You might not realise this but support for onshore wind has risen to a new high

DECC has been carrying out a regular survey of attitudes to energy and climate matters since March 2012. Today saw the publication of the latest wave of results. Support for onshore wind was at its highest level: 70% are in favour and only 12% oppose. The 8 page detailed press release announcing the release of the data doesn’t once mention wind - onshore or offshore - and you have to delve into the spreadsheets published today to find this out. The Conservative Party has just announced what is, in effect, a commitment to block further onshore wind after the next election. We can all therefore understand that the rise in support for this renewable technology is embarrassing to ministers. But DECC statisticians should not manipulate official data in order to support the viewpoints of Conservative politicians.

The results of the nine waves of the survey – carried out every quarter for two years are below. The increase between wave 8 and wave 9 is statistically significant (95% confidence). The previous highest level of support for onshore wind was 68%. 

Support for offshore wind and for solar PV  in the most recent survey also rose by statistically significant amounts to 77% and 85% respectively. Offshore wind recorded its highest ever level of support across the 9 surveys. As with onshore, PV and offshore wind were not referred to in the long and detailed press release.

The percentage of people who support renewable projects in their home area went up to 59% while the percentage opposing fell to 17%. The balance (support less opposition percentages) increased from 36% in 2012 to 42% now. Once again, this is not mentioned. A very disappointing piece of work indeed from DECC.

Community energy financings speeding up in the UK

 

At the beginning of this year I thought the UK might see 25 completed financings of community energy projects in 2014. As the pace of fundraisings increases, this estimate now looks too low.  30-40 might be possible.

Wester Derry turbine is a typical example. A 250kW model will be installed on farmland near Alyth in Angus, north-west of Dundee. Boosted by the continuing availability of EIS tax relief on the investment, prospective investors are given indications that average returns over 25 years will be more than 10%. Investors putting their money in immediately may do better – though their risks will be somewhat greater. In addition, there'll be a yearly payment to local good causes more generous than commercial wind farms.

There’s nothing particularly exceptional about this community financing but it is a useful example of how groups of people anywhere around the country can get to set up their own energy project and earn very decent possible returns. Wester Derry turbine is a simple, efficiently-organised cooperative that can serve as a good model for schemes anywhere in a reasonably windy location around the UK.

The cooperative

The farmers who own the land completed their planning application in 2011. The application was approved, despite some local opposition. Alongside the usual concerns about visual impact, noise and the effect on property prices, opponents often commented that while a turbine generating power for a landowner’s own use was fine, ‘commercial’ developments are inappropriate. Even the people who oppose wind often do so because of unhappiness with profits disappearing to an energy company rather than a root-and-branch hatred of all turbines.

Wester Derry may placate some people who initially opposed the scheme because it is not a conventional commercial project. Aided by Sharenergy, a business that has helped many communities and landowners build renewable energy projects, the landowners set up a cooperative in late 2013 that now seeks to raise £800,000 to erect the turbine before the end of the year.

Most of the community projects currently being financed are established as ‘bencoms’ or, more correctly, Industrial and Provident Societies for the BENefit of the COMmunity. Wester Derry is set up instead as a cooperative. Cooperatives are owned by shareholders (each with one vote, irrespective of the size of their holding) and are less restricted than bencoms in the returns that they can pay to investors. Like Bencoms, they benefit from eligibility for tax relief that is denied to conventional companies. And they can also give part of their income to the local community.

The turbine and its output

A 250kW turbine from German manufacturers WTN will stand 30 metres at hub height on a piece of upland.  WTN has been used by several other recent community ventures.

Output is projected to average about 400 MWh a year, roughly equivalent to the usage of 130 homes. The expected electricity production works out at a capacity factor of about 18%. That is, 400 MWh is about 18% of what the turbine would produce if it were working flat out all year. 18% is quite low for a turbine in Scotland and this is a result of wind speeds averaging around an unexceptional 5.7 metres per second. It’s probably worth noting that we would need almost one million turbines of this size and wind speed to replace all the electricity generation currently needed in the UK

In contrast to the lowish projected output at Wester Derry, the successfully financed community turbine on windy Islay off the west coast of Scotland is projecting a capacity factor of 39%, over twice as much. The average wind speed at the Islay site is over 8.4 metres per second. (The power in the wind is the cube of the speed meaning that quite small differences in wind speed really affect the amount of electricity that can be generated).

The finances of the turbine

The current fundraising is only possible because of the loans made available by Scottish government institutions to help get the project this far. (The same was true on Islay). Getting a community wind project through the planning process and ready to be financed is time-consuming and costly. The Wester Derry project needed a loan worth almost £100,000 from CARES to get to this point. This is about an eighth of the total cost.

In common with most other ventures of this type, investors are offered a relatively low initial return which rises in line with inflation of feed-in tariffs and in power prices. Personally, I think Wester Derry’s prospectus is a little too aggressive in forecasting that the price it can get for its power will rise by 4% a year for the next 20 years but the impact of shaving  this figure to, say, 2.5% would be quite small.

Most financing of wind turbines give average projections for electricity output and a more conservative figure that assumes the turbine produces 90% of that power. Wester Derry uses a more pessimistic assumption of 85%. As the world warms up we cannot be sure that current wind patterns will be maintained and it makes good sense to test whether the finances still work at lower average wind speeds.

Most investors in the turbine will receive tax relief under the EIS scheme. This means that the real cost is 70% of what the shareholder put in. At the expected wind speed (not the more conservative 85% figure) and 2.5% annual inflation in feed-in-tariffs, the annual returns and capital repayments after year 4 will give an investor an average return of 10.4%, weighted towards the later years. (This is what is known as the Internal Rate of Return for the shareholder).

Of course things can wrong. Turbines can break or wind speeds drop. But community offerings of this type can produce decent returns over long periods. I’m not qualified to give advice but these schemes do seem as though they are worth examining as part of a savings portfolio.

SEIS

The earliest investors in Wester Derry will be putting their money into a more risky venture. Their money will be spent ordering the turbine from Germany and preparing the site. In certain circumstances, the tax rules allow the first £150,000 on money in to the company to attract a 50% tax relief. This means that £1,000 of shares will actually only cost the investor £500. As of 25^th April, Wester Derry has almost raised its first £150,000 so investors eager to get the 50% relief would need to act fast.

Sharenergy

The Shrewsbury-based firm Sharenergy has helped organised the offer of shares to the community (and to anybody else who might want to invest). The prospectus is simply and clearly written. The offer is well-structured and appealing. Congratulations to Sharenergy and to the Wester Derry board for putting in place this model opportunity.

Energy and Scottish independence

 

Every couple of weeks a UK cabinet minister makes a day-trip to Edinburgh to give a speech saying how dreadful Scotland’s future will be if it votes for independence. Accompanied by a repetitive, poorly argued and partisan 101 page document, DECC’s Ed Davey made the hour-long flight north a couple of weeks ago to predict that Scottish energy prices would soar.

The DECC contention is simple. Scotland uses about 10% of UK electricity but produces almost 40% of its renewable power. THese renewables are subsidised to make them competitive with fossil fuel generation. If an independent Scotland continues with its plan to get 100% of its power from renewable sources in 2020, DECC asserts that Scottish people will have to pay for all the extra subsidies that will be required. These payments will no longer be shared across the whole UK. Davey’s figures suggested that householders in Scotland might have to pay as much as £189 more a year.

As usual, the reality is much more complex. Without Scottish wind and hydro power, the remaining UK (R-UK) will generate only about 20% of its electricity from renewables in 2020, barely changed from today’s 16% for the UK as a whole. This means that without Scottish renewables, the UK will miss the binding EU 2020 target of 15% of all energy (not just electricity) coming from low-carbon, non-nuclear sources. To be more precise, the R-UK will hopelessly undershoot this figure. Perhaps this doesn’t matter – the country may not even be part of the EU by then.

What may be more important to the R-UK is that Scottish renewables are cheap. DECC figures show that the 2020 subsidy for a megawatt hour of good Caledonian low carbon electricity will be about £43. For England, the cost will be over twice as much at £93. The reason is that Scottish power predominantly comes from onshore turbines and hydro, which receive relatively little subsidy while English renewable electricity is generated more expensively by offshore turbines and by PV on the roofs of well-heeled Southerners. If Scotland remains in the UK, the whole country can meet its decarbonisation targets far more cheaply than R-UK can on its own.

Another issue is scrupulously avoided by the DECC report: Scotland is a major source of the electricity for the rest of the UK. About 4% of the yearly power consumption of England and Wales is met by exports coming on pylons across the Scottish border. This figure is tending to rise as Scottish renewable power continues to grow faster than in England and as English nuclear plants are closed.  Although Ed Davey talked darkly of cutting Scotland off from the R-UK grid and finding alternatives supplies from more accommodating countries, we lowlanders are reliant on Scottish electricity, particularly at peak time. Despite what he says, England cannot get the power from elsewhere. The links from France and the Netherlands already run hot with imported electricity and have very little surplus capacity. (As I write this, on a warm Monday Bank Holiday when power demand is unusually low, both interconnectors are bringing in electricity – effectively from German PV -  at 100% of their maximum.)

Moreover, Scottish electricity tends to come south at times when demand, and therefore wholesale electricity prices, are high. As the R-UK piles into small-scale solar PV electricity, which arrives on the grid exactly when it is not needed, the need for Scottish wind power on dark December evenings becomes even clearer.

Readers will not find much of this data in the DECC report, so I thought it might be useful if I assembled two tables of numbers. The first looks at how new renewable capacity is expected to come on-stream by 2020 in England + Wales (not N Ireland) and Scotland.

Table 1: 2020 renewables output in England + Wales and Scotland

	England + Wales	Scotland
2012 renewables output	25.2 TWh	14.8 TWh
Share of 2012 national consumption, including transmission losses	8%	44%
Expected 2020 figure	56.2 TWh	39.6 TWh
(Add in small-scale renewable power covered by FITs) (1)	6.3 TWh	1.4 TWh
Total expected renewables output	62.5 TWh	41 TWh
Share of 2020 national consumption, including transmission losses. (2)	20%	123% (3)

(1)    Curiously, the DECC paper omits any mention of FITs for PV and wind in England and Wales. But smaller scale PV will be a major user of subsidy by 2020.

(2)    Assumes 2020 demand is equal to 2012 figure.

(3)    DECC says, without providing supporting justification, that Scotland has underestimated its electricity demand. But the numbers on page 53 of this document that other sources in DECC agree with the Holyrood figure.

