UK Faces Higher Energy Bills this Winter due to Limits on Renewables

higher energy costs

The current decision by the UK government to limit new renewable energy generation has disappointed the renewables industry. The industry sees this as a “missed opportunity” while the green campaign group, Greenpeace has berated government ministers for “outdated thinking”.

The government is restricting renewable installations by setting arbitrary limits on the amount of capacity that can be subsidised through the contracts for difference (CfD) scheme. This means that consumers will face higher energy bills than necessary this winter.  The limits are being supported despite the UK’s urgent campaign to stop importing Russian gas and to protect consumers from the full impact of soaring natural gas prices.

The way the system of “contracts for difference” works is by renewable energy generators bidding for contracts to produce power, but the government can set an overall limit on how much capacity it wants in the auctions as well as set limits on how much cash it is prepared to provide in the form of incentives.

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Ministers will authorise contracts for about 12GW of new renewable energy generation, to begin construction this year, with much of it likely to come on stream before the autumn of 2023. Although this is the biggest auction so far, the renewable energy industry has estimated that there are about 17.4GW of projects that have already been granted planning permission and are “shovel ready”. This includes 8.5GW of offshore wind, alongside 3.9GW of onshore wind and 5GW of solar. Greenpeace said that few of these projects will go ahead without the contracts that let generators lock in prices for their power.

This shortfall will result in consumers being deprived of the energy savings on bills that come from renewable energy. Renewable energy is now cheaper than fossil fuels which have risen to sky-high prices since the Russian invasion of Ukraine. While onshore and offshore wind and solar power all now command about £40 per megawatt, gas fired power generation costs about £140 per megawatt hour. Increasing the amount of renewable capacity would help to ease energy prices and mean that households would feel less strain during the winter of 2023-2024 when bills are forecast to still be high. In fact, if the 12GW of new renewable energy generation the government is planning for this year had been available last winter, energy bills would have been about £100 lower for the average household.

The Department for Business, Energy and Industrial Strategy (BEIS) has set out plans for the next CfD auction, to be held on 5th-6th July. During the auctions, generators will bid for contracts to produce green power at a guaranteed per-unit rate. This round will see the government award contracts to a combined 5GW of new onshore wind and solar installations with neither allowed to take more than 3.5GW in total.

It was expected that the government would set a cap of 7GW on new onshore wind capacity. However, the plan isn’t to set a cap but instead to limit the incentive pot to £200 million, which industry expects will amount to a de facto cap of 7GW.

Many groups, including unions, the CBI employers’ organisation, the National Farmers’ Union, and green and consumer groups, called for the government to increase the amount of renewable energy generation.

Doug Parr, a policy director for Greenpeace UK, said:

“We have a global climate emergency which requires low carbon power, we have a cost-of-living crisis which requires cheap power, and we have a war in Ukraine that requires domestic power. By an amazing stroke of luck, renewables are low-carbon, cheap, domestic and can be deployed faster than the alternatives. Capacity limits on cheap renewables are outdated thinking.”

Back in March this year, research from Carbon Brief’s Dr Simon Evans said that 649 onshore wind and solar projects with a total capacity of 10GW already have planning permission. If they went ahead, they’d save Britain more gas than it currently imports from Russia.

Total renewable capacity grew by 3.4% to 49.44GW in the year to December 2021, which is a significant drop compared with an average annual rise of about 18% over the previous 11 years.

However, a government spokesperson defended the UK government’s record in bringing renewable energy capacity online.

“The Covid pandemic and its aftermath understandably slowed infrastructure deployment across the country. That said, nearly 40% of our electricity now comes from renewable sources, and since 2010 we have delivered a 500% increase in the amount of renewable energy capacity connected to the grid. The contracts for difference scheme has been hugely successful in boosting UK energy supply and reducing our dependence on volatile fossil fuels, with competitive auctions reducing the price of offshore wind by around 65% since 2015.”

Sustainable Future for UK Hospitals with Solar Energy

hospital medical solar panels

Castle Hill Hospital in Cottingham, East Yorkshire has become the first hospital in the UK to be completely powered by its own renewable energy in daylight hours. In September 2021, Hull University Teaching Hospitals NHS Trust started installing solar panels on land next to the hospital site. It took five months to install the £4.2m grant funded installation of more than 11,000 solar panels, which covers 7.7 hectares, around the size of 14 football pitches. The Trust received a grant from the Department for Business Energy and Industrial Strategy (BEIS) as part of its Public Sector Decarbonisation Scheme which allowed them to embark on this ambitious project. The plan was to generate a third of the total energy requirements of the hospital.

The project which became known as the ‘Field of Dreams’ is part of the trust’s campaign to tackle the NHS’s impact on climate change by achieving net zero carbon emissions by 2030.

The Trust’s investment in solar technology is now paying dividends. Hull University Teaching Hospitals Trust, which runs the hospital, said the scheme meant the trust was currently saving about £250,000 a month. With the arrival of the longer days of British Summer Time, the panels are generating enough electricity to meet the entire daytime power needs of the Castle Hill site. Currently, about 26MWh per day is generated, the equivalent to the average daily energy needs of 3,250 UK households. Output is expected to almost double during the peak summer months.

The trust, which also runs Hull Royal Infirmary, is also planning to replace 20,000 lights across both sites with LED bulbs, to insulate buildings and install heat pumps to cut heating costs.

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Alex Best, Head of Capital for the Trust said:

“Our aim has always been to generate enough electricity to make the hospital site self-sufficient in the summer months when the days are longer, and now that the clocks have gone forward, the panels are generating around 26MWh per day so far in May and are anticipated to rise to a peak summer load of 50 MWh per day.

Not only does this represent a significant contribution towards our plan to become carbon neutral by 2030, but the project is also saving us a significant amount of money on hospital energy bills; approximately £250,000 to 300,000 every month.”

