Be afraid, be very…

Some time ago I posed the question as to whether ECO would come in under the dreaded  Treasury ‘Levy Cap’ arrangement, and might find itself, according to the rules, having to scrape out a presence within the £ 11.8 billion allocated to items within the cap up to the end of the current spending round in 2015.  Chris Huhne responded to my questioning about this with gnomic non-answers, and then announced the sums involved (£1.3 billion per year) with no further comment on levy caps. It will be a levy on energy companies but it hasn’t been capped.

So I was wrong then. Or so it seemed. Just as I was about to flagellate myself for my misguidedness, my eye fell upon page 137 of the Green Deal and ECO impact assessment (yes, I did read that far).

Here’s what it says.

‘The current energy company obligations (CERT and CESP) are classified as business regulations for statistical purposes.  We understand the Office of National Statistics (ONS) – who are responsible for issues of classification – are now considering whether there is a case for reclassifying CERT as a levy and thus an imputed tax. If the ONS were to decide to reclassify CERT, this would be very likely to set a precedent for the eventual classification of ECO…’

Aaargh! It was out there all the time, waiting to grab us just as we entered the  ‘business regulation’ waters again.  The only positive thing one can say about this (other than I was not entirely wrong in my suppositions) is that it may well take ONS such a long time to decide how to classify CERT  (three years ten months so far) that it (CERT that is, ONS is safe for the time being) may have been abolished by the time they actually get to sit down with their calculators, in which case it won’t actually be classified,  and therefore a precedent won’t be set. Yeah, right…

There’s inefficient, and then there’s really inefficient

The one hundred and six mostly Tory MPs who think wind power is a bad idea have had their day in the Sunday Telegraph, and new  Secretary of State Ed Davey has been robust in his defence of wind as part of a mixed renewable portfolio. It is, of course, local planning that these MPs are after, as well as subsidies, and rumours are that the Government is to produce guidance that ‘rebalances’ national and local planning considerations when it comes to the siting of onshore wind.

Rebalancing, that is, …er… the shredding of planning guidance by the Government down to just fifty odd pages, thereby, among other things giving national policy planning guidance a sharp tilt AWAY from local vetoes on planning.   The localising of planning demand is set out in an annex to the MPs letter not apparently published in the Sunday Telegraph and is well dissected  in a ‘mole’ piece in ‘the Week’.

But stick for a minute with the central letter.  ‘In these financially straightened times’ the MPs declare, ‘we think it is unwise to make consumers pay, through taxpayer subsidy for inefficient and intermittent energy production that typifies on-shore turbines.’

There are two points to think about here. One is dealt with very well by Damian Carrington in his Guardian Blog, who points out that the consequence of  these MPs wanting to  ‘spread the savings between other types of reliable renewable energy production’ could well mean energy being far more expensive since these other ‘reliable renewable’ generation devices produce electricity at far greater expense per kilowatt hour than does on-shore wind.

The other point has not to my knowledge been dealt with at all. This is that, on analysis, the confident assertion by our 106 antiwinders that consumers are paying for all this ‘inefficient and intermittent’ wind through the nose doesn’t look quite so clear. Not, that is, if you look at electricity production in the round, or at least enough in the round to take into account how efficient other forms of electricity production actually are by comparison with wind.

To make this calculation, you have to take into account the thermal efficiency of other forms of power   – that is the extent to which fuel that goes in is actually produced as electricity, and doesn’t just go up the chimney in hot air.  Then you have to look at how often the plant itself is not producing at all, because it is closed, or broken down, or is being maintained.  The resultant figure is the ‘effective energy delivery’ of the technology.

Hard to find out? Not really: it’s all there on Table 5.10 of the Digest of UK Energy  Statistics’ (DUKES) a fine publication that our antiwinders would be well advised to consult more often.

So, our starter. Wind, we can generally say, has about 25% ‘effective energy delivery’. It produces electricity to about 25% of its theoretical installed capacity, but when it does the fuel is free and none is wasted.

So it’s gas next up. Very efficient, one would think. But is it? Load factor of 60.6%, thermal efficiency  of 47.6%, so it slides in just ahead of wind with an ‘effective energy delivery’ of 29% (but not very low carbon).