Table 2: 2020 subsidy cost per megawatt hour of renewable electricity

	England + Wales	Scotland
2020 subsidy (under ‘Levy Control Formula’)(1)	£5,800m	£1,800m
Renewable electricity production in 2020	62.5 TWh	41.0 TWh
Subsidy cost per megawatt hour	£93	£44

(Source:DECC)

The DECC paper suggests that about two thirds of the increase in Scottish power bills will result from householders being obliged to take on the full cost of all renewables added to the grid after the date of independence. (Which is, of course, not the date of the referendum). I have assumed that 2013/14 subsidy payments made to Scotland generators - often owned by non-Scottish companies – are about £1bn out of the UK total of about £3.2bn. By 2020, this subsidy is expected to rise to about 1.8bn (source: DECC) out of a UK total of £7.6 bn. So the incremental cost of Scottish renewables between the end of 2012 and 2020 is about £800 million a year and the cost per extra MWh of electricity is little more than £30. See Chart 1 below.

These calculations suffer from not using precise figures for 2014/2015 renewable generation in Scotland and England + Wales but I am sure they are directionally accurate. To summarise, they show that Scottish renewables are getting cheaper over time but the reverse is true in England and Wales as the R-UK switches to expensive offshore wind and small scale PV. The subsidy cost of all Scottish renewables in 2020, not just the farms installed after independence, will be about £44 a megawatt hour compared to £93 in England and Wales.

Chart 1: The full subsidy cost of renewables in 2020 and the incremental cost for new generation between 2012 and 2020.

Renewable subsidies are the most important reason why DECC says Scottish bills will rise. The other cost DECC identifies is the bill for improving the capacity of the interconnectors between Scotland and England. The intention is that this should rise from about 3.5 GW to around double this amount. This will be needed to help balance the grids of the two countries. But there is no clear argument in the DECC paper, or elsewhere, as to why Scotland, rather than England, should pay for this cost. Why should the seller, not the buyer, pay for the improvement?

Two final points. The DECC argument against Scottish independence has at its heart the assumption that Scotland will suffer financially from its ambition to be (net, over a 12 month year) 100% powered by renewables by 2020. The Department's report wants Scottish voters to worry about the cost of this low-carbon power. But at the same time as publishing DECC frequently asserts the importance of the whole UK’s efforts to decarbonise electricity by 2030. Without near 100% low carbon electricity by 2030, ministers rightly assert, the UK cannot hope to meet its ambitions to cut total emissions from energy (not just electricity) to close to zero by 2050. In essence, the attack on Scotland is therefore unpleasantly hypocritical: Salmond and his government are pilloried for striving to achieve by 2020 what the UK as a whole plans to achieve by 2030, just a decade later.

Writing as someone who believes passionately in the need to get as much low carbon power, including nuclear, onto the grid as soon as possible, I’m acutely disturbed by government ministers warning other countries about their costly ambitions for renewables. As has happened so frequently in the last couple of years, skittish investors will have heard Davey’s speech and asked themselves if his statements presaged another turnaround on financial and legislative support for renewables.

Similarly, although the DECC paper stresses the need to make rational and financially sensible decisions about which renewables to support, nowhere does it acknowledge that onshore wind from the west coast of Scotland is one of the cheapest sources of renewable electricity anywhere on the planet. The R-UK, as the major customer of Scottish wind-generated electricity, really does need continued investment in this source of inexpensive power. Bellicose and patronising words from DECC about finding alternative electricity from other countries do absolutely nothing for the future of the electricity system of the British Isles. Frankly, in the event of Scottish independence, the R-UK needs Scotland more than Scotland needs us.

And, lastly, I do think it strange that a UK minister who has agreed a subsidy for new nuclear power stations in England of over £90 a megawatt hour should hold the Scottish government to account for subsidising its own renewables at less than half this cost - and also achieving binding EU targets that the R-UK will spectacularly miss.

Going green in Cornwall

(This post is by Gage Williams, a regular commenter on this site and a very active entrepreneur in smaller scale green energy) I have to confess to being a Green Geek.  It all started 15 years ago when taking Cornwall, as the first ‘County of the Year’, to the Royal Agricultural Show at Stoneleigh.  One of our four pavilions was dedicated to showing off some of our excellent small renewable energy companies.  Besides getting a great introduction to renewable energy from them, it struck me as strange that none had met each other before and each seemed to know little about the other technologies being exhibited.

After the Show, we decided to set up the Renewable Energy Office for Cornwall (REOC) and for 18 months this was funded with European funds sufficient to employ a chief executive.  When the funds ran out, REOC continued as an informal forum for Cornish renewable energy companies and I remained an unpaid director.

It has been an interesting 15 years and no one could have predicted just how quickly various renewable energy technologies would come down in price and be deployed.  Cornwall, with arguably the best mix of wind, solar, wave, tidal, biomass, hydro and geothermal in the world, has been at the forefront of this energy revolution.  Indeed, in 2013, 25% of all our electricity was generated from renewables within the county.

The generous subsidies introduced for renewable electricity in late 2010 and for renewable heat in 2012 (for non-domestic) and announced on 4 April 2014 for households are a boon especially for those living in rural areas where fuel costs for households are the highest.  They are the highest as much of rural Cornwall is without public transport making car ownership essential and nearly 60% of us are not on mains gas.

My wife and I live in an isolated Grade 2 farmhouse built in 1730.  Not surprisingly, it is poorly insulated and difficult to heat.  We are both self-employed and need to run two medium sized cars – our nearest town is a ten mile round trip.  Our annual energy costs have been horrendous comprising: the two cars do 24,000 miles per year which, according to the AA, costs us £9,600; our electricity £1,400; and our heating £3,200 (oil-fired, 4,000 litres plus servicing) and hot water £600 (electric immersion).  The total annual cost was £14,800.

We took the following action:

1.      Solar PV.  In March 2012, we installed 3.8kWp of ground-mounted solar PV (20 panels which can now be used as a wood store) in the garden.  They could otherwise have made a superb chicken house. 2.        This cost £6,000 and generates 3,200 kWh per year all of which we use (today, this might cost £4,000).  We got the first Feed-in-Tariff of just over 40p/kWh and Ofgem assumes that we export 50% of the output to the grid at about 5p/kWh.  In the last 12 months, the FIT and export has paid us £1,500 and the used electricity that would have cost 18p/kWh has saved us £580 for a total benefit of £2,080.  This is income tax free (had I paid for the electricity, it would have been from taxed income).  As a basic rate taxpayer (20%), when grossed up this was worth £2,600 over the past 12 months.  Further, this annual income is RPI linked and guaranteed for 25 years. 3.      Oil-Fired Aga.  We exchanged our 1963 oil-fired  Aga for an electric Aga that uses Economy 7 cheap electricity (7p/kWh) at night.  We run the Aga for 30 weeks a year.  The old Aga used 1,500 litres of oil and needed two services a year costing £1,200 a year.  The new Aga uses £2 worth of electricity per night for £400 and does not need a service – a saving from what would have been taxed income of £800 which is worth £1,000 per year when grossed up.  The Aga swap cost £9,000.

4.      Wood-Pellet Biomass Boiler.  Our 20 year old oil-fired boiler badly needed to be replaced.  A replacement with an upgrade of our ineffective radiators would have cost £6,000.  In April 2013, we replaced the boiler with a 35kW Austrian SolarFocus wood-pellet boiler costing £23,000.  We received a Renewable Heat Home Incentive (RHHI) grant of £3,700 (repayable over 7 years) and avoided the £6,000 cost of replacing the oil-fired boiler.  The net cost was £13,300.  Because the house is Grade 2 Listed, we cannot install double glazing or outside wall lagging and hence the Green Deal Assessor gave us an EPC rating that estimated a heating requirement of 40,000 kWh per year.  The RHI Feed-in-Tariff for a wood pellet boiler is 12.2p/kWh RPI linked for seven years.  In Year 1, starting on 1 April 2014, we will receive an RHI payment of 40,000 x £0.122 or £4,880 less one seventh of the £3,700 grant leaving £4,350.  The wood-pellet costs £260 per tonne and we have needed 8 tonnes in the first year for £2,080.  The 4,000 litres of oil used to cost £3,200, so there is a net saving of £1,120.  The total benefit is £5,470 which, when grossed up, is worth £6,840 RPI linked for seven years.  The boiler should pay for itself in two years.

5.      All Electric iOn Peugeot Car.  We have just exchanged my wife’s car for a £13,500 Peugeot iOn car which has a range of 82 miles.  We worked out that as a two car family, most of our journeys were well within this 82 mile range and we expect to use the car for about 15,000 of the 24,000 miles per year that between us we drive.  We recharge the car at night-time using our Economy 7.  A full charge is 16kWh costing at 7p/kWh just £1.12 for 82 miles which works out at 1.36p/mile.  Remarkably, the car does five miles to the kWh demonstrating the inefficiency of the combustion engine.  Over 15,000 miles, we will use just £205.  My wife’s old car used to do 40 miles to the gallon and a gallon now costs £6.00.  Over 15,000 miles, she would have used 375 gallons costing £2,250.  We will therefore save £2,045 in the first year that would have been paid from taxed income.  In addition, there is no road tax (£150) and the insurance is £100 less than for her old car.  When grossed up, this saving is worth £2,870.  The Government is installing recharging points for free and there will soon be a good network.  The fastest recharging points can give us 65 miles range in just 20 minutes.

Adding the above measures together comes to a grossed up benefit of £13,310 in the first year most of which is RPI linked either for 25 years or for seven years.  The cost of doing all of the above, without including the cost of the car which was swapped for my wife’s old car, is £28,300.

You could argue that the capital cost is also taken from taxed income, in which case the £13,310 when ‘grossed down’ is worth just £10,648 which still gives a Year 1 Return on Investment of 38%.  Currently, my bank is offering loans at 4.7% interest over five years that would cost £5,800 per year if the £28,300 had been borrowed leaving £4,848 in profit over the first of five years repayments – well within the Green Deal’s ‘Golden Rule’ whereby any energy efficiency measures must at least pay the interest on the loan required to install them.

At the end of the day, we at last have a warm dry house and a cheap means of getting about the county for the 90% or so of journeys that are within the range of a nippy electric car that is ideally suited for Cornish lanes..

