, and not in any way that was remotely predictable even 24 hours ago. The average cost of electricity has probably been relatively high as spare power stations have been fired up and down to meet swings in demand but I would guess there hasn’t been a single moment of real anxiety anywhere across the UK generation and supply industry.

What continues to amaze me is that people who scorn the value of wind energy are often also the most fervent believers in free markets and their apparently magical power to match supply and demand. The UK’s electricity market is far from perfect, but it is quite robust enough to handle a near hurricane, followed by unexpected falls in wind speed. What further demonstrations that wind turbines are effective providers of electricity could possibly be required? Today’s weather might have been more of a problem had the UK had 30,000 wind turbines rather than 3,000 but as of early 2012 the freely functioning electricity market is coping very well indeed with intermittency.

The Energy Company Obligation: a pittance that will worsen the finances of the most poor

  A press release today (January 3rd 2011) from the Department of Energy and Climate Change makes the following assertion as part of the Department's response to a campaign on child poverty.[1]

‘we’re also focusing on the causes of fuel poverty – in particular poor household energy efficiency. There’s free and cheap insulation available to low income households now from energy suppliers and the Warm Front scheme, and this will be also be a core feature of the new Green Deal from the end of the year.’

This statement isn’t true. The Green Deal proposals do not have ‘free and cheap insulation’ as a ‘core feature’. The Green Deal is a mechanism for allowing householders to improve the energy performance of their homes and pay back the cost slowly using a loan from electricity companies. Helping get people out of fuel poverty – one of the most important challenges facing the UK – is nothing to do with the Green Deal.

However DECC would be right to say that the alleviation of fuel poverty is indeed a feature of the proposed Energy Company Obligation (ECO) to be introduced in the spring of next year. This mechanism will force the energy companies to spend about £1.3bn a year for the next ten years on subsidising home energy improvements. But only about 25% of this amount, or something around £375m a year, will go towards those with the lowest incomes and greatest risk of fuel poverty.

This may sound a lot. Unfortunately it isn’t. Compare it with today’s position: the government obliges the energy companies to disburse £2.4bn a year through the CERT programme. Rising prices mean that the proposed £1.3bn will achieve less than half of the old figure. Of that £2.4bn, about 40% is spent on vulnerable homeowners, or about three times what will spent under the future ECO plan for helping the fuel poor.

Separately, the government also provides funds today for the Warm Front home insulation scheme. Even after the public expenditure cuts of 2010, Warm Front disburses £100m a year to the most needy for home improvements. This help will cease entirely at the end of the year. Despite what DECC asserts, the only scheme left for directly helping the less well-off improve their homes will be ECO, and it will be a shadow of existing schemes. However one looks at it, the government is reducing its efforts to cut fuel poverty.

The small scale of the new plan can be gauged by comparing the 5 million or so UK homes classed as in fuel poverty and spending 10% or more of their income on energy, with the size of ECO support for home improvements for vulnerable homes. The ECO scheme will be spending the equivalent of about £75 a year per fuel poor household on energy efficiency improvement. ECO is only expected to remove about 450,000 homes from fuel poverty by 2022m, or less than 10% of those classified as in this position. That’s it: a one percent reduction in fuel poverty per year, even under the Department’s own estimates.

It gets worse. On average, the poorest ten per cent of households will actually see a greater proportion of their income being spent on energy in 2020 than today as a result of the government’s new scheme. The Green Deal and ECO are highly regressive, with the bottom decile, excluding those small numbers who get help from ECO, spending a greater fraction of their cash on energy than if the Green Deal and ECO did not exist.  By contrast the top half of the income distribution is expected to see virtually no change.[2]  So even under the government’s own figures, ECO is expected to take more from the poor than it gives back in free or subsidised energy efficiency benefits.

I apologise for writing again about DECC’s Green Deal and ECO plans. I do so because these proposals will both substantially reduce the rate of home energy improvement and redistribute cash from the poor to the rich. DECC must be pushed back from these regressive policies.


[1] Save The Children’s ‘No Child Left in the Cold’.

[2] Please see Figure 27 on page 88 of DECC’s own Impact Assessment.

