So where does the sacred sum come from? It seems to have emerged from two sources, possibly connected: Ofgem’s ‘Project Discovery,’ in 2009, which modelled a number of scenarios for low carbon investment needs and came up with the  £200  billion figure for the most ambitious of their scenarios ‘green transition’. This assumed  rapid economic recovery, global agreement on climate change measures, and new nuclear and carbon capture measure operational by 2020, among other things.  Other scenarios modelled produced a much lower level of investment requirement. Ernst and Young, at the same time, produced  an estimate of £235 billion up to 2025 in their ‘Securing the UK’s energy future.’   This assumed among other things a huge increase in installed capacity  (about 122GW) well beyond even the (I think) inflated capacity projections of the Government National Planning documents and a corresponding hike in peak demand of about 15%, also belied by DECCs projections.  Both documents, incidentally assume a large amount of new nuclear online between 2020 and 2025, (Ernst and Young almost 13Gw up and running by 2023) which we know now  almost certainly won’t happen.

So as with all big numbers they are often not quite plucked out of the air, but rely on some occasionally heroic assumptions, which can be eroded fairly rapidly by the passage of time.  the assumptions  here are certainly  beginning to look rather rusty, and yet just as they do so, they seem to become more embedded in the narrative. I suppose that’s what happens when things go rusty: doors start to seize up and stick.

I don’t think for a moment that we will need to spend ‘between £200 and £300 billion on plant and infrastructure by 2025, even if we did have that sort of money lying about to invest: what I do know is that the investment requirement will be very substantial  – probably well above £100 billion, for example – and will need hard work to achieve. I’m not sure that this task is best served by hanging paradigms  marked ‘at least £200 billion’ over the entrance to the workplace. Time for some updated, and perhaps more guarded projections to be put on the table, I think.

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…

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.

‘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.

Last week I secured an adjournment debate in the House about ‘the potential for micro-CHP’. Not exactly the hottest of topics I know, and I’m not sure my soaring rhetoric calling for a ‘second boiler revolution’ exactly heated it up.

But, as I pointed out, the last ‘boiler revolution’ was pretty comprehensive as it turned out, and has probably been the single most effective change in domestic energy and emission saving over the last decade. The Government’s Carbon Plan has this to say about the process of changing the building regulations with effect in 2005 so that , by and large replacement boilers (of which there are about 1.5 million per year) should be more efficient condensing boilers. ‘Installation rates’  they say, ‘have increased to over 1.5 million a year [i.e. pretty much all new boilers]….which in turn has saved 4.1 mt of C02 alone. This has led to savings for many householders (approximately £95 off their energy bills for this year) and at least £800 million for the UK as a whole’.

‘The second boiler revolution’ could be just as spectacular, if we moved to a similar regulation mandating the installation of micro CHP boilers, which are now on the market, are reliable, heat your homes, provide hot water and generate about as much electricity per day in the winter as a 2.5 kw Solar PV installation does on a sunny day in the summer. Pretty compatible weather-wise, you might well think, as well. They still have a bit of a cost premium attached to them, but that will mostly be taken up by mass production. So a little support is needed, I suggested, and a little more than the 10.5 p currently allowed for under FITs, up to a pilot limit of 30,000 installations.

I received quite an positive reply from the minister.  He made some encouraging noises on FIT support, but understandably demurred on tackling Eric Pickles to persuade him to draft the changes next time the building regs come up for review.  That would be what we need next, and then you wouldn’t need any FIT  support at all. And Eric could prove us all wrong about his relative green-ness (see very old post on Eric and Sontaran-looky-likey here.)

This week the Energy Select Committee has been holding hearings on the latest iteration of the energy White Paper, ‘Planning our Electric Future: Technical Update’. It’s more of a ‘here’s what we’ve decided to do on a couple of things that were not very clear in the White Paper’ document than a ‘technical update’, but that’s beside the point really.  The two things they’ve decided on are:

1. Who will be the system operator for the whole thing? Answer – the National Grid
2. Will we set up a strategic capacity reserve of specially built plants that never produce anything except at half time in the cup final or pay people to turn up and bid?  Answer: it’s the second thingy – you know:  the capacity market.