Wind power's effect on German electricity prices

Germany’s large amount of wind and solar power gives us a clue of what will eventually happen to UK energy markets. With over 60 gigawatts of capacity from wind and sun renewables can provide a large fraction of German electricity needs across the year. A windy week cuts average power prices nearly in half. The chart below shows how the average day-ahead power price in Germany fluctuated during the thirteen weeks of January, February and March. The weekly cost of wholesale electricity has been as high as €45 a MWh and as low as €25. (These figures are well below the equivalent UK figures, which averaged about €60 during the period).

The variation in wholesale price has been driven by changes in the average percentage of electricity provided by wind and solar during the week. This has swung between 8 and 27% of  electricity supply over the three month period.  Peak wind weeks have been associated with average power prices well under €30.

A CCGT power station needs to spend €30 just on fuel to generate a megawatt hour. The downward price pressure imposed by wind is making gas generation particularly unprofitable.The first three months of 2014 have shown just how destructive wind and solar can be to the finances of traditional power sources. Even nuclear power stations, which cost no more than €10 a MWh to operate, have been affected.

(Original data from the wonderful people at www.ise.fraunhofer.de)

During the first quarter of the year power prices went close to zero at some point during almost all Sundays, when power demand is at its lowest. On two days, Sunday 16^th February and Sunday 16^th March, prices fell to minus €50 for several hours. These negative prices arose because of forecasting errors of 2 and 3 GW. In the context of available wind generation capacity of more than 30 GW, these numbers are not large: errors of more than 1 GW are not uncommon in the UK which has about a quarter as much wind power as Germany. Power prices in countries with large amounts of variable renewable capacity are becoming hugely sensitive to unexpected small changes in electricity production.

PV on 22,000 schools

The government’s new plan for solar wants the south facing roofs of public buildings covered with PV panels as quickly as possible. The 22,000 schools in England and Wales are a particular target. Two communities are currently raising money for schools in their area. Staffordshire Sunny Schools  is raising about £1m to put an average of 40 kW of panels on 25 primary schools. Plymouth Energy Community is looking for £0.5m to match a loan from the local council that will see PV installed on about the same number of schools.  The two schemes are both proposing investor returns of about 5-6%, as well as discounted electricity for the schools and large amounts of cash devoted to local energy efficiency schemes. Both these companies will happily accept investors from outside their area.

Staffordshire and Plymouth will benefit from EIS eligibility, meaning that taxpaying investors will get 30% back in reduced income tax bills. EIS also avoids inheritance tax, which may be a worthwhile additional benefit for investments that will deliver value for the 20 year period of feed-in tariffs.

Other schemes, such as Oxford North Community Renewables, have also recently succeeded in raising money for school solar through funding of a ‘Community Benefit’ company funded by small investors, mostly from the local area. Crowdfunder Abundance Generation's solar schools offer will open within a few weeks. Meanwhile the emissions-reduction action group 10:10 continues with its pathbreaking 'Solar Schools' scheme, which encourages charitable giving to fund PV. Indeed the government's new enthusiasm for PV on school roofs seems to owe much to the hugely successful efforts of 10:10 over the last two years.

I’m not competent to recommend these or any other community energy schemes. However the economics for Staffordshire and Plymouth look perfectly solid: £1,000 of PV panels will generate feed-in tariff income of about £120 a year, meaning that investors will get about half of the subsidy revenue. There's plenty of cash available to fund the costs of running the business as well as channelling money into local fuel poverty projects.

The Staffordshire scheme sent me some comments from the headteacher of one of the schools in the area that has already had panels installed. Anybody looking to make investments with social value as well as a reasonable financial return might be interested in these remarks.

Paul Moon, Millfield County Primary School Head Teacher 

How I teach

Fitted about six months ago, our school’s solar panels are already having a wide-ranging educational impact on several aspects of the curriculum, including science, maths and geography. Solar is a practical and local way into a complex range of inputs with an output at the end of its cycle.

There were learning messages from the start including: is this offer best value? In assemblies, we explained in age-appropriate ways how solar energy works and its benefits. For example, as an Silver Eco School, generating our own electricity could help us get to Gold. 

I first heard about the Sunny Staffordshire Schools project from Staffordshire County Council’s sustainability team: funded by in part by community shares, Generation Community was offering solar panels for 25 schools, gratis. We were selected as a pilot, and the solar panels were installed over half-term in October 2013.

We wanted the children to see the practical benefits, and our site supervisor suggested using the ITC suite as the focus. With 32 computers and air conditioning, it is the single most intense user of energy. 

We use known ways of scientific change, such as the water cycle, to show how solar works. Every time a child switches on a computer, they get a physical indication of how they are powering their own ITC suite with electricity generated from the sun.

We deliberately sited the visual display panel in the main corridor at a user-friendly height for the children. They are surprised to see the panel working even on a dull day. This leads to an exploration around the science of heat, light, greenhouse gases and atmosphere. Although the depth of understanding varies with age, the children understand we are reducing greenhouse gases whilst also saving money.

The solar panels also lead us to explore maths and economics. We generate more than we need for our ITC suite, and sell the surplus into the national grid. The solar panels feature in our school’s enterprise project - we are now energy producers, traders and sellers. We can calculate how much electricity is generated, used, and how much is left to trade. 

Since the panels were fitted, our electricity usage has gone down, but the price per kwh has gone up in some cases. This leads to: what makes a fair measurement? We have generated almost 3,000 units from sunlight, and can start plotting graphs over a set period. We are constantly refining the way the panels can be used educationally.

Already the solar panels meet several national curriculum objectives. In history, we can investigate Staffordshire’s former coal mines and explore our growing use of nuclear power and imported gas. In geography, we can look at where electricity is stored, how it travels, and where the surplus goes. This gets us into surges in demand for electricity peaks and flows, and different seasonal and activity uses.

Children are very interested in green issues; for instance younger ones are aware of the benefits of recycling. Key Stage 2 children are increasingly knowledgeable about the need to carefully manage the world’s finite resource, realising how important it is to look after what we have and to invest in new technologies for the future. 

More half-truths from REF

The Renewable Energy Foundation, an anti-wind body, has complained again about payments made to wind farms when the National Grid is facing an inability to ensure that all wind electricity can be used. In March 2014, the Grid made payments of about £8.7m to wind operators. REF portrays this as part of a ‘steadily increasing trend’.

It may be useful to throw some extra facts into the ring.

a)      During March 2014, wind supplied about 2 TWh of the UK’s total need for electricity. The percentage of total wind output that was not used was about 5%. This was a high figure for the UK: for the first quarter of 2014 as a whole, the figure is about 1.2%. January and February saw constraint payments for wind output of approximately 0.5% of the electricity generated.

b)      There is no ‘steadily increasing trend’ over time. March was relatively high, February very low. (And February’s wind power output was one of the highest ever monthly figures). In the four most recent six month periods recorded by the National Grid, the percentages have been 1.4%, 2.1%,0.9% and 0.3%. (These figures are from April 2011 to March 2013).

c)       REF complains about industry behaviour, saying it charges too much money for agreeing to curtail output. The average charge was about £80 per MWh in March, well down on typical figures for previous years. And REF may not be aware that National Grid payments for curtailment are usually the outcome of auctions. The price isn’t set by the wind farm operators.

d)      Lastly, REF ignores the real problem, which isn’t the wickedness of farm operators or the fickleness of the wind. It’s the lack of reinforcement on the pylon lines from NW Scotland. But by late 2015 the improved line from Beauly to Denny will remove much of the constraint on wind farm output in northern Scotland. In the meantime, probably including last month, the continuing construction work on the line (which already carries electricity), means that more curtailment than usual needs to take place.

As always, the UK is coping well with the variable nature of wind power and curtailment costs add very little to the average bill. My estimate is that wind curtailment has cost a domestic customer about 25p a year.

Ofgem hands the chalice to the Competition and Markets Authority

Ofgem has asked the Competition and Markets Authority (CMA) to review the workings of the UK energy market. As a result, we’re now in for three to six years of investigations, draft decisions and endless appeals. The energy firms will spend £10m a year on City lawyers contesting every single paragraph that the CMA produces and little will eventually change. Regulatory processes in the UK stink. Let’s look on the bright side. The document setting out the reasons for Ofgem decision is really clear, well-written and comprehensive. But it’s 120 pages long. So here are some of the most striking factoids that back up Ofgem's conclusion that the Big Six aren't competing effectively in supplying domestic customers.

In summary, Ofgem said that it had evidence of four different problems with the working of competition

a) For some customers, including those in vulnerable groups, the individual companies had the power to hold prices too high, particularly in the regions of the country in which they used to be the local electricity monopolist

b) Many features of the market make it possible for the Big Six to 'coordinate' their price changes. This has allowed the companies to increase prices more than would normally be possible in a truly competitive market. This problem, Ofgem alleges, is getting worse as the amount of switching between suppliers falls. Prices rise faster than they come down in response to changes in costs. No illegality is suggested: 'coordination' is not outside the law if it is done without any form of direct communication between companies. Ofcom is at pains to say it has found no evidence of any form of illegal price rigging.)

c) Although smaller entrants have made headway in the last year, they don't threaten the dominance of the big companies. This dominance is exacerbated by several features of the electricity market, including the relatively small amounts of electricity trading and by the 'self-supply' of the vertically integrated Big Six.

d) The growing discontent with the electricity and gas companies is causing consumers to disengage from switching between suppliers or actively looking for better deals. This is bad for competition.