Government's own figures show the Green Deal will be far less effective than existing energy efficiency measures

The previous post on this site looked at whether the flagship Green Deal programme was likely to achieve success. It asserted that the so-called Golden Rule – the requirement that the cost of a home energy efficiency programme be covered by the savings on utility bills – would only be met by cavity wall insulation measures. When I wrote that piece I hadn’t read the long Impact Assessment that accompanied the recent DECC consultation document. The projections in the Impact Assessment show extremely low levels of expected takeup of Green Deal measures.[1] The number of new cavity wall insulations is projected to fall from an average of about 500,000 per annum over recent years to about 100,000 a year at the start of the Green Deal, a reduction of 80%. And cavity wall insulation is the single most cost-effective home improvement (other than loft insulation in one of very small number of homes without any at all).

These are shocking figures. In effect, the government is admitting that the Green Deal will not result in a substantial number of home energy efficiency improvements.  It would have been better to stay with the existing programme of support.

The chart below is taken from page 17 of the recently published DECC Impact Assessment, a 300 page document that is intended to demonstrate the effectiveness of the new programme.

Figure 1: Historic and projected CWI installations under CERT, the counterfactual and option 1

Notes on this chart.

CWI. Cavity wall insulation

CERT. The existing programme of support for CWI, funded by the energy companies and thus indirectly by consumers

Counterfactual. What would have happened if the Green Deal were not introduced and, very importantly, the CERT scheme is abandoned as planned. Please note that the counterfactual could have been the continuation of CERT.

BAU = Business as usual. The levels of BAU installation after 2012 run at about 30,000 a year. There is assumed to be no subsidy and no Green Deal financing.

Uptake (survey) and Uptake (actual, Ofgem) are estimates of the number of home in which new cavity wall insulation was added in each of the years from 2003. These works were usually subsidised by the Government’s CERT programme, an obligation on energy suppliers (essentially, the Big 6) to provide heavily discounted energy efficiency measures, particularly for poorer households or households containing pensioners.

CERT extension. This number, about 800,000 is the expected number of installations were the CERT programme of subsidised installations to be extended for a further year.

DECC modelling. The expected number of homes installing new cavity wall insulation under the terms of the Green Deal, by which the cost is recouped from future payments added to the household’s electricity bill. The words ‘GD only, no ECO’ mean that only the impact of the Green Deal is estimated and the extra impact of the new subsidy programme, the Energy Company Obligation is not calculated. But the ECO is not primarily intended to subsidise CWI. CWI is meant to be cost-effective and should not require any part of the ECO.


[1] Thank you to the two individuals who pointed this chart out to me.

The Green Deal: failure is almost guaranteed

The UK’s houses are poorly insulated. The proposed Green Deal is the central part of the government’s plan to encourage householders to improve the energy efficiency of their homes. Instead of paying for improvements immediately, homeowners will be able stretch their payments over many years, paying less than the savings they accrue through lower energy use. What the government calls the ‘Golden Rule’ is that people will be able to borrow as much as they want as long as the energy bill savings are more than the repayments. Sounds too good to be true? It is. At the expected implied interest rates, only cavity wall insulation achieves a large enough energy efficiency benefit to meet the requirements of the Golden Rule. Except in exceptional cases, no other energy saving measures will save homeowners more than the cost of the improvements. The much heralded Green Deal will be a spectacular flop. In late November, the Department of Energy and Climate Change (DECC) launched the open consultation on the new proposals. A dense 200 page document goes into huge detail on the way the new scheme will be regulated and householders shielded from aggressive sales tactics. The concerns about consumer protection are justified – from autumn 2012 energy advisors selling insulation measures will be trying to persuade homeowners to take on thousands of pounds of debt for insulation measures that make no financial sense if the consumer has to pay anything like a commercial interest rate.

The consultation document doesn’t make any attempt to show that it makes financial sense for householders to invest in energy efficiency by borrowing money. In the many hundreds of pages of dense official reports on aspects of the Green Deal, I haven’t been able to find any analysis that shows how much efficiency improvements will cost or what will be the benefits for the average homeowner. Expectations for the scheme run high at DECC: ‘The Green Deal will put consumers back in control. By 2020, we will have seen a revolution in British property’ says the November document. But it contains no numbers and no calculations. So let’s look at a few figures here – I’m sorry if the arithmetic is a little dense.