Nuclear – that’s low carbon, isn’t it?. Runs all the time. Must be the winner. Well, no: load factor in 2010 of 59.4%. Thermal efficiency just 38.3% – down there  in third with ‘effective energy delivery’ of 22.75%.

And coal – well, it’s not only very high carbon, but very inefficient. Much more so than wind:  a 40.9% load factor and thermal efficiency of just 36%: A poor last with ‘effective energy delivery’ of only 14.7%.

I doubt whether these ‘facts’ will  stop any of the antiwinders or their allies going on about how hopelessly inefficient and unreliable wind is.  But it is a largely groundless prejudice, and ought to be recorded as such. I am indebted to Edward Hyams, former chairman of the Energy Saving Trust for pointing me at this: it should be more widely disseminated, I think.

When is a target not a target?

Talking of the Carbon Plan, (subtitled ‘delivering our low carbon future’) it is difficult to see how you can set out a plan and a proposal to deliver it without some targets along the way. And that is what the Carbon Plan effectively does, including targets for the insulation of cavity wall and solid wall housing. But really eagled eyed students of Hansard will have detected ministers fervently debunking the notion that there are or should be targets as far as Green Deal and ECO are concerned.  Here’s Greg Barker on the subject of targets during the committee stage of the recent Energy Bill:

‘Labour members, in their heart of hearts, yearn for a plan – a centrally organised government Plan like Warm Front. …That is not the Green Deal: that is not how it will work. Nor are targets the way it will work, because we have been down that road before and it ended in failure.’

And here’s Lord Marland, batting bravely for the Green Deal in response to a question asking him to estimate take up of Green deal over the next five years.

‘The Green Deal is a market based mechanism and take up will depend on the level of consumer demand.’

So no targets, then. But the authors of the Carbon Plan have, clearly, not taken these emphatic protestations into account: yes, they set out what looks suspiciously like… targets.  Here’s what the Carbon Plan (p33) has to say on Green Deal and ECO:

‘The Government’s current policy package will depend on the final design of the Green Deal and Energy company obligation in the light of public consultation. It is likely to result in all practicable cavity walls and lofts having been insulated by 2020, together with up to 1.5 million solid walls also being insulated’.

Looks a bit like targets, doesn’t it? But then we have to contend with the tricky business of the cold light of impact assessments, which must be published on policy proposals by law, and have to, more-or-less add up. You might remember that DECC had some trouble with the Feed in Tariff change impact assessment recently. Nasty, messy, but necessary. The impact assessment for Green Deal and ECO, unfortunately doesn’t really bear the Carbon Plan targets out: it does, on the one hand, predict a quite staggering amount of solid wall insulation (SWI) considering the funds available, and the limited amount of social housing SWI to practice on before we get onto the much less tractable private sector SWI.  But on the other hand it envisages a gap, and then a collapse in cavity wall insulation as CERT  and CESP (and that centrally planned Warm Front) come to an end, and Green Deal takes up the slack. Essentially, there will be, according to the impact assessment, a declining level of cavity walls insulated dipping from just over 100,000 in 2013 to well below that figure in 2021: and certainly well below the 170,000 ‘treatments’ per year that are pencilled in to make the Green Deal finance company figures stack up.

That, it could be argued, is because ‘all practicable cavity walls and lofts’ have been treated by 2020: but that is not so, if the English Housing Survey estimates of all types of cavity wall (conventional, narrow and non-traditional)  are taken into account. Indeed as a new report from the Association for Conservation of Energy makes clear, (‘Dead CERT’ January 2012) the demise of work on cavity wall insulation once CERT goes and Green Deal comes in will mean that ‘at such a rate, even the low cost cavities would not be insulated until almost 2040, with the more expensive cavities not filled until 2050.’

Those companies specialising in cavity wall and loft insulation, furthermore will probably have to adapt rapidly to solid wall insulation, or die.  The ACE report suggests the creation within Green Deal/ECO of a ‘son of CERT’, which could continue work on cavities, particularly narrow and unconventional types, by bringing them into an obligation, and hence into ECO’s funding envelope.

I guess it is, on reflection, little wonder that ministers have been so adamant about not having targets. They are indeed difficult to achieve, especially if the mechanism you introduce leaves a great big hole in the middle of them. Put money on ‘son of CERT’ is my advice.