Marc Beaumont, Head of Sustainability for the Trust also said:

“When you consider the size of the Castle Hill Hospital site and the amount of activity that goes on here, that’s a huge amount of power that’s required to keep it running.

Now if you stop to consider what the solar panel project is contributing, it’s incredible to think that the power used to deliver patients’ radiotherapy treatment sessions, to support many life-saving surgical procedures, and to keep our intensive care unit running right now is all completely self-generated, green electricity.”

Work has also begun on a 12-hectare solar farm which is being developed on a former landfill site adjacent to New Cross Hospital in Wolverhampton. Proposals for this giant solar farm were approved in 2021 and the site will be cabled directly to the New Cross Hospital.

Hospital bosses believe the scheme will save the trust millions of pounds in energy bills in the coming years and plan to spend the money on frontline services instead.

Planning images showed solar panels stretching across the former landfill site, the size of 21 football pitches.

The original idea to turn a former tip into a solar farm came from the Wolverhampton council.

Councillor Steve Evans said:

“It’s toxic land, we can’t build on here, we’d never be able to do anything, and we had some issues with fly tipping”.

Another hospital, Milton Keynes University Hospital has utilised its flat roofing structure to install solar panels to generate significant energy on-site. £2.75m was invested in new roofing and the installation of solar PV.

The Trust took the opportunity afforded by the installation of solar panels to improve the roof insulation in order to optimise energy use, reduce costs and carbon emissions.

During the building works the Trust has also introduced LED lighting to further improve their energy efficiency.

The first phase of the work has been completed with more than 2,500 solar panels installed across the hospital, producing 853MWh which is equivalent to powering over 200 average homes for a year or around 8% of the Trust’s total electricity requirement. When the second stage of work is completed, there will be over 3,300 individual panels positioned on roofs around the site which will ultimately generate nearly a gigawatt of free electricity which equates to the same power that would be used by 344 average homes in the UK.

The cost and carbon savings are not the only benefits the hospital is experiencing. The new roofing has made for a more comfortable environment for both staff and patients.

A staff member said:

“Before the roofing upgrade and installation of solar panels, this area would fluctuate in temperature – at times too hot and others too cold. The new roofs have made an incredible difference to both staff and patients and it’s even better to know that we are helping the environment.”

The innovative and inspiring project at the Castle Hill Hospital has saved significant funds which can be reinvested back into treatment and care. The success of all the green achievements in the hospital sector provides an excellent example for other hospitals and the wider NHS to adopt sustainability at the heart of healthcare.

It’s possible to see that if these successes were reproduced on a national scale, it could save the NHS billions, allowing reinvestment in healthcare. The advancement of sustainability in healthcare provides a key precedent for a greener future for the NHS.

Why Smart Meters are Important for the Net Zero Target

Energy-Usage

Smart meters are no longer new to people. Most of us have heard about how smart meters can help us to be more efficient in the home through monitoring our energy usage. What is less understood is the benefit that smart meters can bring to the grid as a whole.

If we’re going to prevent a climate catastrophe it is vital that we reach the net zero carbon emissions target. The only way we are going to do this is by generating more green energy and being much smarter about how we use it. The technologies we use to help monitor and control our energy consumption are set to play a critical role in the fight against climate change.

The number of smart meters being installed in the UK has surged in recent times. Despite the pandemic slowing the rate of installations there were still 3.8 million smart meters installed in 2021 and the uptake of smart meters is likely to increase as consumers deal with the ongoing surge in energy prices. 

Smart meters are a key part of the clean energy system of the future. They will be an indispensable tool in the development of a more sustainable future. As they become more widespread, they’re likely to have a radical effect on energy use in the UK. Customers and businesses will have more insight into their energy use than ever before which will reduce waste, cut bills and help to drive industry innovation. 

If you have a smart meter installed at home one of the first things, you will notice is how easy it is to see how much energy you are using and how much it is costing you. Because smart meters give you real-time data on your energy use, you can see how your energy consumption rises and falls and therefore make informed decisions about how and when you buy energy. Knowing how much energy is being used every day can also really help you to cut down which means you are reducing your carbon emissions as well.  You might decide to swap your bulbs for energy saving LEDs, use the tumble dryer less, batch cook food, turn off appliances before going to bed or to insulate your home. Whatever you do you’ll quickly be able to see if you’re using less energy.

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It’s when you add up all the small changes that everyone in the UK makes to their daily routine that you can see how this could be important to reaching the net zero goal. If 10 million households were to do something as simple as only boiling the amount of water, they need for their morning brews instead of overfilling the kettle it would significantly cut the amount of fossil fuels that the UK needs to burn.

Smart meters aren’t just about saving energy at home. Currently, energy suppliers and the National Grid don’t have a full and accurate picture of consumer energy demand. They know how much consumers are using between meter readings, and they can estimate daily and yearly peaks and troughs, but this unclear picture can lead to energy being wasted. Smart meters lead to a more accurate view of exactly when energy is being used and where which means that energy suppliers and the grid will know in more detail how much energy to buy and sell. Not only does this allow for energy generation and transmission to become much more efficient but it helps the grid to incorporate a higher percentage of renewable electricity. 

Things are set to improve even further as by 2025 the frequency in which smart meters transmit their data to the energy companies will increase to every half an hour to help to provide a larger picture of the country’s energy usage.

Let’s look at an example of how smart meters can help in the future. Electric vehicles are going to become increasingly commonplace on our roads which will mean that the amount of electricity needed to charge them will also increase. If everyone arrives home at the same time and plugs in their vehicles, this will place a peak demand on the electricity grid and potentially lead to extra generation from fossil fuels being needed. This is something we all want to avoid. This is where smart meters can make a significant difference as they have the potential to spread out this kind of intensive demand so that green energy can be used throughout. Most vehicles won’t need to be fully charged until the following morning, so there’s no need to charge every car in the shortest time. In the future, you might tell your car or an app your driving needs, and it would communicate with your smart meter to ensure green energy is being used to charge your vehicle without creating a peak in demand.

