UK RE Policy : More questions than answers?

The UK renewable energy sector is riddled with questions — many of them still remain unanswered. How is the UK going to meet its 10% renewable energy target? Are the various policies, that have recently been announced, going to be enough to achieve this target? What is the interaction between these different policies and will they work in tandem to develop this sector? What of the Renewables Obligation, Climate Change Levy and New Electricity Trading Arrangement? Do their effects support, hinder or simply cancel each other out? And what of green electricity? Is it going to be a passing phase - a product that will soon cease to exist for domestic customers as non-domestic interests clamour to buy existing ‘stocks’ to avoid the Climate Change Levy? Is the Climate Change Levy a means for the supply industry to meet its 10% renewables obligation as they have a market to offset the cost? And what approach is the electricity supply industry taking to the combination of policies they are having to face imminently? These are some of the many questions and confusions surrounding the UK's renewable energy market. In this article, Judith Lipp, researcher at the University of Oxford's Environmental Change Institute, attempts to make sense of this minefield of questions and uncertainties.     

Integration of bioenergy systems into UK agriculture–New options for management of nitrogen flows

The large flow of reactive nitrogen (N) through agriculture causes negative environmental impacts, pointing to a need for changes in agricultural practices. At the same time, agriculture is expected to provide biomass to support the increasing demand from the UK bioenergy sector. A high-level aggregated model of the agricultural system in the UK was developed, which maintains the existing level of food and livestock production and at the same time increases N recirculation. Integrating three different bioenergy sub-systems into the agricultural system was an essential component of the model development. Cellulosic bioenergy crops were located in the landscape as vegetation filters to intercept and capture N and thereby reduce N leaching. Efficient collection and digestion of manure produced organic N fertiliser and biogas. Efficient forage production for cattle allowed further cultivation of bioenergy plants. Five implementation scenarios were developed to clarify the contribution of these bioenergy sub-systems to improved N management. The results point to a significant potential for improving the productive use of reactive N and for decreasing N losses to water and air. The interception and recirculation of N presently leaching from arable fields is assessed as the most important option. It is also important to increase recirculation of N in manure and in bioenergy system by-flows. Besides mitigating the environmental impacts of agriculture these measures reduce the requirements for newly synthesised N fertilisers. A systems perspective on N, agriculture, and bioenergy systems facilitates N recirculation and promotes effective N use, reducing the need for additional N inputs.     

Does weather explain cost and quality performance? An analysis of UK electricity distribution companies

In recent years, a number of empirical studies and energy regulators have applied benchmarking techniques to measuring the efficiency and performance of network utilities. An important issue has been the extent to which the results are influenced by contextual factors. Among these, weather factors are frequently discussed as being important. We use factor analysis and two-stage data envelopment analysis techniques to examine the effect of a set of important weather factors (gale, hail, temperatures, rainfall and thunder) on the performance of electricity distribution networks in the UK. The results indicate that such factors often do not have a significant economic and statistical effect on the overall performance of the utilities. The weather parameters in some models are significant in terms of economic efficiency. The results echo our previous findings of the importance of extending the basic model to include other inputs such as total expenditure (Totex), customer minutes lost (CML) and network energy losses in regulatory benchmarking.     

Fiscal impacts of energy efficiency programmes—The example of solid wall insulation investment in the UK

Programmes supporting the installation of energy efficiency measures typically incur a cost in the form of subsidies as well as lost VAT income due to reduced energy consumption. Those costs are to some extent offset by the tax receipts and other revenue streams generated as a result of the activities promoted under the programme. In this paper we analyse the budgetary effects of energy efficiency programmes focusing on the example of solid wall insulation in the UK. Three distinct subsidy options have been defined and modelled for the purpose of this research including two policies with varying degrees of direct subsidy and a low interest loan scheme. Our analysis shows that a significant amount of the cost of a scheme funding solid wall insulation would be offset by increased revenues and savings. A loan scheme, due to the high leverage, achieves not only budget neutrality but generates additional revenue for the Exchequer.     

Stuck between a ROC and a hard place? Barriers to the take up of green energy in the UK

This paper examines the UK mechanisms for ensuring future investment in renewable energy through consumer adoption of green energy tariffs and the Renewable Obligation Certificate (ROC) system. Using a national survey and focus groups the stated willingness by UK customers to pay a premium for renewable or green energy and actual take up of such tariffs is assessed. Substantial differences between willingness to pay for and the adoption of green energy tariffs are reported. This disparity is linked to a range of factors including consumer confusion, lack of supply, complexities of constructing ‘green source’ tariffs under the ROC system and a lack of customer trust. It is concluded that the re-definition of the green energy market in favour of ‘green source’ tariffs, greater direct compliance with the Renewable Obligation by addressing supply constraints, and efforts in providing clearer information and choices for consumers via a compulsory green energy accreditation scheme are required if willing consumers’ are to contribute to investment in renewable energy.     

What lessons have been learned in reforming the Renewables Obligation? An analysis of internal and external failures in UK renewable energy policy

Despite operating a delivery programme for RES-E since 1990, UK targets and policy goals have not been achieved. In response, the Government reformed the RO. This article re-examines UK renewable energy policy by analysing the internal and external failures of the various mechanisms to determine if Government has learnt from previous experience in reforming the RO. Government did not learn from their own actions during the NFFO/RO transition, evidenced by high-levels of similarity in internal/external failures. The reformed-RO is expected to significantly increase deployment, has provided a ‘renewables package’ by comprehensively addressing both internal/external failures but major internal failures (price/financial risk) still remain, resulting in contiguous failures over two decades and two mechanism changes (NFFO, RO, RO/reformed-RO). Success will again be heavily dependent on a select few technologies and new/untested measures to combat external failures. Mechanism-extension to 2037 is probably the single most important factor underlying potential deployment increases. However, introducing a FIT-like system via the sheer number of ‘bolt-on’ reforms to counter policy failures indicates loss of direction and clarity. Overall, although Government appears to have learnt some of its lessons from the past two-decades, significant doubt remains whether renewable energy policy objectives will be met via the latest mechanism change.     

Effect of heat-saving measures on the CO2 savings attributable to micro-combined heat and power (μCHP) systems in UK dwellings

This paper considers the relationship between heat-saving and micro-combined heat and power (μCHP) technological interventions for reducing the carbon footprint of existing domestic dwellings within the UK housing stock. The relationship between the annual heat requirement of individual dwellings and the CO₂ savings attributable to different μCHP systems is investigated (by means of predictive modelling based on heat and power demand datasets recorded on a 1-min time base for nine dwellings). An assessment is made of the effects of various heat-saving measures upon the annual CO₂ savings predictions for candidate μCHP system implementations, when applied to ‘domestic building variants’ (as defined within the Carbon Vision TARBASE research programme). The increasing application of heat-saving interventions serves to reduce the CO₂ savings solely attributable to a μCHP system. The magnitude of this effect is a function of the μCHP system's electrical efficiency and electrical power output. For example, a 1 kW prime mover of 10% electrical efficiency is predicted to reduce annual CO₂ emissions by 72 kg CO₂ for a dwelling with an annual heat requirement of 11.9 MWh, but if the identified set of heat-saving measures is implemented first the demand falls to 5.0 MWh and the μCHP system will actually result in an emissions increase of 100 kg CO₂ p.a. By comparison, relative savings of 467 and 294 kg CO₂ p.a. are predicted if this dwelling is fitted with a 1 kW prime mover of 30% electrical efficiency. Still greater savings are predicted for higher power output systems of high efficiency, but a relatively large proportion of the generated electricity (44–75% depending on the heat and electrical demand of the dwelling) must then be exported.