UK government support for the low carbon economy has created a market dominated by solar, wind and biomass technologies. Mass implementations of these systems has resulted in electricity grid imbalances that the government believes needs large infrastructure scale solutions.
We believe that technology agnostic support for low carbon innovations, perhaps targeted at micro generation and storage will build a more robust energy network. This will take the pressure off the national grid and lead to a more flexible market driven demand framework requiring little government support once up and running.
How do we get there?
We suggest four areas that need addressing:
- Regulation: the government must revisit its decision to back away from the zero carbon homes standard. Rigorous implementation of this standard alone would drive change. There are examples of low carbon buildings built at the same cost to current buildings and achieving zero net carbon standards. Low carbon buildings can be achieved at no cost to the government.
- A new subsidy regime: Most renewable technologies cost more than fossil fuel systems but have lower running costs. The capital hurdle can be addressed effectively through lump grant, tax capital allowances, or stamp duty – Incentives based on long-term revenue do not interest the building industry. If we are going to continue with subsidies, then implement a technology neutral subsidy regime that pays out on metered renewable energy delivered, irrespective of where it comes from.
- Low interest loans: Many renewable technologies have not reached the economies of scale to compete head to head with existing systems backed by legacy infrastructure investment. Getting to scale is a key challenge. Government backed funding (i.e. low interest loans) for projects would help.
- Value Storage: It is clear that national scale renewable energy systems rely on energy storage. Under the current energy price regime, storage has no value. Storage only has value at scale. That creates a problem in getting to that scale. However if linked to use of renewable energy, then storage has a value at the domestic scale.
Regulation, alongside intelligent backing for low carbon micro technologies has the potential to transform the UK’s energy market. A focus on getting this market to scale would cost significantly less, and generate more value to the country than the major infrastructure investments currently being planned. We urge policy makers to use a consistent metric of carbon reduction per government pound and use this metric to drive investment decisions and government support.