Background

1. Average dual fuel prices increased by 24% between 2009 and 2013 compared to a 14% rise in the CPI. Average energy use per home has fallen, meaning that expenditure on electricity and gas has only risen slightly faster than inflation. (1.1 and 1.2)
2. The cost of wholesale gas and electricity used to service the average dual fuel customer fell by 5% between 2009 and 2012. (Figure 1)
3. The total earnings (EBIT) of the Big Six, including profits from generation, supply to businesses and supply to homes, rose from £3.1bn in 2009 to £3.7bn in 2012. Generation profits fell, as did business supply.
4. Profits made from domestic customers more than compensated for this rise by increasing five fold from £233m to £1,190m over the four year period.(Figure 2)
5. Overall, the generation businesses of the Big Six just about covered their costs of capital. (6.79)
6. At the level of the individual customer, the average retail margin before operating costs to a Big Six supplier from a dual fuel account approached £300 in 2013 having been almost nothing at the end of 2005. (Figure 36). This is in addition to generation profits, of course.
7. Margins for domestic electricity fell from 2009 to 2012 from 2.2% to 1.8%. Gas supply margins rose sharply from -0.3% to 6.7% over the period. (1.6)
8. Some suppliers contend that an overall 5% return from domestic customers is a ‘fair’ margin. Ofcom found no evidence to support this. (1.8)

Evidence for suppliers having the power to charge more in regions where they are in a strong position (‘unilateral power’)

1. Market shares for incumbent electricity suppliers (companies that used to have regional monopolies before privatisation) are materially higher in their home regions. Centrica, which had a nationwide monopoly of gas supply still has a 40% share of domestic gas sales. (1.10) 37% of electricity customers are with their incumbent suppliers (4.5)
2. On average, 48% of the customer base of a Big Six electricity supplier is in its home (incumbent) region. (4.18). For single fuel electricity customers this number is even higher at 69% (4.20)
3. Incumbent customers generally switch less (4.5) The figure is about a quarter of the level of non-incumbent customers (Figure 23). This gives the suppliers the ability to force up prices disproportionately in their home regions. (So called ‘unilateral’ power)
4. ‘Suppliers are able to segment their customer base, and charge different groups of customers different prices for what is essentially the same product’. Non-switching, or ‘sticky’ customers pay more partly because they tend to be on single fuel tariffs.
5. On average, single fuel incumbent customers pay £40 a year more than if they shopped around for electricity or gas from another supplier.
6. Crucially, therefore, Ofgem finds ‘these price differentials to be consistent with suppliers having a degree of unilateral power’. (4.29)
7. New, non-Big Six, suppliers now have over 5% of both the gas and the electricity markets up over 2 percentage points since early 2013. However ‘it is unclear that any existing supplier will achieve sufficient scale in the near term to act as a disruptive constraint’. (1.11)

The Big Six are tending to converge and ‘tacitly coordinate’ their price changes.

1. Switching rates have shown a strongly falling trend since 2008, despite persistent price differentials. (1.12). The rates of switching among the Big Six are tending to converge. (4.55). Retail margins are also tending to converge. (4.57). Taken together, this evidence is consistent with ‘tacit collusion’, a legal form of diminishing competition and a second reason, after ‘unilateral’ power why the market seems not be to working well.
2. Average retail prices among the Big Six are increasingly tracking each other. (Figures 31 and 32). This is also a feature of a market with tacit collusion or coordination.
3. Price changes have become more similar in size over time among different suppliers (4.68).
4. These features of the market push Ofgem to say that the evidence suggests that tacit collusion may be becoming more effective over time (4.62)
5. Ofgem thinks that the evidence for tacit collusion is reasonably strong. The large suppliers announce price changes around the same time and of a similar magnitude. Profitability of domestic supply has risen for all large suppliers and supply margins have converged.
6. The intensity of competition for domestic customers is falling. (4.11)

Prices go up faster than they come down

1. Large suppliers raise prices rapidly when costs are increasing, and cut them slowly when costs are falling. (1.28)
2. More specifically, ‘we found that suppliers do not adjust their prices as quickly when costs come fall compared to when wholesale costs rise. We ran this analysis using a number of different model specifications all of which showed this asymmetry.’ (4.86)

Switching behaviour is increasingly ineffective at constraining the big suppliers.

1. 62% of customers could not recall ever having switched supplier. (1.13) Another 14-16% have only switched once. (3.17)
2. One in ten of all consumers are not aware that it is possible to switch supplier. (1.43) The DE social group figure is 21% and the number for ‘Black and Ethnic Minority Groups’ is 39% (3.8)
3. A 2013 survey suggested that 43% of customers do not trust energy companies to be open and transparent, up 4 points from 2012. Ofgen considers this to be ‘an extremely high figure’ for an essential service. (Para 1.16)
4. Ofgem says that the market is highly segmented. Many customers are non-switchers and this segment of the market faces persistently higher prices. At the other extreme, customers who manage their accounts online, pay by direct debit and buy fixed price deals do better. Because the new suppliers are obliged to focus on this segment, their profitability is inherently lower. (This last sentence is my inference from 1.17)
5. Ofgem says that competition for domestic customers isn’t working properly. It points to the existence of the persistently non-switching segment, who are systematically charged more and three other factors. These are ‘tacit coordination’, barriers to entry and expansion and weak customer pressure.   (1.20)
6. Typical single fuel customers would benefit by £100 by switching to the best priced single fuel tariff. But the average customer requires a saving of at least this amount before she/he thinks it is worthwhile.
7. Ofgem found a price difference of £250 between the average ‘incumbent’ single fuel tariffs and the best online dual fuel direct debit tariff offered by small suppliers (1.25)
8. 62% of people think there are too many tariffs available. 54% said that they understood their options ‘not very much’ or ‘not at all’. (1.44)
9. 26% of those switching in the year to April 2012 would not do so again. (1.45)
10. Only about 20% of customers are on fixed term tariffs. (2.11)
11. Customers are ‘bewildered’ and feel ‘disempowered’ by the choice of tariffs. (3.12) ‘If consumers cannot easily or effectively compare… products … this may allow firms to exercise market power (3.9)
12. Language experts hired by Ofgem concluded that a lack of clear communications and standardised language compounds the belief among consumers that the energy market is confusing. (3.14)
13. Switching rates are falling and switching behaviour is increasingly concentrated in a limited, better off subgroup. Vulnerable consumers are ‘disproportionately’ likely to never switch.

Vertical integration is harming competition by restraining new entrants

1. Vertical integration is a key feature of the UK market. The Big Six own 70% of electricity generation capacity. (1.36) This is double what it was in 2000 (5.58)
2. Vertical integration makes entry and expansion difficult, partly because it means that the wholesale market for electricity is not liquid and neither does it enable long-term hedging of prices (that is, new entrants find it difficult or expensive to buy in advance the electricity they need for future months and years).
3. Trading in the UK electricity market has fallen substantially in the last decade. The average unit of electricity was traded 7 times before delivery in 2002 and only 3 times in 2013. These later figure is much lower than in Germany, which has an even more concentrated retail supply market. (5.26, 5.27)
4. Furthermore new entrants are unable to fund the high capital requirements to become fully effective participants in the buying and selling of energy.
5. Ofgem concludes that it is ‘concerned that vertical integration may have a detrimental effect on competition by imposing barriers to entry and expansion and by reducing liquidity in the wholesale market’. (5.92)

Other findings pushing Ofgem into thinking a full competition investigation is required

1. Satisfaction with suppliers has gone down 12 percentage points to 52% in the last five years.
2. Customer complaints are rising, sharply in the case of some suppliers. Complaints are up 50% since 2011. (3.21)
3. 18% ‘completely distrusted’ energy suppliers in 2013, up from 13% in 2012. (3.22)
4. The numbers saying that they are not switching because they are happy with their current supplier was 55% in 2013 compared to 78% in the previous year. (Figure 14)
5. The time taken by industry participants to organise a switch of supplier is now five weeks though the suppliers have committed to cutting this by a half within a year. (3.44)
6. Ofgem says that some companies have looked at entering the energy supply business put have been put off by the risk to their wider reputations from being involved in an industry with severe customer relations problems.

The Ofgem document is a fine piece of work and a model of clarity and terse argument. Congratulations to the people who wrote it.

Cool Planet: the most plausible producer of cellulose-based fuels yet

 

Nature had a recent article on the poor health of advanced biofuels companies in the US. Entitled ‘Cellulosic  ethanol fights for life’, the author took particular aim at the new Abengoa refinery in Kansas that uses enzymes to break up the complex cellulose molecule into sugars that can then be fermented into ethanol.

The Abengoa plant was expensive to build, is one mile square in size and probably produces ethanol from cellulose at a cost that makes it uncompetitive with first generation corn ethanol plants. Nature may have been right to be gloomy about its prospects.

But this doesn’t mean that all the companies intending to make fuels from cellulose – the most abundant organic molecule in the world – suffer from similar problems. Actually, 2014 may see greater advances in the production of low-carbon biofuels than ever before. After nearly a decade of failure, it looks increasingly likely that cellulose will eventually become a useful source of transport fuels around the world. Although Abengoa may have built a refinery that embodies a technological dead-end, others such as the extraordinary Cool Planet, may show that low-value plant matter is capable of being turned into fuel that can compete on price with fossil fuels. And Cool Planet is also turning out large volumes of biochar as a by-product. I think this is one of the most interesting companies in the world.

Five years ago I published a book about the technologies that I thought would help the world wean itself off fossil fuels. Of course I was almost ridiculously optimistic (except about solar PV, where I was too conservative) and many of the low carbon energy sources I wrote – such as power from the flow of the tides - about have made strikingly slow progress.

Another one of the chapters was about using cellulose molecules to create motor fuels. I was at pains to distinguish cellulose-based petrol from the first generation biofuel plants that break down the simple starches in grain to make ethanol. As is now well understood, using foodstuffs to make fuel for cars is a terrible diversion of valuable calories. Moreover, the typical human needs about 2 kWh of food a day but her car might consume ten or twenty times this amount of energy. Turning maize or wheat into motor fuel can never be a real solution to the need for low-carbon travel.

But cellulose could be different, I suggested. It is everywhere. Leaves, grasses and stalks are largely made from it and it provides the soft structure for a plant’s energy capture and conversion systems. (Lignin is the dominant molecule in woody biomass). Cellulose is composed of long chains of strongly linked sugar molecules which cannot be broken down by humans. Some plant eating animals, such as cows, house useful bacteria in their stomachs that exude enzymes that can chop up cellulose into much simpler molecules. But the vast bulk of the world’s cellulose production is wasted, eventually rotting away and giving up carbon dioxide to the atmosphere.

Since I wrote the book in 2008 many companies have tried to find ways of breaking up cellulose from organic sources such as wood chip or maize stalks. Many have mimicked grass eating animals by using enzymes and applying gentle heat to break up these intractable molecules. Once they’ve got a soup of simpler chains of atoms using these enzymes they use fermentation to turn starches into ethanol (a product we usually call alcohol).  Most have failed, at considerable cost to their investors including the most important backer, Vinod Khosla. The last few weeks have seen KiOR, one of Khosla’s many investments and one of the few companies actually to build a working refinery, announce it wasn’t certain it could continue. Without more money from Khosla or co-investor Bill Gates, the company would run out of cash because its plant hasn’t been able to produce as much ethanol as it expected or the purity of fuel it needs.