Furthermore, there’s the potential to be paid to use your EV battery as energy storage, where the National Grid could take energy back from your vehicle in order to meet high demand and replace it later.

We’ve talked a lot about what smart meters mean for households, but businesses will benefit from the technology too. Smart meters can provide more detailed insights into a business’ energy usage, allowing suppliers to offer that business bespoke tariffs based on their actual energy requirements. This means businesses will get better deals and prices, but also makes things easier for suppliers by providing greater certainty around their customers’ energy demands.

Apart from helping businesses and households to consume their energy more efficiently, the extensive growth in the installation of smart meters has the potential to unlock a level of untouched energy efficiency in the form of a smart energy grid.

Smart grids are different to traditional grids as they use different technologies, such as smart meters, sensors and networks to increase the level of intelligence and efficiency at which the grid operates.

A smart grid will mean that operators will be able to balance the flow of energy more efficiently throughout the grid. This is vital if we are to be more sustainable. With the help of the grid’s sensors and meters, operators will be able to detect power demand surges and outages in real-time and adapt accordingly to ensure efficiency.

Furthermore, smart grids can enable the smooth integration of renewable energy sources, such as solar panels. Better energy infrastructure will allow operators to effectively manage different renewable energy sources that are geographically spread across the grid. In addition to that, smart grids will enable providers to let energy consumers play a central role in the grid by selling extra energy storage they might have at home.

Whether it’s reducing the amount of energy wasted or helping the grid become truly responsive smart meters are essential components for the creation of a greener energy network that can maximise use of renewable energy sources as well as help us reach our net zero carbon emissions target by 2050.

Landmark Moment as G7 Countries Commit to Near Zero Emissions by 2035

G7

At the end of a three-day summit in Berlin, climate, and energy ministers from the group of seven wealthy nations have announced that they will aim to largely end greenhouse gas emissions from their energy sectors by 2035. The seven nations’ goal is for a complete phaseout eventually. In particular they agreed to phase out coal-fired generation making it very unlikely that any of these countries will burn coal for electricity beyond 2035.

Coal is a heavily polluting fossil fuel which is responsible for a fifth of global greenhouse gas emissions caused by humans. Though there are ways of reducing the carbon dioxide from the burning of coal it is almost impossible to reduce it to zero. This makes it the first fossil fuel that should be completely phased out.

The 2035 target is a real breakthrough. Luca Bergamaschi, director of the Rome-based campaign group ECCO said that in practice this means that countries need to phase out coal by 2030 at the latest.

Germany, the current chair of the G7 has played a big part in driving this commitment. The German coalition government vowed to bring forward the country’s own coal phaseout by eight years to 2030 and has pushed the other G7 nations to bring their plans forward too.

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Currently, Germany and Canada are aiming for 2030 while the US administration has set a target of ending fossil fuel use for electricity generation in the US by 2035. Japan is the only one of the seven nations asking for more time.

Although Britain, France and Italy have already set themselves deadlines to stop burning coal, Britain has recently decided to postpone some of the planned closures of coal power plants due to predicted energy shortages.

Other major polluters will likely feel pressurised to follow suit and build on the compromise deal which was reached at last year’s UN climate summit. At this summit nations merely committed to the phasing down rather than the phasing out of coal with no fixed target date.

There will no doubt be a return to this issue at a meeting later this year of the group of 20 leading and emerging economies, who are responsible for 80% of global emissions.

Officials from Germany, Britain, France, Italy, Japan, Canada and the US, the nations that make up the G7, have also agreed on a target to have a highly decarbonised road sector by 2030. This would mean that zero emission vehicles would dominate sales of vehicles by the end of the decade.

Governments are continuing to prioritise decarbonisation plans for their economies with a view to cutting their nation’s reliance on Russian oil and gas as a response to their invasion of Ukraine. They are focusing on finding new energy sources as well as expanding the use of the renewable energy sources they already have in order to guarantee long-term energy security in light of both the war in Ukraine and the recent price volatility associated with fossil fuels.

Ministers at the G7 meeting pledged to be more ambitious regarding renewable energies and to “rapidly scale up the necessary technologies and policies for the clean energy transition.”

Canada has made good progress and is on track for phasing out coal by 2030. If it is to achieve a net zero grid by 2035 it will, however, need to reduce gas-fired power, scale up affordable and proven clean energy technologies and take the necessary steps to enable grid flexibility.

Despite these good intentions, global coal is expected to reach an all-time high by the end of 2022, if current trends continue.

Developing countries have for years demanded a clear commitment that they will receive financial support to cope with the destruction caused by climate change and to help them make the transition to a greener economy.

In a move to end this inequality, the G-7 has now recognised for the first time the need to provide additional financial aid to developing countries so that they can cope with the loss and damage caused by global warming.

David Ryfisch of the Berlin-based environmental campaign group Germanwatch said:

“After years of roadblocks, the G7 finally recognise that they need to financially support poor countries in addressing climate-related losses and damages. That recognition is not enough: they need to put actual money on the table.”

The agreements which will be put to leaders at the G-7 summit in Elmau in June, were largely welcomed by climate activists.

It is hoped that the G7 nations will propose similar commitments in a meeting later this year of the wider group of 20 leading and emerging economies to ensure that tackling climate change is a global effort. The group of 20 are collectively responsible for 80% of global emissions.

It won’t be easy to get all G20 countries to sign up to the ambitious targets set by some of the more advanced economies as countries such as China, India and Indonesia are still heavily reliant on coal. In fact, China has revealed plans to boost its coal production capacity in the coming months.

The US and Germany have signed a separate agreement to deepen their bilateral cooperation on transitioning from fossil fuels to renewable energy in an effort to curb climate change.

