Feed the carbon market

For years the government has said that it is committed to stimulating the market for renewables and microgeneration, but now there is some activity to back up the words

by Peter Excell

12 February 2009

The government's legally binding target of an 80 per cent cut in carbon emissions by 2050 is bold and ambitious. But setting a target is easy - even the climate change and energy secretary Ed Miliband admits that.

"We all know that signing up to an 80 per cent cut in 2050, when most of us will not be around, is the easy part," he told the House of Commons recently. "The hard part is meeting it - and meeting the milestones that will show we're on track."

Part of that effort has to include greater support for microgeneration technologies such as combined heat and power (CHP) and photovoltaics (PV). So it was gratifying to see that revisions to the Energy Bill now include a plan to introduce "feed-in tariffs" that guarantee the price paid to individual micro-generation projects, which are able to sell electricity into the national grid.

A similar tariff system has already proved highly successful in Germany and is now being enhanced. German CHP owners already receive a healthy payment for electricity they generate themselves and this was increased at the start of 2009 to between 11.59 and 13 euro cents for every kWh. This tariff is guaranteed until 2016 thanks to the country's new CHP Act.

The price offered for PV generated electricity is higher to reflect the extra cost of installing that technology and, at the same time, Germany has introduced a 10 per cent surcharge on fossil fuels providing further incentive for users to invest in alternative energy sources.

Many people have been calling on the UK government to do something similar for years. In 1999 the German market looked very similar to how ours appears today, but incentives have totally transformed the commercial environment in favour of microgeneration. Under the new regulations, microgenerators now have the same rights as the large utility companies and power stations.

Currently, UK microgenerators do not receive a guaranteed price for the electricity they sell back to the grid. In fact, in many instances they receive no payment at all.

Industry experts estimate that a realistic feed-in tariff for CHP of around 5p/kWh would lead to 18 million units being
installed in the UK by 2030. This would reduce the country's CO2 emissions by 24 million tonnes a year and eliminate the need for the proposed new generation of extremely expensive and controversial nuclear power stations.

However, a wholesale charge into microgeneration could be counterproductive. FMs have to be mindful of what is appropriate for their buildings and each project needs to be judged on its individual merits.

In many cases, so-called 'new' technologies are simply not appropriate and the building operator would be far better advised to upgrade existing conventional equipment and improve the controls. High efficiency condensing boilers and water heaters, for example, will deliver impressive carbon reductions compared with ageing standard efficiency systems.

You must also make sure you consider the whole building services set-up and not just tag a renewable onto a poorly performing system. For example, there have been far too many instances where solar thermal collectors have been fitted to systems whose primary heat source is an old-style standard efficiency boiler - totally defeating the object. A condensing boiler will cut carbon emissions far more efficiently than the solar, which should be seen as a bonus and a way of reducing annual hot water bills (not heating) by around a quarter over the year.

End users should also not be encouraged to invest in solar if they are simply looking to get their money back in a hurry. Some salesmen might tell you there is a payback period of a few years, but in reality you will be very lucky to get a return on your investment in less than 20 years - this is something to invest in if you want to cut carbon over a long period.

There are grants available to reduce the capital cost of a renewable and/or microgeneration installation by up to 50 per cent under the Low Carbon Buildings Programme. However, again the government needs to take a close look at this system as it is not working well.

Only not-for-profit organisations are eligible for the grant and they must only use firms authorised under the Microgeneration Certification Scheme (MCS). Only a handful of contractors have signed up to this scheme due to the perceived high cost and bureaucracy - so it has created another barrier to wider adoption of microgen technologies. The M&E Sustainability website (www.mech-elec.org.uk) is a good source of detailed information about potential technology choices for FMs and grant funding.

Renewables still only account for less than 4 per cent of our total energy supply - pretty woeful - and we have a long way to go. Yet, the government may have finally turned the corner with its legal commitment and the financial mechanisms are there - they just need to be applied more vigorously particularly during the current financial crisis.

Peter Excell is chairman of the HVCA's Service and Facilities Group and development director of Platinum Facilities and Maintenance Services