So what’s different about Cool Planet and the other new companies working to get motor fuels out of biomass? The main change is that many of these companies are intending to use pyrolysis, the process of heating biomass in the absence of air, instead of breaking cellulose up using enzymes and then fermentation. When biomass is heated to several hundred degrees during pyrolysis, its molecules break up into simpler hydrocarbons which are then driven off in the form of gas. As they cool, these hydrocarbons become oily liquids, often called bio-oil. What remains at the end of pyrolysis, provided the temperature has been high enough, is a fairly pure carbon charcoal. Or ‘biochar’ to its growing band of enthusiastic followers.

Cool Planet’s patent documents show that the company’s approach is to slice wood or other biomass into very thin strips which then subjected to pyrolysis at higher and higher temperatures in separate chambers. It’s as though a wood chip is moved from a cool oven to increasingly hot ones over a short period. The rising temperatures in each sequential oven drive off a different gas in each case. This has the crucial advantage of ensuring that the Cool Planet biorefinery can capture a pure stream of gas that cools to a distinct oil at each point in the process. In this respect, it is similar to a conventional oil refinery, which distils various oils into different streams, with petrol usually being a key output alongside diesel and aviation fuel. This is presumably why it calls its central process 'fractionation'.

The Cool Planet approach has the crucial advantage of creating separate streams of oils. Older pyrolysis processes produce a mixture of various different oils and other chemicals that have relatively little value as motor fuels. Cool Planet’s trial refinery in California is said to produce oils, such as gasoline, that are chemically indistinguishable from fossil equivalents. One story told by the company is that tests by a sceptical oil company were only able to say it wasn’t a fossil fuel by the use of carbon dating. The cellulose was new, whereas oil is often hundreds of millions of years old.

It’s particularly important to note that Cool Planet and some of its recently formed competitors are seeking to produce a true drop-in replacement for petrol/gasoline. It fuels are chemically identical to what comes out of conventional oil refineries. They are not following the earlier cellulose processors in trying to make ethanol, which is a fuel that can be added to fuel but which modern engines cannot usually accept in high concentrations. (Of course Henry Ford initially believed that plant-derived ethanol was a better fuel for cars but modern engines have been adapted to burn fossil fuels).

After experimenting with its prototype in California for several years, Cool Planet has just broken the ground for a full sized refinery in Louisiana. When I say ‘full-sized’, I mean a plant of perhaps a hundredth or less of the output of a conventional oil refinery. 200 million litres a year is the target production starting late in 2014. What will also come out is a huge amount of residual biochar, dwarfing the current world production of this valuable soil enhancer. Not unexpectedly, the company is trying to get rapid endorsement of the value of biochar in improving agricultural yields. (Earlier articles on this website talk enthusiastically about the potential usefulness of biochar, and another chapter of my 2008 book also lauds its importance, perhaps a little too uncritically).

All companies trying to convert biomass into useful oils bandy figures around about the low cost of cellulosic-based oils. Most have been absurdly optimistic. Nevertheless Cool Planet doesn’t hesitate to join in, offering estimates as low as 20p a litre, or about a third of current petrol prices excluding UK tax. Its biomass sources, initially intended to be trees from Colorado that have been destroyed by beetle infestations, are cheap but the crucial reason for its lower cost than first generation cellulose fuels is probably the relative simplicity of the refinery.

The value of the biochar – trading at up to £4 a kilo in small quantities on UK websites - will help improve the economics of the process, perhaps by a large amount. In some interviews, company executives seem more taken by the value of the char than they are of the oils. They also proudly boast of the carbon negative fuels that their refineries will produce; biochar lasts for hundreds of years in soil, this storing carbon that would otherwise have rotted into CO2 or methane.

Cool Planet envisages hundreds of small refineries around the US, gobbling up local biomass surpluses, whether of dead trees or otherwise useless agricultural wastes. The capital costs of the first Louisana refinery are around 25p per litre of annual output. Executives talk of cutting this in half within a few years. These are really impressive numbers, if true. Other investors in places like Malaysia are licencing the rights to the intellectual property in order to build their own refineries.

Is this all another fantasy, like so much of the renewable fuels experiment has proved to be? Of course I don’t know but something about this company looks profoundly convincing. Investors include Google, BP, the forward looking US electricity company NRG, GE and several other sceptical corporations. The team is strong and the detailed and meticulous research behind its refineries seems robust. The four key patents, although extremely widely drawn, have a simple plausibility about them. I think this will work.

Maize in anaerobic digesters: Is Monbiot right?

  George Monbiot points his critical attention to the increasing use of food crops in the UK’s anaerobic digesters (AD). These huge green cylinders, usually on farms, take organic matter, expose it to bugs that have excrete enzymes that eat cellulose and starch in the absence of air. The bugs produce a mixture of methane and carbon dioxide as an output. This ‘biogas’ that comes out of AD plants is burnt in an engine to produce electricity.

Many digesters use the human waste from water treatment plants or from animal slurry while others take waste from food factories or from doorstep collections. But increasing number of AD plants are using maize and other food crops because the simple starches in these ingredients break down very well, creating more cubic metres of  valuable methane gas than, for example, the more complex molecules in cow manure. Many UK AD plants – built to digest municipal waste, for example – are now boosting their yields by mixing in maize that would otherwise have been used as food for animals or people.

Does it make sense in energy terms to grow maize (or even wheat) as a feedstock for a digester? No. The energy value of the methane that is produced in an AD plant, converted into electricity via a gas engine, is about 0.4 megawatt hours per tonne. This is approximately a tenth as much as the calorific value of maize to a human being.

This isn’t the whole story, since the digestate left behind after the energy has been extracted in an AD plant does have some value as a replacement fertiliser when it is reapplied to the fields. Nevertheless, putting maize into an AD plant to make energy involves a huge loss of calorific value. And the climate change implications also need considering: as well as the energy used in the Haber Bosch process the high levels of nitrogen fertiliser used on maize land produce large amounts of nitrous oxide, a powerful warming gas.

Monbiot has also recently shown the other cost of growing maize for AD: land used for maize has low water retention capacity in winter. The recent floods on the Somerset  Levels were exacerbated by the large areas of adjacent land given over to maize. If, instead, these hectares had been planted with short rotation coppice, such as hazel or willow, more water would have been stored in the soil. And, second, the energy value of the harvested wood, converted into pellets for use in domestic wood burners would have been about twice as great as the energy captured from the same area given over to maize for anaerobic digestion.

There are no good arguments for using productive food land for maize that is then pumped into an AD plant. (AD plants may get more effective at conversion of cellulose in the future and this might affect the universality of this assertion).

My calculations are as follows. (Comments *very* welcome indeed).

Maize in AD

(Figures taken from Farmers’ Guardian and used by Monbiot in the other Guardian).

Raw material needed by an AD plant creating 1 MW of electricity	20,000 tonnes of maize a year*
Annual electricity production from a 1 MW plant operating 8,000 hours a year	8,000 megawatt hours a year
Therefore, electricity output per tonne of maize	0.4 megawatt hours
Calorific value of maize in human diet per tonne	About 4 megawatt hours
Food value compared to electricity production value	Therefore maize’s food value is about 10 times its value in an AD plant

*Farmers’ Guardian says ’20,000-25,000 tonnes’ needed

Maize versus short rotation coppice

Energy value of electricity per hectare generated by maize in AD plant	17.8 MWh**
Tonnes of SRC per hectare (oven dried equivalent)***	10 tonnes
Energy value of SRC per tonne	4.5 MWh
Efficiency if burnt in a biomass pellet stove in a domestic/small commercial property	80%
Usable energy value per hectare of SRC	36 MWh
Energy value of SRC versus maize digested in an AD plant	Therefore SRC (36 MWh) about twice as good as maize (17.8 MWh) per hectare

** Farmers’ Guardian says 450 hectares produces 20000 tonnes of maize that is enough to provide the fuel for a 1 MW plant (therefore about 8,000 MWh per year).

*** To get this yield requires good husbandry but would be perfectly possible on the Somerset Levels.

The Salford Energy House shows the precise benefit of solid wall insulation

The Salford Energy House is a remarkable laboratory. A reconstructed 1919 end-of-terrace dwelling, it sits within a completely insulated warehouse on the university campus . External temperatures can be precisely adjusted. Simulated rain falls from the ceiling onto the roof of the house. Wind is mimicked by giant fans. 400 measurements can be taken every minute. Researchers are able to make large and small changes to the house (such as opening or closing the curtains) and measure accurately what the impact is on energy consumption and internal temperatures. This is the only place in the world, I was told when I visited a couple of weeks ago, where the real impact of energy-saving measures can be exactly calculated.

Commercial companies can use the house for experiments. The building products company St Gobain recently released some details of the work it has carried out on the Salford house. Although the published data is very sketchy, the headlines suggest that external wall insulation can be much more effective than some other estimates would suggest. When St Gobain put insulation on the outside of the end of the house and the back wall and also added internal insulation on the front wall, it reduced heat loss by almost 50%, saving over £250 a year. This is about three times what the latest government data suggests. The reasons will include the care with which the St Gobain staff installed the insulation and the quality of the product.

About 7 million houses in the UK have solid walls, about a quarter of the total stock of homes. These houses were usually built before the mid-1920s, when cavity wall insulation became almost universal in single family dwellings. A typical Victorian terrace has brick walls, often only one brick thick. Such houses, still popular with their owners, are amongst the most energy inefficient in the Western world. Solid wall insulation – either on the outside of the brick or on the inside of the house is the most important improvement that can be made. Reducing the heat need in these homes (1/4 of the stock) by up to 50% by using solid wall insulation would cut UK carbon emissions from domestic heating by about 12%. This is not an overwhelming number but external wall insulation is one of the two or three most important individual energy improvements that the UK can make.

An earlier article on this web site looked at the results from the National Energy Efficiency Database (N-E-E-D). This database showed that the real world results from most energy efficiency measures were much less than other government sources predicted. For example, increasing the thickness of loft insulation had very little effect on actual energy consumption. The N-E-E-D results also suggested that solid wall insulation measures were not particularly effective. The average installation was shown to reduce its energy consumption by about 2,000 kWh a year, perhaps a sixth of the total heating bill.

So the Salford results are much better. In the laboratory, where St Gobain technicians could carefully fit insulation without fear of being rained on or being distracted in other ways, the savings seem to be about 6,000 kWh a year, three times the level suggested by N-E-E-D for real world houses.  The explanations for the difference are well known: the work will have been done more carefully and precisely in Salford, the materials will have been first-rate and – perhaps critically- the laboratory house was still run at the same temperature once the insulation was completed. (Better insulation sometimes seems to encourage the householder to turn up the thermostat, taking back some of the savings).