The deal focuses on the two countries working together to develop and deploy technologies that will accelerate their clean energy transition, particularly in the area of offshore wind power, zero emissions vehicles and hydrogen.

The two countries have also pledged to work together to promote ambitious climate policies and energy security worldwide.

Germany’s energy and climate minister, Robert Habeck, said the agreement reflected the urgency of tackling global warming.

Scientists agree that if the goals that were set out in the 2015 Paris agreement are to be met, steep emissions cuts will need to happen this decade.

Time is literally running out, Habeck said, calling climate change the challenge of our political generation.

Could Moving to Renewables Save the UK Energy Bill Payer Money?

Energy-Usage

It’s now known that it’s cheaper to produce energy from wind than gas. Since the government announced its energy security strategy, many climate experts and activists are asking why the UK is not speeding up the change to net zero.

It became cheaper to produce a unit of energy from a wind farm than a gas-fired power station for the first time in 2021 due to rising fuel costs as well as technological advancements in the wind sector.

To calculate how expensive, it is to produce energy from different sources you need to consider all the different costs over the lifetime of a plant including the build, the fuel, the maintenance and how much energy it can provide over that time.

Sky News has seen figures that show that the cost of producing energy from onshore wind will be less than half the cost of producing energy from gas this year and could fall to a quarter in 2023. According to researchers at BloombergNEF, offshore wind is less than two thirds of the price of energy from gas stations.

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The use of wind for energy has multiplied almost 20 times in the last 10 years making it the second biggest contributor of energy in the UK. The environmental benefits have been behind most of its rise so far, but political and economic factors are responsible for recent acceleration.

At the beginning of April, the price of a standard energy bill rose by more than 50% meaning that more than a quarter of homes in the UK were forced into fuel poverty. Wind being cheaper than gas is more important than ever now not just for environmental reasons.

The Energy Security Strategy was aimed at both reducing the UK’s reliance on Russian oil and gas and tackling the soaring energy prices.

Many climate experts believe that the UK’s Energy Security Strategy should have gone further and faster on energy efficiency and onshore wind. They think that the government has missed vital opportunities to cut bills at the same time as cutting emissions.

Community England are disappointed that the Energy Security Strategy contains nothing new on energy efficiency, demand reduction or communities taking control of their energy. The strategy is similar to the government’s previous 10-point plan which focussed mainly on big-cheque, centralised, supply-side measures that will be owned and controlled by big business, for profit.

The strategy does not enable the localisation and democratisation of energy so important to increased efficiency and achieving net zero. Nor does it address the challenge of improving Europe’s draughtiest houses which would not only save people money in the UK but also save carbon, lives and health costs.

Community England support the increased emphasis on wind and solar which can deliver genuinely low-carbon, low-cost home-grown energy. They welcome the emphasis on increasing solar for domestic and commercial rooftops as this is an area that Community England has been particularly effective in. Community solar projects can bring benefits directly to vulnerable communities. They would however, like to see more support for onshore wind, the cheapest form of renewable energy.

Bills are still high partly due to how the National Grid Electricity System Operator (ESO) balances the energy that we use.

The National Grid ESO uses sophisticated models to predict how much energy the country will need for a given half hour period. This is based on people’s habits such as when they cook or turn lights on as well as how cold it is and how many people will have heating on. The ESO then brings on board energy using the cheapest suppliers it can to fulfil that need.

A National Grid ESO spokesperson said:

“The rules of our license mean we must always bring on the cheapest form of electricity available, we are technology agnostic. Prices are market driven so we are not immune to global issues like the rise in the cost of wholesale gas. We have a diverse generation mix and as we bring on more renewable energy, with the technology to store that energy, we will become more energy independent.”

Wind, solar and tidal provide the cheapest energy, then nuclear followed by the most efficient gas suppliers. If there is still demand left over then ESO have to resort to the most expensive gas and coal providers. The cheapest sources of energy are balanced against the most expensive but the billpayer ends up paying for the total cost of that.

Unfortunately, we are still paying for energy from older wind farms which have not benefited from the recent technological advancements which makes it more expensive.

Dr Simon Evans, deputy editor and policy editor at climate change publication Climate Brief, said:

“Renewables shaved the equivalent of about £10 off bills last winter and would have saved about £100 if we’d already built the wind and solar farms that are under contract or expected to be granted contracts in the summer. But the wholesale price of gas is still most important in setting the price we pay – it has driven about 90% of the increase in bills. If we had more renewables, they would be taking more of the edge off the higher bills.”

In the past the National Grid ESO has been able to reliably predict how much energy a given gas or coal power station will produce per hour, and match that against how much energy they think we’ll need.

However, now that the UK is using more wind, supply is less predictable short-term. In the same way that the UK cannot control the global price of gas and oil, it also can’t predict how much the wind will blow or the sun will shine.  There will be periods of time when it’s cold, calm and dark.

Storing the energy created from wind and solar is the obvious solution to this when more is being produced that can be used at the time.

Typically, storage is either in batteries or in the form of hydrogen that can be extracted from water when the turbine is running and stored to be burned when it’s needed later.

These storage options can be expensive even if the fuel is free though Dr Evans says that a renewable system such as this would still be cheaper overall.

Dr Evans said:

“Because wind and solar are so very cheap, the overall costs are lower even when you pay for storage and for building the storage technology. The way that consumers pay for and use energy at the moment means the hour-by-hour changes won’t be that noticeable – you’ll just see the overall price going down. But we may get to a stage where we can set smart chargers to charge your electric car only when the wind is blowing strongly and can sell energy back to the grid when it’s not.”

Stew Horne, Energy Saving Trust’s head of policy thinks that there are two important areas where the government’s strategy has fallen short. He believes that improving the UK’s largely inefficient housing stock and investing in the electrification of heat would help the UK to strengthen energy security and lower bills now and in the longer term. Accelerating the installation of heat pumps which are available now combined with the implementation of energy efficiency measures would provide a long-term solution. The demand for gas to heat our homes could be significantly cut.