How much do households spend on heating?

The typical UK house uses about 14,000 kilowatt hours (kWh) for space heating each year. (The average gas bill is higher but this includes about 4,000 kilowatt hours for cooking and water heating). Today’s prices for kilowatt hours of gas start at around 3.5 pence. (You may pay more – this is the lowest rate I could find for gas from a large supplier). All the space heating needs for the average house can be provided for about £490 per year. We’ll call this a round £500.

The gas we use for heating keeps our rooms warmer than the outside world. In a perfectly insulated house, we’d not need any central heating – the heat from our bodies, the warmth from lights and appliances and the energy from the sun getting in through the windows would keep the house heated. The typical UK house isn’t well insulated and leaks heat in approximately the following yearly amounts.[1] (Fans of this type of data can find much, much more in my book How to Live a Low Carbon Life.)

Walls 6,500 kWh
Windows 3,300 kWh
Ventilation (‘draughts’) 3,300 kWh
Roof (loft) 1,300 kWh
Doors 800 kWh

 

In addition, the typical central heating boiler loses about 2,500 kWh in hot air expelled to the outside world.

The government has provided a long list of energy efficiency measures that householders could plant to introduce under the Green Deal. These range from air source heat pumps to better central heating controls. But the table above gives a good sense of where the savings might actually be worth achieving. If, for example, the walls of a house could be better insulated then it might be possible to save a large fraction of the average heat loss of 6,500 kWh per annum.  Cutting this in half – approximately what can be achieved by adding insulation to cavity walls - would save 3,250 kWh, saving about £115 a year.

Today, cavity wall insulation is subsidised and it will generally only cost about £250 for the average house. After the Green Deal is introduced, the subsidy will go and the full average cost of about £500-£600 will be applied. But even at this higher level of cost, it makes financial sense for the homeowner to pay for insulation of cavity walls. With an interest rate on the loan of 7%, the insulation pays for itself in 7 years.

Although the expected interest rate that will be charged by commercial providers is never specified by the government, the implied figure has risen from 3% mentioned in the early DECC market research to a couple of examples in the footnotes of the November 2011 consultation document that use the 7% figure. Standard personal loans might cost 11% today, meaning that even the 7% figure may turn out to be optimistic.

The crucial fact is that no other piece of house improvement is financially viable. There is either no payback within twenty years at today’s energy prices (double glazing is a good example) or even a small interest rate renders the energy efficiency measure financially unattractive (such as improving the thickness of loft insulation).

Here’s some numbers to back up these assertions.

Double glazing

Cost of double glazing for a medium sized three bedroom semi-detached house  - perhaps £6,000.

Energy saving if this measures cuts heat loss from windows by two thirds – 2,200 kWh per year.

Financial benefit of energy saving - £77 per year.

Payback – about 80 years, by which time the seals on the glazing will have been lost, reducing the efficiency gains.

Loft insulation

Cost of extra loft insulation. (Almost all homes have at least 10 cm of existing covering) – perhaps £320 including the fee of the Green Deal adviser who has to approve the measure.

Energy saving if this measure cuts heat loss from the loft by two thirds – 870 kWh.

Financial benefit of energy saving - £30  a year

Payback with a 7% interest rate – 21 years.

The other major potential cost saving investments are boiler replacements and solar panel installation. Neither come close to achieving a 20 year payback with an interest rate of 7%. A new efficient boiler pays back in two decades (by which time it will probably have had to be replaced again) with a 5% interest rate  and a typical solar panel installation only works with interest rates of 4% or below. This figure assumes that the proposed Feed In Tariff reductions are actually applied.

The very unhappy fact is that with the exception of cavity wall insulation there is no energy efficiency improvement that a family can take that makes strict sense financially if the household has to borrow to make the change. The government’s hypothesis is that British homes are poorly insulated because people don’t have the ready cash to invest in improvements. Sadly, DECC is wrong. British homes remain badly insulated because it is extremely expensive for most people to make real energy saving improvements and few households will want to take on the burden of more debt when the reductions in their energy bills are so small.