So the good news is that solid wall insulation can really make a difference to energy consumption. But this is balanced by the high cost of such measures. Even a small terraced house, such as the Salford lab, would face a bill of over £5,000 for good insulation, possibly much more. The annual return would therefore be less than 5% or so. This isn’t sufficient to incentivise most householders, although they would certainly benefit from a more comfortable and less draughty house. However government can borrow at much less than 5% so it may makes financial sense to think about a national programme of solid wall insulation.

What about the other measures that the St Gobain team undertook? Topping up loft insulation saved about £20 a year, underfloor insulation and better windows cut bills by about £35 for each measure. These are all quite small savings and its worth reiterating the point that the cash benefits wouldn’t justify taking out a Green Deal loan to finance the improvements. (Unlike the results for external wall insulation, the St Gobain figures for loft insulation are similar to the figures suggested by N-E-E-D for real homes).

We all like to think that energy efficiency improvements are financially sensible. These latest Salford results suggest that the reality is more complex: if you have savings mouldering in a close-to-zero interest bank account then improving the fabric of your home may make sense. But for new homeowners stretched by mortgage payments, insulation will not look financially attractive.

Total UK energy use fell by about 4% in 2013

  Today’s provisional energy consumption figures from DECC suggest a striking improvement in energy efficiency in 2013. The key ratio of primary energy use to UK GDP improved by about 4%. Expressed another way, energy consumption in 2013 fell by 2% as the economy grew by about 1.9%. This ratio has improved an average of 2.8% a year since 2000, suggesting that the rate of efficiency improvement may be increasing.

Whatever else the UK is doing wrong in energy policy, there’s little doubt that overall energy use is tending to fall quite sharply. Much of this improvement may be driven by rising energy prices. In recent years, the rise in wind power production has also helped; a turbine’s usable power is nearly as much the primary energy it produces but it takes about two units of input energy to make one unit of electricity from fossil fuel. This effect alone represented one percentage point of the decrease in total (‘primary’) energy use. Nevertheless if the UK returns to the average growth rates of pre-2007 of around 2-2.5% a year, total energy use seems likely to continue to fall.

Tesla announcing plan to become world's largest rechargeable battery manufacturer

Tesla isn’t just a car company producing the world’s best regarded electric vehicles. It’s also driving forward a network of very fast chargers (20 minutes or so) across the US and its other important markets such as Norway. And, lastly but most significantly, it is changing the economics of battery storage.

Nobody quite knows how far Tesla has pushed down the price of batteries but some commentators suggest that the business is already paying less than $250 a kWh for its lithium ion rechargeable packs. At this price, it might almost makes sense to use Tesla batteries to store domestic solar power. And, tagged on to the end of the annual letter to shareholders written last week, the company confirms that its ambition is indeed to provide electricity storage for solar PV installations as well for its cars.

Within the next few days Tesla will be announcing its plans for the world’s largest battery factory.  The gossip is that a site in New Mexico will be chosen for what Tesla founder Elon  Musk calls a ‘gigafactory’. This single site will be making about the half the world’s total supply of lithium ion batteries in three or four years’ time. Tesla will need more capital to finance this $2bn+ investment but the stock market and company shareholder Panasonic seem more than willing to stump up the cash.

The reason for the new factory is obvious.  Musk wants to sell half a million a year of his third generation of cars, probably starting in 2017. The big bottleneck is batteries. The world will buy about 2 billion phones this year, almost all with lithium ion batteries made to the same basic design as each Tesla’s 8,000 cells of stored electricity in its current cars. The table  below shows that Tesla’s need for batteries will exceed that of all the mobile phone manufacturers in the world. Even if you add in 100 million tablets and other electronic devices sold each year and Tesla still probably will need to double the world capacity to make lithium ion cells. Musk knows that without an enormous new factory, he’ll never get enough batteries.

Table 1

Phones

1800 million phones

times

0.01 kWh each of battery

equals

18 million kWh of batteries

Tesla

0.5 million Tesla cars a year

times

50 kWh battery pack in each

equals

25 million kWh of batteries

If he can push the cost of batteries down to $200/kWh by the latter part of the decade, the storage pack in a car with 50 kWh (perhaps 200 miles range) will cost about $10,000. Call that £8,000 at retail, but with a saving of perhaps £2,000 in fuel costs a year and the financial arguments for going electric begin to look strong. In a stroke of the marketing genius that characterises the company, charging the car at one of its 20 minute ‘superchargers’ is free. Add in the likely lower long run costs of maintaining an electric car, and Tesla’s highly impressive safety performance and the case for going electric begins to seem very persuasive by the last years of this decade.  Its aim to drive mass-market adoption of electric cars looks achievable.

Tesla has had a wider ambition for some time. Once it has driven down the price of batteries far enough, it becomes sensible to use them to store electricity from small scale renewables. You won’t have to buy a car: small sized battery packs will sit in the garage sopping up excess power from the panels on the roof when the home wouldn’t otherwise use the electricity.

What would the economics look like for a householder in the UK with 4 kW of solar panels on the roof and a 5kWh battery pack, perhaps costing £1,000 installed?

Table 2

4kw of PV

produces

3,500 kWh  a year

of which

2,000 kWh spilled to grid per year

of which

1,000 kWh usefully stored in batteries for night use[1]

saving

14p per kWh

produces

£140 saving  a year

The returns aren’t great. Not many people will spend £1,000 on something only saving £140 a year. But Musk openly talks about getting battery costs down to $100 a kWh within a decade or so. At some point in the not-to-distant future domestic electricity storage using lithium ion batteries begins to look compelling, particularly if power prices continue their upward course.

Many start-ups around the world are focusing on battery technologies that don’t use lithium ion. But whatever the fundamental advantages of these approaches, they face the unpleasant prospect of having to compete with a Tesla’s enormous manufacturing scale and rapid growing experience of making cheaper and cheaper cells. Even if lithium ion isn’t the best approach, with Musk’s blessing it will probably destroy the chances of any competing technology getting successfully to market, at least in niches up to 1 MWh or so.

---

[1] A 5 kWh battery will not be able to handle the surplus power from a 4 kW array in high summer so only part of the electricity produced by the PV and not used by the house will be storable. Second, many households have relatively low nighttime power use at times when the sun is strongest. It may be that the battery will not be discharged overnight at such times.

As they age, wind turbines generate about 1.6% less power each year

All machines get less efficient as they grow older. Wind turbines are no exception to the rule. A new study shows that a turbine has an average ‘capacity factor’ of 28.5% when new and this falls to about 21% in the nineteenth year of its life. (1) This finding implies shows that the average wind farm loses just less than 1.6% of its expected output for each year that passes. Over a twenty year working life, a turbine will therefore produce about 12% less electricity than predicted by the manufacturers. Some of this decline is due to the turbine being out of action and awaiting maintenance more frequently later in its life. Another reason is simple wear and tear. These results are very different to those obtained by Gordon Hughes and published in late 2012. Hughes said that the rate of decline was very much faster, calculating that typical output of a wind farm halved by the fifteenth year, implying a rate of decline three times the speed of the new study. Hughes didn’t use estimates of actual wind speeds and experts such as DECC Chief Scientist Professor David MacKay have strongly criticised the statistical techniques he employed.

Iain Staffell and Richard Green of Imperial College Business School have produced an elegant and clear paper that is accessible to non-technical readers. Their most significant advance over the work of Gordon Hughes is that they incorporate estimates of the hourly wind speed at each of the several hundred UK wind farms. Since we know how much each type of wind turbine should produce at different wind speeds, Staffell and Green were able to calculate whether the performance deteriorated at time. If a turbine aged ten years produces 15% less power at a specific wind speed than it did when it was new, we can use this figure, along with many thousands more from that turbine, to calculate its rate of degradation.

Staffell and Green show that the 1.6% annual rate of output decline is fairly consistent among turbines of different vintages, and across the UK’s many wind farms, although they do suggest that the newest turbines may be performing better than predicted. Perhaps this latter finding is because of better maintenance in the first years of their lives when manufacturers offer performance guarantees. It’s also important to note that their findings are compatible with the real-life experience of wind farm operators, who were amazed at Hughes’ estimates of performance fall-off.

The wind speed estimates that Staffell and Green use aren’t perfect. Although each large wind turbine in the UK has an anemometer on its nacelle that measures and records wind data, this information isn’t made public. Staffell and Green were therefore forced to use a huge NASA database of wind speeds at low heights above the ground taken from weather stations, balloons, aircraft, ships, buoys and satellites. The resolution of this data is only down to squares of about 50km by 50km. However when the researchers looked at how well the NASA data predicted wind power output across the UK’s wind farms they found a very good fit. Their simulations of wind speeds in 50*50 km squares seem to give excellent predictions of power output from wind turbines inside those areas.

Gordon Hughes’ highly controversial 2012 study didn’t use wind speed data at all. In fact his model allowed wind speeds to rise across the last twenty years and used this increase as an input into the model. (Actually, if anything, UK wind speeds have tended to fall over the last couple of decades - at least until the last three months - so this was a very strange technique to use). The reason his research showed much higher rates of performance degradation is therefore that old wind farms, such as Delabole in Cornwall, appear in his model to be losing power because their output has stayed relatively flat, rather than rising with the higher assumed wind speeds in Hughes’ computer model. Hughes defends his approach by saying that it produces the best statistical fit. Critics have commented that any computer simulation that plugs in an assumed rise in national wind speeds that has not actually occurred is clearly inadequate.

Staffell and Green’s detailed analysis shows that turbine performance takes a dive in the last year or so before ‘repowering’, or the replacement of an old machine with a newer, and often much bigger, version. This is also consistent with the real world experience of wind farm owners who reduce maintenance as the wind turbines approach the point of being taken down. It’s far cheaper to repair old machines on the ground prior to reselling them into the second hand market.

The implications of this new study are important. Surprisingly, the financial models used by investors to plan wind farms seem to generally exclude any figure for performance degradation. The loss of power output in later years raises the cost of electricity derived from the turbines. The increment is small – no more than 9% - but it needs to be factored into the calculations about the true cost of wind power.

This isn’t necessarily a comfortable finding to financial people who had assumed that wind turbines had no perceptible performance decline. But Staffell and Green’s comprehensive and lucid work will for the first time provide the industry – and society at large – with proper estimates of the lifetime power output of a wind farm. And, as Gordon Hughes originally suggested, it will mean that a bigger than expected fleet of wind turbines will be needed to provide the UK’s desired electricity output from this source. If the UK does achieve 30 GW of wind power by 2020 - an increasingly unlikely target as offshore operators rapidly retreat from their projects - this will mean installing an extra 435 MW a year, or four large new farms, to counteract the ageing of the fleet.