The International Energy Agency (IEA) has said that we cannot exploit any new fossil fuel reserves if we are to achieve the 1.5-degree goal. They have also stressed that not only is nuclear much more expensive than renewables but that it won’t deliver low carbon electricity below the Climate Change Committee’s 50g p kWh threshold. It uses huge amounts of fossil energy in the construction stage, front-loading emissions at a critical time when we should be reducing them. The IEA believes that the UK should be investing in flexibility and storage to enable greater penetration of genuinely low-carbon variable renewables.

New Renewable Energy Capacity Broke Records Worldwide in 2021

Energy Capacity

According to the Paris based International Energy Agency’s (IEA) Renewable Energy Market Update, the world added a record 295 gigawatts (GW) of new renewable power capacity in 2021. New capacity for generating electricity from renewables such as solar, wind, and other clean energy increased by 6% despite having to overcome pandemic-driven supply chain challenges, construction delays and higher prices for raw materials.

In the European Union alone, annual renewable power additions jumped by almost 30% to 36 gigawatts in 2021 which finally exceeded the bloc’s previous record of 35 gigawatts set a decade ago.

The IEA expects clean energy to continue to grow further in 2022 as governments seek to take advantage of renewables’ energy security and climate benefits more and more.

It is anticipated that global capacity additions will rise by 25 GW this year to 320 GW. This is equivalent to an amount that would come close to meeting the entire electricity demand of Germany or matching the European Union’s total electricity generation from natural gas.  

Solar PV is on track to account for 60% of global renewable power growth in 2022, followed by wind and hydropower. Global additions of solar PV capacity are on course to break new records this year and next. Solar’s growth in China and India is accelerating due to strong policy support for large-scale projects which can be completed at lower costs than fossil fuel alternatives.

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Europe’s renewable capacity is set to grow more in 2022 and 2023, as Brussels aims to launch a “European Solar Rooftops Initiative” to help cut gas-fuelled power and heating in domestic and commercial buildings and move away from Russian fossil fuels.

The IEA’s report indicates that fast renewables growth is being boosted by strong policy support in China, the European Union, and Latin America. Renewables growth is still forecast to increase by 8% despite slower than anticipated growth in the United States.

Russia’s invasion of Ukraine has helped to create an unprecedented global energy crisis. Governments in many countries are trying to find ways to help consumers with the higher energy prices as well as reduce dependence on Russian energy supplies. This has naturally resulted in policies being proposed that accelerate the transition to clean energy technologies. Notably wind and solar PV have the potential to reduce the European Union’s power sector dependence on Russia by 2023.

The current global energy crisis has served to highlight the key role of renewable energy and added new urgency to accelerate clean energy transitions. Renewable energy can reduce prices and dependence on fossil fuels both in the short and the long term.

It looks promising that the additional renewables capacity commissioned for 2022 and 2023 will significantly reduce the European Union’s dependence on Russian gas in the power sector. However, the increased renewables capacity needs to go hand in hand with energy efficiency measures to keep the region’s energy demand in check, for this to work.

IEA Executive Director Fatih Birol said:

“Energy market developments in recent months, especially in Europe, have proven once again the essential role of renewables in improving energy security, in addition to their well-established effectiveness at reducing emissions. Cutting red tape, accelerating permitting and providing the right incentives for faster deployment of renewables are some of the most important actions governments can take to address today’s energy security and market challenges, while keeping alive the possibility of reaching our international climate goals.”

Even though costs for new solar PV and wind installations have increased due to elevated commodity and freight prices, natural gas, oil and coal prices have risen much faster making renewable electricity more competitive than ever. The rise in the prices of solar PV and wind installations has reversed a decade-long cost reduction trend and they are expected to remain higher in 2022 and 2023. The current growth in renewable power capacity would be even faster if it wasn’t for the present supply chain and logistical challenges.

Uncertainty around policy as well as long and complicated permitting regulations have prevented much faster growth for the wind industry. After falling by 32% in 2021 after especially high installations in 2020, additions of new onshore wind capacity are expected to recover slightly this year and next.

Based on the policies we have in place today; renewable energy’s global growth looks likely to lose momentum in 2023. Without stronger policies the amount of renewable power capacity is expected to plateau as continued progress for solar is offset by a 40% decline in hydropower expansion and little change in wind additions.

The outlook for renewables in 2023 and beyond will very much depend on whether new and stronger policies are introduced and implemented over the next few months.

New Plans for UK Consumers to Track Renewable Energy by the Hour

Renewable energy Data

It won’t be long now before energy users will be able to check where their energy is coming from on an hourly basis and receive a discount on bills if they use electricity when renewable energy is plentiful.

According to plans led by start-up Granular and energy giants like Elexon and National Grid, energy companies will be launching a new mechanism for hourly renewable energy certificates in the UK. The mechanism will allow UK energy consumers to track their electricity source.

The initial launch of the new certification system will be as a pilot project starting at the end of April with a series of stakeholder engagement workshops and is still open to new participants. 

The move comes at a time when the global drive for greater transparency in energy procurement, known as ‘24/7 carbon free energy’ is accelerating. In an effort to reduce their carbon impact through their energy purchases, organisations such as Google, Microsoft and the US Federal Government have recently made commitments to source carbon-free energy on an hour-by-hour basis.

Currently with energy certificate schemes, such as the UK’s Renewable Energy Guarantees of Origin (REGO), renewable energy generation and consumption are matched on an annual basis. In other words, energy providers look at the previous years’ energy use and match it with the equivalent amount of renewable energy. This doesn’t reflect the ‘real world’ situation where renewable energy availability fluctuates from hour to hour.