The Green Deal as presently configured by DECC will fail. But we must cut household energy bills and reduce the 25% of UK carbon emissions coming from domestic housing. What should we do? First, we need a national well-publicised programme of free cavity wall insulation, with contractors moving street by street to improve every household.

This won’t happen under the Green Deal: it is a hugely complex and a bureaucratic nightmare even a year before it starts. Just to give one example of the costs imposed: the doorstep advisers established under the Deal will be highly regulated and will have supervisory bodies checking their work. Amazingly, on top of these institutions will be a further regulator superintending the activities of the supervisors. The chance of significant success, even at getting large numbers of houses to install cavity wall insulation, are close to zero when the overheads are so great. Only a countrywide programme of free insulation stands any chance. Simplicity can succeed where the Green Deal will not.

Second, we need to have national scheme for insulating solid wall homes. Even the supporters of the Green Deal know that solid wall insulation does not make financially sense. But such measures can make the single greatest difference to fuel bills in money terms. Millions of solid wall houses need external or internal insulation and a nationwide campaign to train an army of people to do the work would have major potential employment benefits. As the economic situation worsens, a campaign to insulate – for free – all the eight million solid walled homes in the country makes increasingly good sense.


[1] The total comes to more than 14,000 kWh because our home heating is supplemented by the heat from lights, people, appliances, hot water and solar energy.

Biochar encourages the growth of winter salads

As part of The Big Biochar Experiment, five weeks ago I planted 40 pak choi seeds in small plastic pots. 20 went into conventional peat-free seed compost and 20 were planted into a mixture of 10% biochar (by weight) and 90% compost.

Biochar helped greatly. 16 out of the 20 biochar seedlings germinated, compared to 11 without biochar. The biochar seedlings are, on average, healthier, greener and have much better root systems. Some of the biochar seedlings had one or more roots 40 cm long when taken out of the plastic pot. None of the non-biochar plants had roots that had grown sufficiently to leave the pot. This difference was very striking indeed.

Why does biochar have these effects? In particular, why should germination rates be better with biochar? Much more work is needed on this, but potential hypotheses include the impact of black biochar increasing the temperature of the soil by absorbing more of the limited autumn sunlight.

I think the far better root development may possibly have arisen because the biochar made the soil less susceptible to waterlogging. When I took the seedlings out of their pots, the biochar-amended oil was loose and friable, probably encouraging the growth of the root system. By contrast, the unamended soil was dense and overly damp. The improvement from the use of biochar might therefore not have been as marked if I had planted the seedlings in a peat-based compost which would have resisted the effect of heavy rain better.

Whether or not biochar works to improve agricultural and horticultural yields is a vitally important question. Biochar is nearly 100% carbon, and it seems to remain in the soil for many generations. If the carbon in agricultural and wood wastes that would otherwise rot and turn into carbon dioxide were permanently stored in soils around the world, humanity's net CO2 emissions could be significantly reduced. Increasing the carbon content of the world's cropped soils by one tonne per hectare a year would sequester about 5% of global emissions. Since the typical hectare of agricultural land produces several tonnes a year of organic wastes in the form of such things as straw and maize stover, this target is certainly possible. Biochar has important other effects such as reducing nitrogen run-off, thus cutting nitrous oxide emissions and decreasing the need for conventional fertiliser.

Peak Stuff - did the UK reach a peak of material consumption in about 2001-3?

Empirical evidence presented in a paper available from this website supports the hypothesis that the UK began to reduce its consumption of physical resources in the early years of the last decade, well before the economic slowdown that started in 2008. (An article about this contention was published in the Guardian on 1st November 2011). This conclusion applies to a wide variety of different physical goods including, for example, water, building materials and paper and includes the impact of items imported from overseas. Both the weight of goods entering the economy and the amounts finally ending up as waste probably began to fall from sometime between 2001 and 2003.[1]

Summary data is provided below. The full paper is here: Peak_Stuff_17.10.11

 

If correct, this finding is important. It suggests that economic growth in a mature economy does not necessarily increase the pressure on the world’s reserves of natural resources and on its physical environment. An advanced country may be able to decouple economic growth and continuously increasing volumes of material goods consumed and a sustainable economy does not necessarily have to be a no-growth economy.