(1) A turbine's capacity factor is its actual output as a percentage of its maximum yearly production if the wind were to be blowing strongly all the time.

A cheap and effective form of house insulation?

Sally Philips, the inventor of the Chimney Sheep (www.chimneysweep.co.uk), sent me the following email over the weekend. I think that Sally's story clearly illustrates the challenges that energy efficiency entrepreneurs face. Although her product offers savings that match other improvements, such as better loft insulation, entrepreneurs like her face difficult obstacles in getting their product accepted by regulatory bodies. Products that improve air tightness are vital additions to the armoury of energy efficiency inventions but never get the attention that they deserve. (Her letter is reprinted with her permission). ***

Hi Chris,

I was interested to read the Guardian article recently ('The energy efficiency 'savings' that are just hot air') that referred to your blog.

I have developed a draught excluder for chimneys made of felted sheep wool. We lose about 4% of our household heat up redundant chimney flues. About two thirds of the UK housing stock was constructed pre-1970’s before central heating was installed as standard, meaning millions of UK homes have open chimneys, many of them with several. Plugging the gap with a Chimney Sheep saves about £64 per year, according to recent research conducted by the University of Liverpool:

http://www.chimneysheep.co.uk/pdf/University_of_Liverpool_efficacy_report_September_2013.pdf

I don’t know why the issue of heat loss up chimneys is completely ignored by the industry, by DECC, by EST…nobody takes it seriously but it is a problem that affects a significant number of homes and is so readily resolved.

I actually won a Green Economy Award in a category that was sponsored by DECC but nothing has happened as a consequence.

BRE estimate that 40 cubic metres of air is drawn up an open chimney flue per hour. I asked them to look at my product as the first step to getting it approved by OFGEM to be used as an ECO product. They calculated its performance in SAP, then told me that SAP assumes a closed flue is still 50% open to allow for ventilation. This isn’t a building regulations requirement so I don’t know how they can still use that calculation but they have and are now charging £5K for a report that shows that the product is half efficient!

HMRC said they would be happy to add my product to the list of insulation / draught exclusion products that are eligible for 5% VAT rate but I would have to get the law changed first. I met my MP who wrote a few letters to people who haven’t written back.

To be a member of the National Insulation Association I need a test that costs £15K.

To be listed among the products that are eligible to be used for ECO measures I need a different test that costs £15K. To be endorsed by EST I need another test that costs £5K

I’m not getting in touch just to have a moan, but I thought you might be interested to know just how hard it is to get the issue of chimney insulation noticed or taken seriously, when such a tremendous lot of heat is wasted up chimneys and it is so easy to prevent.

Yours sincerely

Sally Phillips

Chimney Sheep Ltd

19K Solway Industrial Estate

Maryport

Cumbria

CA15 8NF

Web: www.chimneysheep.co.uk

Phone: 01900 825019

Facebook www.facebook.com/chimneysheep

Green Deal promises break laws of physics

I’m not sure that the Green Deal needs any more kicking than it is getting at the moment. But, as one illustration of why I want it buried quickly, here are four sentences from the recommendations produced in the Green Deal assessment for my house in August of last year.  

‘Based on this assessment, your home currently produces approximately 1.7 tonnes of carbon dioxide a year.... Adopting the recommendations in this report can reduce emissions and protect the environment. If you were to install these recommendations, you could reduce this amount by 2.1 tonnes per year. You could reduce emissions even more by switching to renewable energy sources’.

In other words, the very nice assessor was promising me the very first carbon negative house in the world, without even using renewable energy. A world first and all by simply installing a bit more insulation! I think I am right in saying that this would break the laws of thermodynamics. That, and the several dozen other errors in the software that drives the Green Deal process, mean that people are systematically being offered inaccurate, expensive and utterly confusing advice in their assessments.

Actual energy savings from efficiency measures only half what is officially claimed

(This article provided some of the data for the Guardian's article on energy efficiency on 18.01.14. I have put it at the top of this web site in order to make it easy to find. Chris Goodall)  

Research published by DECC last month showed that home insulation measures deliver half the savings that are claimed. A study of homeowners installing a package of cavity and loft insulation and a new boiler in 2010 indicated a 19% reduction in energy use, and a likely saving of about £140 at current gas prices. The government’s Energy Saving Trust claims savings from these measures of twice this amount. The smaller than expected reductions in energy use mean that the typical UK householder will lose hundreds of pounds a year from taking out a Green Deal loan.

The research

The DECC study is part of a long running research project to track energy use in British homes. Actual gas and electricity use is logged for a large sample of households. Homes installing energy efficiency measures under government schemes can be compared to a control group of houses with initially identical gas and electricity consumption.

The results released on 21^st November tracked those homes that had cavity wall insulation, loft insulation or a new boiler installed in 2010. The numbers showed the reductions in energy use in 2011 in these houses. Energy use in UK houses is tending to fall so the DECC survey  estimates the extra reduction in gas bills arising from the energy efficiency measures compared to the control group average.

The results

The table below gives DECC’s estimate of the cut in energy consumption arising from the individual reduction measures

Measure	Percentage reduction in gas use	Estimate of kilowatt hours of gas saved
New boiler	9.2%	1,800 kWh
Cavity wall insulation	7.8%	1,400 kWh
Loft insulation	1.7%	400 kWh

Notes:

a)       Loft measures include full insulation where the house had none laid and also ‘top-up’ measures to take the depth to 270mm.

b)       The homes having, for example, new boilers would have had a different control group to the cavity wall houses. So the baseline energy consumption may well be different.

c)        The average (mean) gas consumption across all the houses in DECC database was 14,100 kWh in 2011.

d)       By coincidence, those homes installing all three measures together achieved a saving of 19.0%, almost exactly the same as the individual elements combined.

At today’s gas prices, what are these savings worth? (I have used the lowest Big Six energy company costs of 3.874p per kWh for an address in Oxford). And what does the government’s Energy Saving Trust say that the measures should save a householder?

Measure	Annual value of savings	EST estimate of savings
New boiler	£69.73	‘£105 to £310’ depending on the age of the replaced boiler
Cavity wall insulation	£54.24	‘up to £140’
Loft insulation	£15.50	‘up to £180’ when loft had no insulation otherwise ‘£25’.

The DECC survey also looks at homes that had all three measures installed in the same year. The typical saving was 3,600 kWh, producing a saving in 2013 prices of £139.46. This compares with the EST’s headline saving estimate of £270, almost as twice as much as actually achieved. (I have used the EST’s figure of ‘up to £140’ for cavity wall insulation.

What would this package of measures cost today? The EST web site gives a minimum figure of £3,050. In other words, the typical return to energy efficiency investment is less than 5% per annum. (£139.46/£3,050) It may still make sense financially in these times of low interest rates on savings but the benefits are not large in cash terms.

The DECC study also shows that many households saw an increase, not a decrease, in their gas consumption after installing cavity wall insulation. The report doesn’t provide a number but a chart (Figure 3.3) suggests that perhaps 40% of homes with new insulation experienced increased bills compared to the control group. This may be because the insulation was installed badly - a depressingly common phenomenon - or because the occupants decided to heat their house to a higher temperature as a result of the better insulation.

The implications for the Green Deal, the government’s main energy efficiency policy, are very troubling indeed. Unsurprisingly, the DECC statistical report doesn’t make this clear.  The Green Deal arranges for householders to get loans to improve their properties. The interest is charged at commercial rates and repayment is made through the electricity bill.

According to the EST figures, the typical householder installing loft and cavity insulation and a new boiler would need to take out a loan of about £3,050 to pay for the measures. At an interest rate of 8% and repayment over 20 years, the annual addition to the electricity bill would be £342.87, compared to the average savings on the gas bill of £139.46. In other words, a family taking out Green Deal finance would be over £200 a year worse off as a result of doing what the government suggests and improving the energy efficiency of their home.

Outside government, everybody knows the Green Deal is a disaster. The scheme is excessively complicated, over-bureaucratic and expensive. The initial assessments for the programme use software that is misleading, and often simply wrong, in its estimates of cost savings from energy efficiency. (I know; I had one done on my house).

More generally, I want to ask this question. If the research arm of DECC knows the true figure for the likely cost savings from energy efficiency  measures, why are other parts of government continuing to promulgate much larger figures in order to get householders to take out Green Deals? When is DECC going to get sued for not telling people trying their best to save money that the Green Deal will typically cost families hundreds of pounds a year?

Power to the people: Islay looks set for a hugely successful community turbine

Local investors have put over £150,000 into the Islay community wind turbine in the first 48 hours of a share offer.  Islay, an island off the west coast of southern Scotland, looks set to join nearby Tiree, Gigha and Westray in the growing list of areas developing, funding and owning their own energy resources and using the financial surplus to reduce energy consumption in their homes and community buildings.

Islay is one of the windiest places in the UK. A commercially owned turbine on the island would make a very decent return. In this case, however, the community has decided to hold the interest paid to individual investors at 4% and will hand the remaining profits to a fund to improve local energy efficiency and relieve fuel poverty. The illustrations in the fundraising prospectus show about £80,000 a year flowing to these causes. Among many other advantages, this has ensured very wide support for the turbine. A 2011 survey suggested 92% of the island’s residents were in favour of the project.

The Islay cooperative (strictly speaking an ‘industrial and provident society for the benefit of the community’) is promised loans and other support from the Scottish government and other institutions if it fails to raise its target of around £750,000 investment from individuals. But if the cash keeps on flowing in at the rate of the first 48 hours it won’t need the money. The total cost of the project to install the Enercon 330kW turbine is around £1.25 million, a high figure inflated by the substantial costs to reinforce the electricity grid.

The output of the turbine will be about 1,000 MWh a year, enough to cover the needs of about 300 homes, or about a fifth of local domestic needs. In addition, of course, the local whisky distilleries need power, which is partly provided by anaerobic digestion plants on the island.

Speaking personally, I find Islay’s success hugely cheering. Although it should be acknowledged that getting to £150,000 outside investment is made relatively easy by the generous tax reliefs available to the first investors in the project, the degree of enthusiasm for this project is striking. Like the Osney hydro installation on the Thames, Islay shows that a well-planned scheme led by local people and with robust philanthropic intent can raise money at 4% (plus some benefit from tax relief) and still devote the bulk of its return to improving the lives of a wide spectrum of the community. We need hundreds of thousands of schemes like this.