Due to there being times of the day when renewable energy is less available, for example when it is less windy or sunny, consumers could be encouraged to use power when it is in oversupply by offering them a discount on their bills. This could lead to less gas being used.

A new report published recently, entitled Accurately Tracking Carbon in Electricity Markets by Net Zero innovation centre Energy Systems Catapult and electricity market Balancing and Settlement Code (BSC) manager Elexon, sets out how the industry could create the common rules, standards and processes to measure, track, report and verify the carbon content of electricity within the power system.

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Energy Systems Catapult, Senior Policy and Regulation Advisor, Sarah Keay-Bright, said:

“Currently the industry is not accurately tracking any given unit of electricity from the generator to the consumer. For example, energy suppliers can claim they are supplying green electricity to customers on a windless winter’s day because they hold a certificate for wind energy produced in the previous summer. However, the British energy market can now harness the power of digitalisation to accurately track carbon across the system at a granular level in time and space.”

The new certification system will allow participants to receive hourly certificates for their power generation in the Certigy registry which is managed by established Guarantee of Origin registry provider Unicorn. 

Making it easier for people to choose energy companies that are transparent about exactly how much renewable energy they use could help the UK to reduce its emissions.

Nicholas Rubin, market architect at Elexon said:

“Great Britain has committed to achieving a fully decarbonised power system by 2035. In order to accelerate this transition, Elexon is supporting initiatives that contribute toward decarbonising the power sector and achieving net-zero.”  

For the first time ever, energy users that use Granular’s management platform will be able to verify where their electricity is coming from on an hourly basis. On top of this, those taking part will be able to trade these hourly certificates bilaterally or on a centralised auction managed jointly by Granular and Nord Pool, to improve their level of hourly matching. The mechanism will also allow participation for storage, so that certificates can be stored and re-issued later.

It is hoped that these certificates combined with an exchange to trade individual hours will create an important price signal to drive investment in the technologies needed to reach a carbon-free grid.

Experts say that consumer demand will increase as they will be able to choose more renewable options. It is likely that this will lead to greater investment in renewables and in battery technology for more efficient storage.

Toby Ferenczi, a co-founder of Granular believes that consumers will be seeing this change by the end of the year.

He said:

 “Long term, what this is enabling is an acceleration towards a completely carbon-free grid as it is harnessing consumer spending power to source energy from carbon-free sources each hour. This drives investment in not just renewables but in energy storage and flexibility. Eventually customers will be able to buy green energy from their energy supplier by the hour.”

He went on to say that this method could allow people to get discounts on their energy bills.

 “It’s an incentive for load shifting and demand response so we want to provide a revenue stream for people who do that – renewable energy should be cheap when it’s in oversupply and more expensive when undersupplied, so it would give an incentive for consumers to shift their demand towards when it’s oversupplied.”

Energy-Saving Credentials High on UK Homebuyers Agenda

Energy Efficiency

A survey conducted by the estate agent Savills revealed that homebuyers are paying more for properties powered by renewable sources and are looking closely at energy ratings.

According to Savills’ analysis people who are looking to move are more likely to consider energy-saving credentials when viewing a property than ever before. Finding a way to reduce their soaring energy bills has become an important priority. Nearly 6 out of 10 (59%) prospective buyers told the company that they were willing to pay more for a home if at least 75% of the property’s energy was powered by renewable sources.

The latest steep rise in energy bills has been very concerning for people across the UK. Energy bills have risen as a result of high global prices for gas and other fossil fuels. Unfortunately, the rise has increased electricity prices too, because a significant proportion of the UK’s electricity, around 51% of all electricity in the UK, comes from gas fired power stations.

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So, it is perhaps not surprising that Savills found that homes in England and Wales powered by renewable sources can demand a 59 per cent premium compared to regional averages.

Interestingly, 71% of people surveyed said that a home’s energy performance certificate (EPC) rating now played an important part in their considerations over whether to buy a property. Energy Performance Certificates (EPCs)F tell you how energy efficient a building is and give it a rating from A (very efficient) to G (inefficient). They will tell you how costly it will be to heat and light your property, and what its carbon dioxide emissions are likely to be.

Times are changing as almost a third (32%) of people said that they put more importance on EPC ratings than they did a year ago.

Despite the government’s emission reduction plans most UK homes are still dependent on fossil fuels for heating, hot water and cooking which accounts for more than a fifth of the UK’s carbon emissions.

With spiralling energy bills and further cost rises expected in the Autumn, gradually more households are seeing low carbon alternatives as one way to lower their costs.

The government has already banned gas boilers in new build homes form 2025 and are considering extending the policy to include all new gas boilers from the mid-2030s onwards. From this date all newly installed heating systems would have to be low-carbon or be converted to use fuel such as hydrogen.

An alternative to fossil fuel heating systems is the electric heat pump where warmth is extracted from the outside air, ground or water and boosted to a higher temperature using a compressor before being transferred indoors.

The government has now launched the Boiler Upgrade Scheme in England and Wales to help homeowners afford the upfront costs of installing low carbon heating systems such as heat pumps. Grants of £5,000 will be available for homeowners to have air source heat pumps (ASHPS), and in some cases biomass boilers installed, and of £6,000 for the installation of ground source heat pumps (GSHPs) or water source heat pumps (WSHPs). It has set a target of installing 600,000 heat pumps a year by 2028.

One interesting statistic is that there are more homes that run on cleaner forms of heating in London and South-west England than in the North-East where almost 9 out of 10 properties rely on mains gas.

The survey conducted by Savills showed that homes with heat pumps demanded an average of £483,935 and sold for a premium of 59% compared to average prices. This premium is even more pronounced in the South-East with homes on average 84% more expensive.

Lawrence Bowles, residential research analyst at Savills said:

“Faced with increasing energy prices, homes that offer more cost-efficient monthly alternatives – such as homes with heat pumps – are climbing higher up buyers’ wishlists when searching for a new home.