Well OK, that’s clearer than before, but some will say, not necessarily in a good way, and – it is apparent from the exchanges at the Select Committee, not accompanied by much technical updating. We seem to be as far from filling in the dots on the why’s and how’s of a capacity market than we ever were, for example. And as for ‘deciding’ that National Grid will run the show, this has more of a ‘who’s standing around in the room who might fit the bill?’ feel about it than anything else. I’ve posted on what seem to be some potentially difficult problems about possible conflicts of interest, however benign National Grid are seen to be (here), and there remain some woeful gaps in clarity on things like who actually designs the contracts for difference and for capacity payments, who guarantees payments once the contracts are issued, and what happens if, say – Gazprom – decide that taking over National Grid looks like a good portfolio investment.

And as for capacity payments, there is the awkward prospect of the likely cost of the chosen alternative.  RWE npower (I know, they may be biased on the subject) have estimated that the incremental cost of a capacity market would be about £7.5 billion, whereas a last resort strategic reserve mechanism (yes, the non-producing power stations)  would, a little counterintuitively, come to far less – perhaps between £300 – £650 million.  The estimate for a capacity market  put forward by the minister in evidence is a little less – net £2.6 billion and a future saving for the customer, but still miles away from the cost of buying plant to sit in the corner.

That’s important because capacity payments of course will be met by levying producers and suppliers, who will pass the cost of the levy on to consumers’ bills. Oddly, at the moment penalties for non-performance once a capacity market agreement has been reached go to suppliers, who look able to bank it and not pass savings on in turn.

And at this point, well, yes the good old Levy Control Framework rears its rough skinned head again.

‘The Government will ensure that the overall parameters within the capacity market do not lead to an unnecessary or unaffordable impact on bills. As a policy funded through levies it is possible that the capacity market will fall within the scope of the Levy Control Framework. Should this be the case then this will provide a basis for decisions on affordability’ we are told on page 36 of the report. I think what this means is that, if the likely levy cap pushes down on the ‘imputed tax and spend’ allowed under the capacity market, then we might get the secret power stations in the corner after all.

So that’s your technical update for you. In the words of one of the witnesses to the hearing Simon Skilling, of Trilemma consulting, ‘a lot of this is close to the drawing board.’ That’s a concept that could prove to be a useful tool in judging progress. (See diagram above.) How far from the drawing board should we be and at what point? I think we need another technical update of the technical update.

But then the story (unlike most turbines) started to fall to bits itself in the space of a paragraph.  Later in the piece: ‘In Scotland, the £300,000 payments over the first five days of this year were shared by four turbine operators.  The controversial ‘constraint’ payments were made because they produced more energy than the National Grid could handle and had to be shut down.’  Eh? Run that past me again. So they do produce lots of energy in high winds. It’s the grid and the shape of the energy market that maybe are at fault?

And the Mail were, to be kind, probably just just too baffled to report or include the press release from RenewablesUk on the same day congratulating the Grid for ‘handling the large volume of electricity generated by wind farms over the festive period.’  Indeed, on December 29^th wind farms provided a new record of 12.2% of  UK electricity demand.

But all these ‘facts’ seem somehow irrelevant when you’ve got two pictures of a broken turbine blade to feed your  predjuduces.  The person who wrote the piece, by the way, was one Tamara Cohen. It would be interesting to hear whether she did so because she believes it all or because she was told to do so.

The problem with many such consultations, though, is that they are only as good as the structure that frames the scope of the consultation. And here as I’ve posted on a number of occasions, there are I think a number of structural problems with ECO in particular that may well make the best consultation only very marginally effective (and I don’t think they are near to resolving the problem of interest charges on Green Deal, by the way).

I posted a while ago (here) on the amount that is now confirmed as being available annually in the ECO coffers to deal with one of the central tasks of the obligation, namely to get the seven million or so solid wall ‘hard –to-treat’ homes externally insulated and energy efficient in the foreseeable future.  I calculated that  the sum  of less than a billion pounds annually that is available will, even if it is well invested and solid wall insulation really takes off,  fall woefully short of even the relatively modest target of insulating 2.2 million homes that the Climate Change Committee sets for the middle 2020s.