One response to my zeal for projects like this is to comment that they are only possible because of the generosity of feed-in tariffs. And these feed-in tariffs are (slightly) inflating the bills of everybody else. It’s true that medium sized wind turbines on windy sites can make high returns with the subsidies currently available. However the really interesting thing is that individual investors are prepared to take a far lower return from community energy projects than is required by commercial operators.  People are happy with 4% interest; companies need 10% or more. In the long run, the switch to local ownership will reduce the bills paid by everybody because of what finance people call a lower ‘cost of capital’ for energy projects owned by individuals, not corporations. Perhaps as importantly, the Islay people will target the surplus money far more efficiently towards genuinely worthwhile local energy-saving projects. We’ll see far lower costs to reduce fuel poverty if the money is generated and allocated by local people than if it is done to meet the targets imposed on the Big Six.

The Germans in the unusual role of impractical dreamers

We Brits haven’t properly understood the scale of the German Energiewende, or energy transition. A recent seminar at Germany’s Environment Agency (Umwelt Bundesamt or UBA) assessed whether the country could stop using fossil fuels entirely by 2050 and concluded it is technically feasible to produce all the country’s energy (and not just electricity) from renewable sources without using biomass, nuclear or carbon capture. This would mean generating about 3,000 terawatt hours (TWh) of renewable electricity and converting most of this into methane (Power to Gas) or methanol/butanol (Power to Liquid).  This is six times current electricity generation from all sources. And it assumes a 50% reduction in Germany's total energy use. Are they mad? I think they probably are. But Germany society is strongly behind the Energiewende and we shouldn’t underestimate the ability of a determined, resourceful and technologically sophisticated country to achieve almost unimaginable growth in renewable energy. What looks to us like impractical dreaming may eventually work. 

Looked at as a multiple of existing low carbon generation, the target numbers are even more startling. In 2013, German wind produced 47 TWh and solar 30 TWh. Hydro added a further 15 TWh. In total, these renewable sources provided 92 TWh, or about 3% of what the Agency says will be needed to decarbonise the economy in 2050. Large scale expansion of hydro power is not an option. So wind and solar will have to be expanded about 40 fold to cover all the country’s energy needs.

It should be said that the UBA seminar papers avoided any detailed discussion of how the country will grow PV and wind to meet the huge need for electricity at mid-century. A 40 fold expansion of PV would mean that over half of German grassland would carry photovoltaic panels but nobody mentioned this. Of course some energy can be imported, but since most other countries in Europe will attempting their own form of Energiewende there won’t be much surplus to go around.

The nature of the ambition.

The UBA seems to have decided that a low-carbon future critically depends on using electricity to completely replace gas and motor fuels. Whereas the UK talks of converting to electric cars and using electric heat pumps to provide home heating, Germany is committing to using power as the raw material for renewable methane and for renewable liquid fuels. (Older articles on this web site have looked at the reasons why the natural gas grid is the only conceivable way of storing surplus electricity generated on very windy days).

One paper at the symposium examined the relative storage capacities of the existing electricity system in Germany (this is almost entirely hydro-electric power schemes that pump water uphill when the grid is in surplus and then let it flow down again at times of shortage) and compared it with gas and oil storage networks.

The argument is compelling: large scale seasonal storage of electricity can only be achieved by converting power into gas, through electrolysis and methanation, or into methanol/butanol using similar processes. Whatever advances we can possibly expect in batteries or other conventional technologies won't provide more than a tiny fraction of the energy storage we will need. Complete decarbonisation, the UBA seems to be saying, will need huge investment in today’s nascent power to gas and power to liquids technologies.

The graphic below makes repeated appearance in the symposium papers.

To replace all carbon fuels with renewable electricity, much of it converted to other energy carriers, necessarily involves large conversion losses. Turning surplus power into methane, and then burning it a gas-fired power station to regenerate electricity, recreates less than a third of the original energy. But if an advanced society, such as Germany or the UK, really wants to decarbonise, there really is very little choice. We have to accept the wastage of energy entailed because intermittent renewables will otherwise need huge backup from fossil fuels.

The scale of what is envisaged

The seminar saw estimates of the amount of primary energy needed to create the fuels a modern economy requires. The table below gives the figures.

	Primary energy needed	Final energy created from this
Electricity	550 TWh	460 TWh (1)
Gas	1110 TWh	300 TWh
Liquid fuels	1280 TWh	520 TWh

 (1)      For electricity, the difference between primary and final energy arises from grid losses and from the losses in pumped hydro and in using some electricity for making methane, prior to conversion back to electricity.

The Germans are saying no to nuclear, but also to CCS and biomass. In one paper from a UBA employee, CCS is called ‘unsustainable’, an attitude remarkably at variance with the UK position. Biofuels of all forms are rejected for similar reasons. So all energy (not just electricity) comes from renewables in 2050 and the UBA sees PV and wind as being the dominant source. The need is for almost 3,000 Terawatt hours of electricity to provide this.

Today Germany has 36 GW of PV, compared to around 3 in the UK. This technology 5.3% of total electricity production in 2013. Wind power supplied about 8% of all electricity need from 33 GW of turbines, about four times the UK’s capacity.

To supply just Germany’s current electricity demand, not the total energy need that the UBA suggests, would need a sevenfold increase in turbines and solar panels. This is not impossible, particularly if Germany successfully moves into offshore wind, which is currently a negligible fraction of its wind capacity. But can Germany reasonably aim to then increase renewable electricity a further six fold to produce the power for methane and butanol production as well? I’m sceptical.

There’s one other important point. Whether or not Germany achieves the ambition of 100% renewable energy, avoiding biofuels and other questionable sources, it is now very focused on developing conversion technologies that turn large volumes of electricity into gas and liquid energy carriers. There is no discussion whatsoever of this in the UK. Time to start learning from the German focus on this critically important issue?

Reducing draughts: a national competition to show how much can be saved

The latest government data shows that draughts cause about 25% of all heat loss from the average house. That means that a quarter of the household gas bill is disappearing through such places as cracks in doors, holes around water pipes and the gaps around window frames. Reducing losses through ventilation is fiddly. It requires perseverance and care. Nevertheless, the savings can be large at a minimal cost. As the Green Deal unravels, we need a new national programme to improve house insulation standards: draught-proofing is the obvious target. The return on investment is likely to exceed all other energy saving initiatives.

Here is my proposal. I suggest a national competition, run by an institution such as the Building Research Establishment (BRE), challenging home insulation companies to reduce draughts in a number of pre-selected homes. It’s possible to accurately measure the draughts in a house before and after insulation and the winner would be the company that cut heat loss the most. It would be finicky, laborious work but it would demonstrate the value of careful draught-proofing. Perhaps each competitor would be given two working days per house and might be asked to work on five houses to prove their skills. Most amateur draught-proofing work isn’t particularly effective but shown the way we could all improve our appalling leaky homes.

In the government’s compendious and fascinating ‘Housing Energy Fact File’ has a table that estimates the actual heat losses from the components of a typical home. For every degree that the home is maintained above the external temperature, the house loses 287 watts of heat. So keeping the home at an average of 18 degrees when it’s -2 outside requires heating that provides about 5,740 watts, or 5.74 kilowatts.

The walls are most important drain of heat. About 32% of all heat leaves this way. What are called ‘ventilation’ losses are next at about 25%. This is 50% more than the windows and three times as much as the roof.

These figures are for the average house. For a home with good cavity insulation, the loss from draughts might actually exceed the loss through the external walls. To put a monetary value on this, let’s assume that the average house uses about 12,000 kWh of heating per year. 3,000 kWh of this needed to replace the heat lost through draughts, and this will cost around £120 at current prices. Saving a good fraction of this by better draught-proofing is cheaper, quicker, less disruptive and more fun than wall insulation or getting into the loft to roll out some another bale of fluffy mineral wool. It may be actually more effective as well: a previous article on this web site showed that major measures such as cavity wall insulation saved much less energy than predicted.

And, perhaps as importantly, reducing draughts around the house will improve perceived internal temperature. Draughts moving across the skin suck heat out of the body faster than still air does so a still house will seem to be a warmer house.

Current UK building regulations require a new house to lose less than 10 cubic metres of air per square metre of external surface area an hour at a standard pressure difference (50 pascals, if you want to know, which is an order of magnitude more than the normal gradient) between the inside and the outside. This will usually mean hundreds of cubic metres of expensively warmed air are being lost every hour. Put another way, all added together the average new house is said to have gaps the total size of a basketball. (I don’t have the data to back this comment up, by the way).

Everybody knows about the leaks that arise because the door doesn’t fit properly, or the windows that have a gap around the edge. It’s easy to deal with this with some cheap insulating tape bought from a DIY store. Applied carefully, this will make some difference. The real gaps are probably less visible. They occur where water or waste pipes go through walls, where light fittings meet the ceiling or skirting boards touch the floor. Filling these gaps is not difficult and nor does it require expensive materials. But it is time-consuming and requires punctilious care. The photograph below is from a Strome presentation on sources of heat losses in new UK houses. Finding and filling gaps like this is difficult work if it is to be done well.

This is presumably why home improvement programmes such as the Green Deal focus on expensive but standard suggestions such as changing the boiler or putting up solar panels.

None of us really know how to improve all aspects of draught proofing. Which of us has looked carefully behind the loo to see if there are gaps in the cement, or gone under the kitchen sink to see if hole through which the cold water comes into the house is sealed? These are where the biggest savings are likely to be.

I think we should have a competition to see who can improve houses by the largest amount. The competition can be documented and filmed. The winner would be the company or person that cut draughts the most (measured in the reduction in air leakage per hour). The competitors could use equipment such as infra-red thermometers or smoke pens. (A pen that issues smoke so that the observer can see where the draughts are).

We cannot predict what the savings are likely to be. Cavity wall insulation saves an average of 1,400 kWh a year, reducing bills by £56 or so. Really good draught-proofing might do better. But the cost might be a third or less. And the impact on perceived warmth might be greater.

Too many government energy efficiency initiatives are not backed by hard information about their true effectiveness. Air source heat pumps are a prime example. I believe a big national competition to crown the best draught-proofer, run by the Building Research Establishment over a long weekend, would attract attention, help build understanding and provide some real numbers about the benefits of careful plugging of leaks from domestic homes. As the Green Deal dies a death and takes the UK insulation industry with it, a new campaign to reduce heat losses might provide some much needed alternative employment.