“However, our analysis shows that more environmentally friendly heating methods such as heat pumps and community heating systems are most prevalent in higher-value areas.

“As such, in many areas housing values would not necessarily support the investment in newer and cleaner forms of heating.

“It also highlights the enormous challenge set by the zero-carbon agenda targets and the uphill battle ahead that we face. While government subsidy will undoubtedly go some way in supporting people to reduce their homes’ environmental footprint, more resources and investment is needed to significantly reduce our reliance on fossil fuel heating.”

Analysis of average values of homes transacted between 2019 and 2021 shows that newer, cleaner, methods of energy do demand a higher price tag.

Lawrence Bowles believes that although government subsidies would help people to lower their homes’ carbon footprint, with for example improvements to home insulation or adding solar panels, more resources and investment are needed to help reduce the UK’s reliance on fossil fuel heating.

Octopus Energy Makes Major Investment in Heat Pump Manufacturer Renewable Energy Devices (RED)

Heat Pumps

Global energy tech pioneer Octopus Energy has acquired a controlling interest in the Northern Ireland heat pump manufacturer Renewable Energy Devices (RED) based in Craigavon, ahead of full acquisition by the end of the year.

The multi-million-pound partnership will see RED’s existing factory being significantly expanded with an additional 100 engineering jobs created by 2024. The initial expansion will enable the factory to produce over 1,000 heat pumps a month by the end of 2022. Octopus Energy is expecting the number of heat pumps produced to continue to grow over the years making heat pumps cheaper and better for UK customers.

Octopus Energy and RED are hoping that by scaling production they can bring down the costs of heat pumps.

Greg Jackson, founder and CEO of Octopus Energy Group, said:

“This agreement will involve major investments into heat pump manufacturing, creating valuable green jobs across the UK and helping increase our energy security by getting more homes off gas, and drive down costs for customers. This is the “Model T” moment for the heat pump industry. Thousands of heat pumps rolling out of RED’s Craigavon factory a month is just the beginning. Like the original Ford, we’re planning to scale production every year, cutting costs even further and making heat pumps affordable for everyone.”

The partnership will allow the companies to build quiet, efficient, cheaper and stylish-looking heat pumps initially for UK customers. The partners are also looking for other locations that are suitable for building further heat pump manufacturing facilities.

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As well as increasing production, Octopus Energy is planning to incorporate its smart grid technology into the heat pumps which will allow them to take advantage of cheap energy when there is surging renewables on the grid but reduce the load at peak times.

Furthermore, by using the smart technology, homes that also have an electric vehicle charger or solar panels can enhance their efficiency. For example, solar panels can reduce the cost of running a heat pump by as much as 70%.

The partnership with RED is just the latest investment made by Octopus Energy in their commitment to building an industry around low carbon heating and heat pumps. It follows their recent investment of £10m into the UK’s first research and development centre based in Slough for the decarbonisation of heat.

Business and Energy Minister Lord Callanan, said:

“The Energy Security Strategy has laid out a future where we will be powered by homegrown renewable and nuclear energy and heat pumps. Using this cleaner, cheaper electricity will allow us to warm our homes. The government’s Boiler Upgrade Scheme will make grants of up to £5,000 available for fitting this green technology and together with private sector investment such as this by Octopus Energy, we’re making heat pumps an affordable, convenient and obvious choice for consumers, especially with global gas prices at record highs.”

RED both designs and manufactures heat pumps and is the only company in the UK to source over 80% of parts for its products within the country. They produce a range of innovative patented air-source heat pumps in-house, including their controls, software and heating distribution systems, making low carbon heating more accessible and regionally sourced.

Dr Jason Cassells, founder and managing director of RED, said:

“When I founded RED, I had a dream to make heat pumps affordable, to put as many heat pumps in as many homes as possible and to make green heating accessible to everyone. With Octopus’ financial backing, industry knowledge and tech expertise combined with our heat pump know-how, this dream will finally become reality. We’re at the cusp of a clean heating revolution, and Octopus is leading it.”

With soaring energy prices in the UK, the economics of operating a heat pump have already changed. Since the jump in the energy price cap in April it is now around £260 cheaper to run a heat pump than a gas boiler over a year and it is likely that this saving will increase in the years to come.

The UK government has set a target of 600,000 heat pumps to be installed every year by 2028. They were given a key role for the decarbonisation of heat in the UK in the government’s Heat and Buildings Strategy released in October 2021. The strategy included the announcement of the new Boiler Upgrade Scheme which was launched on 2nd April which offers households a £5,000 grant if they install a new air source heat pump or £6,000 for the installation of a new ground source heat pump.

To both accelerate this process and lower the costs of heat pumps, Chancellor Rishi Sunak also recently announced in his Spring statement that the government would scrap the 5% VAT on home energy efficiency technology including heat pumps for the next 5 years.

Heat pumps play an important part in the government’s roadmap for a greener and more secure energy future. The Government announced the launch of a heat pump investment accelerator competition for 2022, in its recently released energy security strategy. The scheme will be worth up to £30 million and aimed at making heat pumps in the UK, increasing the country’s energy independence by reducing the demand for gas.

Interest in the technology has unsurprisingly increased making the latest move by Octopus Energy even more relevant. It is hoped that private investment will drive the cost of heat pumps down making them affordable for all households eventually and eliminating the need for government support.

What’s in the UK’s New Energy Security Strategy?

Energy-Security

The UK government has finally set out its plan for how the UK can ensure its energy security after weeks of rumor and speculation. As well as targeting net zero carbon emissions and battling with soaring energy bills the UK is also looking to reduce its dependency on Russian oil and gas supplies.

The new energy security strategy is ambitious yet vague with promises for nuclear power and offshore wind but little mention of new measures for energy efficiency or onshore wind.