All very well to be a critic, I hear you say, but what would you do? After all, these are hard times.  What I think I would do is (at the risk of restructuring ECO somewhat) go down the route of funding the bulk of hard-to-treat homes where the owner could reasonably afford improvements through the issuing of ECO-mortgages. This would  enable an entirely new area of funding to be accessed, and would, in principle allow the presently allocated level of ECO to go much further. It might also mean that more resources could be put towards ‘affordable warmth’ and countering fuel poverty  through ECO than is presently envisaged.  The riposte to this, I imagine would be similar to that levied at elements of the Green Deal programme itself: what’s the incentive to do it? After all, you can save perhaps £350-400 per annum in heating bills with a well insulated home. But to do that costs perhaps £8500 – a gap of perhaps £150 per month between money saved and the cost of servicing a mortgage, albeit on better financial terms than the Green Deal.  My answer would be to introduce an ‘ECO golden rule:’ if it costs more to service a mortgage than is saved on fuel bills then the difference  – for perhaps ten years of the mortgage – would be paid by ECO.  Doing that, it can relatively easily be demonstrated, would allow presently known ECO funds to go much further – perhaps eight ‘treatments’ for each one presently envisaged.  I’ve  attempted to set all these considerations out in more detail in a paper I produced recently on the subject: you can find it on my website here: Hard to Treat Homes and ECO Mortgages.

I think this can work, albeit at a cost of doing a little more than is customary in consultations. But it would not cost any more public money, and  maybe, just maybe, could enable us to reach a target for once, rather than fall miserably short of it. And then there’s all that carbon saving to be banked as well… I’m quite warming to the idea, if that is the right phrase.

Here it is, from p. 15 of the document:

And here it is, rendered into English.

It is clear from the document (and the chart, once you translate it) that the intention is effectively to give the running of all the machinery of Contracts for Difference and capacity payments over to National Grid Plc, including design of the system, operation, giving out of contracts, auctions of capacity payments, and the payments and collection of contributions themselves.  Might there be some conflict of interest?  Well, DECC has thought about that. “Giving the system operator influence over the type and location of generation and the capacity margin raises potential or perceived conflicts of interest with National Grid’s existing functions and businesses,”  they say (quite rightly, in my opinion) and then they list just what those businesses are.  “…including,” they say in a footnote “National Grid’s role as transmission owner for England and Wales (including responsibility for network build), National Grid’s existing and potential role as Offshore Transmission owner, National Grid Carbon Ltd’s potential role as Carbon Capture and Storage Infrastructure owner.”

But not to worry. They’re going to “carefully consider any potential conflicts of interest and possible mitigating measures.”  They’re starting a project to do just that, with the full project expected to take “around a year.”  So that’s, let’s say, next Christmas: by which time, as the document proudly states, legislation will have been through the House to put everything into law.  Hmm. Not sure this really works, DECC, and you may well regret giving huge chunks of the electricity market management system over to one of the players within it.  Better have a good think about it earlier, rather than later, in my view.

So here, in the interests of balance, is what they might have printed (but I’m sure won’t):

THE END OF THE ROAD FOR NUCLEAR?

Hunterston B- DOOMED?

The energy world was rocked today by the failure of the Hunterston B nuclear power station to cope with the recent storms. The multimillion pound plant simply shut up shop at the first sign of bad weather, plunging anxious electricity customers into two days of turmoil and raising serious questions about the future of nuclear power in Great Britain.

“You just can’t rely on these things” a source close to the plant said. “One day they’re on and another day they’re off. It’s just a waste of all that money that’s been poured into this plant. If they can’t cope with the first puff of wind, how will we ever be able to put our faith in them again?”

Despite this catastrophe, the Government is pushing ahead with a programme to build dozens more, dotting the countryside with expensive concrete towers, when much cheaper and more reliable alternatives exist.  A government spokesman told us off the record: “It’s madness. You bet the bank on these monsters and they just switch off when they feel like it. We’re due a fundamental rethink as a result of this, I can tell you.”

Meanwhile a small wind turbine in Scotland suffered from an electrical fault. All of the other hundreds of turbines were unaffected by the storm.