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28 October 2011

Is the renewable energy industry getting greedy?

Twitter and the green press is buzzing with the UK solar industry leaping up and down as they fear the Feed-in Tariff (FiT) is going to get cut by the Government. Apocalyptic predictions are flying about - the industry will crumble, investment dry up, the earth will end...

If you aren't an energy geek, the FiT is a premium rate for locally generated renewable energy and it was designed to ensure a healthy return for investors to encourage uptake. The (capped) cost of the scheme is paid for by all electricity consumers.

What's happening now is the price of solar panels is plummeting, so uptake is going through the roof (excuse the pun) - almost three times as much installed as expected - as people take advantage of the better return on investment (ROI). The Government is said to be considering cutting the FiT for a second time to maintain the original ROI.

FiTs aren't universally popular, even in the green community. Commentator George Monbiot has criticised the FiTs for shunting cash from people who are often struggling to pay their electricity bills to those who already have the money to invest in renewables. I wouldn't go that far - in fact I'm a big supporter of the FiT - but I think the industry still has to be mindful where that money comes from - and the current financial pressures on those householders.

If the Government does reduce the tariff to reflect the new, lower cost of solar, investors will get the same return as originally intended, more panels can be installed under the same cap and there won't be any further increase in consumer bills. So what's the problem? Who loses? How will this kill the industry?

Renewable industry players might have to take a little less profit than they had hoped (but no less than they were promised), but why shouldn't the FiT track the capital costs of technology? It is after all a subsidy, not a right.

There's a parable about a goose that laid golden eggs...

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26 September 2011

Does Commerce Trump Charity?

I spent a very pleasant evening on Friday listening to Chris Packham at a Northumberland Wildlife Trust fundraiser (he's vice-president of the Wildlife Trusts). He may be 50 now, Packham retains all the enthusiasm, charisma and rebelliousness of the days when I watched him present The Really Wild Show back in the late 80s - and he isn't afraid to mince his words.

He started his talk with photos he had taken of Siberian tigers in the snow. This took him to the conservation of these beautiful animals and the shocking figures that a tiger is worth $100,000 to the poacher that shoots it, and $300,000 to the guy illegally selling its parts for medicine in China.

He went on to berate what he called "the tiger conservation industry" for hoovering up huge amounts of money, but failing to even slow the decline of the tiger. "The only thing I've seen that works is eco-tourism", he said "You've got to make the tiger worth more alive than dead to local people."

This is something I passionately believe in. In my opinion, much 'charity' is at best ineffectual and often makes serious problems worse - in effect when we sign a cheque we are buying a feeling of "having done something". If you look at international development, the third world countries which are breaking through like India are doing it by entrepreneurialism, not by accepting charitable handouts which can undermine local markets, trapping people in poverty. (If you are interested in this way of thinking, you must read "The Fortune at the Bottom of the Pyramid" by JK Prahalad - and before anybody gets angry, I'm not including disaster relief in this critique).

Bringing it closer to home, when I started in this career, a surprising number of businesses expected to be given environmental advice for "free" - paid for by the taxpayer in other words. For many years this was what I did - delivering projects where the beneficiary wasn't writing the cheque. Something I noticed early on was that the "free" advice I gave was rarely if ever acted upon, not because it wasn't any good, but because it was seen as free and wasn't valued. Thankfully we have largely thrown off the shackles of publicly funded business support and the bulk of Terra Infirma's turnover is now earned from those who are directly benefiting from our skills, experience and knowledge. We charge them quite a lot of money for this and guess what? Our clients value what we do.

Another great example is the explosion of solar energy in countries which enact feed-in tariffs, creating a market for small generators and undermining the monopolies of the big generators. Those markets are doing more  to ramp up renewable energy than virtually any other attempt I can think of.

The free market is by no means perfect, but I believe in working with what we've got. The challenge is can you harness markets for good? Can you make 'good' financially worthwhile and 'bad' expensive?

Photo © BBC

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13 July 2009

Book Review: The Solar Economy by Hermann Scheer

German MP and Solar Champion Hermann Scheer wrote this book about 10 years ago and it has been available in English for about 7 years, but apart from a few historical references, there is little out of date about this book. Scheer was responsible for introducing feed-in legislation in Germany which has been responsible for a huge boost in the uptake of renewables and the supporting renewables industry.

The book can be a bit difficult to read, partly due to a slightly clunky style and partly due to Scheer's tendency to go off on a rant about something he feels strongly about in the middle of a well argued point. But his main arguments are:

1. There is a prevailing myth that non-renewable sources of energy will support us for ever and that renewable sources cannot. The earth receives 15,000 times as much solar energy as man uses in any year, so it is up to our ingenuity to capture and use as much of this as we need.

2. International agreements such as the Kyoto agreement are a dangerous distraction as they encourage individual nations to delay action, and the compromises inherent in such an agreement leads to the lowest common denominator being adopted rather than a race to see who can do best.

3. The current energy infrastructure is designed to take a number of highly concentrated forms of energy and distributing them to a diffuse number of users. Renewable energy is diffuse and the most efficient way of using it is directly at source (eg a house using the electricity generated on its roof). This requires a completely different distribution system and localised storage systems.

4. As a result of this mismatch, energy statistics are flawed as they omit existing autonomous renewable energy systems (eg domestic solar hot water systems, wood burning stoves, solar powered calculators, solar powered road signs etc) and passive renewable energy use, such as passive solar gain of housing and natural daylighting.

5. The fossil (and nuclear) fuel industries are over-subsidised and are given near monopoly control over some markets. These vested interests must be confronted and routed out before solar can thrive. Existing energy companies should bear the societal costs of their industry.

6. Solar resources (biomaterials, biofuels) can and should replace their oil-based equivalents without disrupting food supplies. Given the recent outcry over food prices and the effect on them of biofuel production, this is one of the few places in the book where it showed its age.

So, instead of the big centralised distribution systems (which are becoming global in many cases), Scheer proposes a localised system of distribution grids, owned by local and regional authorities (Scheer believes that privatisation should only occur where competition is possible). Feed-In Legislation would guarantee grid access for small scale generators, breaking up the dominance of big energy companies. He also proposes the grid operators could also provide other solar resources including biofuels and biochemicals, but I felt that this might be where his politics overstepped his logic - there is no practical reason why there shouldn't be competition in the supply and distribution of vehicle fuel and solid fuels.

It was very appropriate to be reading this book on various train trips in Belgium where I could see the really positive effect of a feed-in tariff. As I said before it can be a bit clunky and a bit ranty in places, but this is still a very stimulating and thought provoking read from one of the true champions of renewable energy.

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2 July 2009

Boss Paints

As I mentioned on Monday, I'm in Belgium and visited Boss Paints on Tuesday to interview the boss, Toon Bossuyt. Boss has done many clever things, many of which will feature in my next book, but one is to produce 25% of the electricity supply from solar PV on the roof.

Belgium has gone solar mad - there are incentives for installation and a feed-in tariff to guarantee a decent return. When Boss first put 64 panels on the roof, it was the biggest in Belgium. Now they have 1477, but they've still not retained that accolade. When I've been travelling to and fro by train it is rare not to see one roof in every suburb or village with a sizeable array.

In the picture above, there's a silver coating on the roof which keeps the buildings cool in summer - it also has an albedo effect - reflecting the suns' rays back into space without causing climate change. Clever.

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