The new strategy plans for quicker expansion of nuclear, wind, solar, hydrogen, oil and gas, including delivering the equivalent to one nuclear reactor a year instead of one a decade. The plan also allows for over 40,000 more jobs in clean industries to be supported thanks to various measures, totalling 480,000 jobs by 2030.

The Climate Change Committee (CCC) is disappointed not to see more on energy efficiency and ways to support households to make changes that could cut their energy bills now.

While the strategy is a necessary step forward in the UK’s net-zero journey, the UK is still left reliant on natural gas for some time to come. Unfortunately, this leaves the UK open to further bouts of energy price volatility over the coming years.

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Just before the new energy strategy was released the latest IPCC report from the UN was published which once again warned that the chances of limiting global warming to 1.5 centigrade were diminishing. This only adds to the growing pressure felt by countries across Europe also grappling with their energy security.

Despite the IPCC warning the new strategy commits to holding a new licensing round for North Sea oil and gas in the Autumn and promises to remain open minded about fracking. The government considers these fuels to be important in the transition period and to our energy security. Furthermore, producing gas in the UK has a lower carbon footprint than importing it from abroad.

The UK’s new strategy is looking less at shoring up near-term sources of supply and much more at long-term solutions to reducing our reliance on imported energy. The UK’s aim is to boost long-term energy independence and produce cleaner and more affordable energy which will mean greater energy security and prosperity.

The new strategy could lead to 95% of the UK’s electricity coming from low-carbon sources by 2030 ahead of the existing aim to decarbonise the sector by 2035.

The Climate Change Committee’s (CCC) initial response was that if the proposals were enacted it “would bring us closer to meeting the net-zero challenge”.

However, the UK is currently still heavily reliant on gas and reducing this reliance needs to be a key feature of any energy strategy. The government’s new strategy is putting its weight behind pushing offshore wind and nuclear as the primary means of achieving this.

The government has increased its target for offshore generation to 50GW by 2030, up from 40GW, with a new target for 5GW to come from floating turbines. This is more than enough to power every home in the UK. It proposes cutting the approval times for new offshore wind farms from 4 years to 1 year and streamlining the process involved in getting new projects to the construction phase.

RenewableUK’s CEO Dan McGrail said:

“The renewables industry is ready and able to work with government to deliver the ambitions set out in the new Energy Security Strategy. Renewables can deliver new, low-cost power quicker than any other option and wind will be at the heart of a secure, affordable net zero energy system.”

It has also given nuclear power a huge role to play in providing clean energy for the UK. It is hoping that new nuclear capacity can increase by up to 24GW generating as much as 25% of UK’s electricity by 2050. Small Modular Reactors will form a key part of the nuclear project pipeline.

Some climate measures which are popular with the public such as onshore wind and solar have received less attention in the new strategy than nuclear power. Although the strategy contains some new measures to promote solar power which is the cheapest, most popular and fastest energy technology to build, the plan as with other aspects of the strategy lacks any real concrete proposals.

The government plans to consult on developing partnerships with a limited number of supportive communities who wish to host new onshore wind infrastructure in return for guaranteed lower energy bills

The press release for the strategy says that the government will “look to increase” the UK’s current 14GW of solar capacity, including both large-scale projects and rooftop solar panels which “could” grow up to five times by 2035, taking it to 70GW. It will also look at the rules for solar projects, particularly on domestic and commercial rooftops.

Solar Energy UK Chief Executive Chris Hewett said:

“The Government’s expectations of a five-fold increase in solar in the UK by 2035, shows that it now shares the same level of ambition as the UK solar industry. The announced changes in planning, Contract for Difference (CfD) auctions and potential low-cost finance options could significantly accelerate solar deployment, creating thousands of jobs, cutting energy bills and making Britain more energy secure.”

It is important of course to have a reliable backup fuel to wind and solar as you cannot guarantee that the wind will always blow as much as you need it too. Nuclear will play that part in the long-term but it’s going to take well over a decade for enough new plants to come online. In the short-term the share of electricity from nuclear will fall as much of the UK’s existing nuclear capacity is retired. Achieving the targeted offshore capacity will also be gradual as the associated planning decisions are often time consuming though the new strategy seeks to reduce that.

The National Grid also requires considerable investment to get the energy onshore to where it’s needed and to minimise imbalances in local power networks. Though onshore wind is perhaps easier to deploy in the short term it is less favoured by the government.

Further to this the strategy includes targeting 10GW of hydrogen capacity this decade, double the original target with at least half coming from green hydrogen. This is ambitious as the technology is still in its infancy. It will also require some to be generated using gas-fuelled power (so-called blue hydrogen) which may actually increase the UK’s dependence on gas in the short-term. The aim is to provide cleaner energy for vital British industries to move away from expensive fossil fuels, but it could also be used for cleaner power, transport and potentially heat.

Reducing the UK’s reliance on gas for domestic heating is a major challenge and the new strategy hints at utilising some of the new hydrogen capacity for this purpose given the potential to use a lot of the existing infrastructure.

The UK also has much less gas storage capacity than its European neighbours. Its total working capacity is a little under 10TWh which leaves very little room to weather future short-term supply issues.

However, heat pumps are what most experts including the government’s independent climate committee favour as playing the dominant role in future heating systems with any hydrogen kept for industrial uses.

The government are currently offering grants to help speed up the roll-out of heat pumps, but they will only work effectively if homes are well insulated. There’s little discussion of any help to finance or incentivise household investment in efficiency products in the new strategy. The government also plans to run a Heat Pump Investment Accelerator competition in 2022 worth up to £30 million to make British heat pumps, with the aim of reducing the demand for gas.

With the continued risk of further bouts of energy price volatility maintaining the currently high levels of public support for renewable energy will be a key challenge for the UK government over the coming years. Hopefully, the new energy security strategy is just a first step on our journey toward net-zero.