Summary of data in this paper

CategoryPeak yearDecline betweenpeak and 2007

InputsTotal Material Requirement20014%

Direct Material Consumption20015%

Water (overall)2003/44%

Water (household)2003/44%

Uses of biomassFood (calories per head)About the 1960sTens of percent

Food (grammes of meat per person)20033%

Paper20016%

Textiles*2007May not have peaked

Uses of mineralsCement198426%

Cars200310%

Some fertilisers (P and K)Mid 1980sMore than 50%

Use of fossil fuelsPrimary energy production20013%

Travel20051%

Some fertilisers (N)198740%

WasteOverall wasteEarly part of last decadeTens of percent

Domestic waste per household2002/35%

 

 

[1] The decline between 2003 and 2007 occurred at the same time as UK population rose by about 2.4%. Source: ONS population estimates.

Some background facts on UK domestic energy supply

1)      About 60% of UK householders say that they have never switched suppliers. 2)      The number of switchers is tending to fall. 22% of electricity customers switched in 2006, falling to 17% last year. The gas numbers were similar.

3)      Only 13% say that they have recently checked prices.

4)      Ofgem research suggests that ‘5-10%’ of householders ‘proactively’ search for better prices. Up to 90% of people were shown by their consumer research to be ‘disengaged’ or ‘passive’.

5)      The last check by Ofgem indicated that there were about 320 different tariffs available in the UK domestic market (January 2011). This is up from about 170 four years before.

6)      In the last thirty days (to 17.10.11) there have been 18 different tariff changes, of which 15 were initiated by the Big Six domestic energy suppliers. None of these changes affected the standard tariff rates. They were all changes to the hugely complex online rate cards as the suppliers withdrew their most attractive online offers. We can only presume that the main reason for these changes was concern that press comment would pick up on the huge differentials between the best online rates and the standard tariffs still taken by approximately 65% of all UK households.

7)      But even today customers in the Southern Electric supply area would save an average of £251 by switching from the standard tariffs of the Big Six to the cheapest online supplier. As of 17.10.11, the cheapest tariff is provided by small supplier First Utility and its cost for a household using 3,300 kWh of electricity and 16,000 kWh of gas would be about 1,025 compared to about £1,275 for the average standard rate card from the Big Six. The First Utility tariff has no cancellation charge but cannot be used by customers unlucky enough to be on independent gas distribution networks.

 

The Big Biochar Experiment

 

Heat wood or agricultural wastes strongly in the absence of air and you will eventually get charcoal through the process known as pyrolysis. Charcoal is almost pure carbon. When ground up and then added to the soil as a means of improving fertility or reducing water use, it is known as ‘biochar’. An Oxford company, staffed with academic researchers who work in related fields, is sponsoring a country-wide experiment to see if biochar can help domestic gardeners improve their crops.

Because charcoal is highly stable, it stores carbon for hundreds of years. Scientists such as James Lovelock have suggested that biochar might be a very effective way of storing very large quantities of carbon in the soil that would otherwise have returned to the atmosphere in the form of carbon dioxide. At application rates of 10 tonnes an arable hectare per year – a typical dose on a tropical soil – the world’s entire greenhouse gas emissions would be neutralised by using biochar on less than 10% of the world’s arable land area..

On poor tropical soils, biochar adds to agricultural production, often making a huge difference to yields. It seems to work by encouraging the growth of beneficial micro-organisms and by helping retain moisture. Does biochar improve yields in temperate climates? The data is less convincing than for hot countries with naturally carbon-poor soils. Some researchers have demonstrated that biochar can have beneficial impact but the overall effect on yields is much less clear-cut than on degraded soils. But anecdotal evidence is sometimes very compelling. The photograph at the top of this article compares biochar-dosed lettuces on the left with those planted just in conventional composts on the right. (Source: www.thecharlady.com)

The Big Biochar experiment has been designed to produce more evidence like this. The lead researchers from Oxford University’s Environmental Change Institute are distributing 1.5kg bags of biochar to domestic gardeners and people with ‘allotments’, small plots of public land rented to householders on which to grow their fruit and vegetables. Across different soil types, growing varied crops and at different times of the year, we will get an idea whether biochar can help people who cultivate their own food improve their yields. If you want to participate, details are here. You’ll need to pay the postage costs and commit to a trial that compares plant growth on a square metre of biochar-loaded soil to equivalent plants on standard soil.

Cecile Girardin, one of the scientists leading the experiment, is an expert on the carbon cycle in the tropics. (The carbon cycle is the natural process by which carbon dioxide is extracted from the atmosphere by growing plants and eventually returned when the plant dies and rots). She told me that she has a hunch that the experiment will demonstrate that root crops such as carrots or celeriac should benefit most from the addition of biochar to the soil. At this time of year in the UK, plants such as this will not generally be growing. However bulbs such as garlic and onions can be planted now (early October 2011) and will grow slowly through the autumn and winter. I think garlic would be a particularly good crop to use in the experiment. If biochar works, the bulbs should result in stronger stalk growth over the next months. I have done something slightly different, planting pak choi seeds in small pots, half of which have 10% biochar added. I will be looking for differences in root growth and leaf formation after a couple of months.

For those who have become convinced of biochar's virtues, the next step may be to club together to buy a kiln for making biochar. Craig Sams's business Carbon Gold is selling a simple retort for large scale charcoal making. At a cost of £3,500 plus VAT, the kiln is not cheap but garden clubs and allotment associations may be able to afford the investment

Biochar is potentially very important. The evidence is growing that it can both increase yields on some soils, reduce the need for expensive artificial fertilisers and cut losses in drought. The more we experiment the better our knowledge will be and sceptical policymakers will see the advantage of sequestering large volumes of carbon in the world’s soils.

Every large roof in the UK should be adorned by PV

The unexpectedly rapid fall in the cost of large solar PV installations means that the financial returns available to property owners have become highly attractive. Any office block, warehouse or school with a roof that can accept 50 kW of panels can expect a return of over 15% a year on its investment. (PLEASE NOTE: this article was written before the UK government made its deeply damaging decision to reduce subsidy payments from December 10th 2011. The new scale of payments will give returns of about half the figures in this note.)  

The UK review of feed-in tariffs carried out in the spring effectively blocked all installations of a size greater than 50kW. But the payments for smaller systems were unchanged, meaning that the returns to people investing in medium-sized installations, covering perhaps 300 square metres, were untouched by the review.

The cheapest quotations for roof-mounted 50 kW installations are now running at around £2.30 per watt. This means that a full-sized system taking maximum advantage of the tariffs could costs as little as £115,000. In the southern half of England a south-facing installation on a sloping roof should generate at least 850 kWh per kW of panels. Assuming that all the electricity generated is used in the building, the total income from the system will be over £18,000 a year, inflating for the next 25 years at the retail price index (RPI). On a particularly sunny site on the south coast, the annual  income could reach 18.5%, inflation-protected. (Although the maps show Cornwall getting the best solar radiation in the UK, data I have seen from readers of this blog strongly suggests that coastal Sussex, which has more sunshine than almost any where else in the UK although less predicted total insolation than the South West, is almost as good).

These are exceptional returns. Compare them to the recently withdrawn index-linked  bond from UK National Savings offering RPI + 0.5%. Although the National Savings offer is government guaranteed tax free and is repaid in full at maturity, the income is still far below the rate offered by a good PV installation. There really isn’t a good reason for people owning large roofs not to be racing to install PV before the rates go down in April of next year. And if you cannot raise the money yourself, there should be no shortage of return-hungry investors eager to assist.

PS. The good financial returns available to the owners of large PV systems do NOT mean that solar is necessarily a good investment for the UK as a whole. The payments mentioned in this article amount to 42.9 pence per kilowatt hour, including 10p per kilowatt hour for the benefit of not buying grid electricity, and are about ten times the level of today’s wholesale power prices. Although the price of large-scale PV has nearly halved in the last year, it remains uncompetitive with other forms of electricity generation. And this extra cost is still loaded onto all the people in the country not lucky enough to be able to afford PV or living in accommodation without access to a good roof.