New Microgeneration report - what it actually says
Home fires burning won't keep the lights on
Analysis A new report on possibilities for deployment of low-carbon microgeneration machinery in British homes was published yesterday, and has scored big ink . But most of the coverage has ignored the three main messages of the report.
These are fairly simple. Firstly, according to the report, microgeneration in the UK is going absolutely nowhere without massive government backing - in the form of multibillion-pound subsidies, or regulations which would in effect place multibillion-pound levies on homeowners. Secondly, the report's authors conclude that with such massive backing microgeneration might reduce the UK's carbon emissions by as much as a few per cent; though in most scenarios the saving would be less than 1 per cent.
Finally and most importantly, however, the report notes that any success in delivery of lower-carbon national grid electricity would render most forms of microgeneration pointless. Given a halving of the carbon burden of grid 'leccy, widespread takeup of home power machinery would no longer reduce the UK's carbon emissions but actually increase them. (It's important to note that headline-worthy but marginally useful microgen kit such as rooftop wind turbines and solar cells formed only a small part of the calculations.)
The document in question is called The Growth Potential for Microgeneration in England, Wales and Scotland, and it can be downloaded in full here (big pdf) . It was produced by consulting engineers Element Energy and was paid for by UK national and local government, the Micropower Council, several power companies, the Energy Saving Trust and the Renewable Energy Foundation.
It won't pay unless we all pay
The report's authors, having done their economic projections into the future, don't see any serious takeup of microgeneration without heavy government backing - to the tune of billions each year.
Subsidy schemes which achieve a widespread penetration of microgeneration have cumulative subsidy costs in the tens of billions by 2030 ... expectations of technology cost reductions appear necessary but insufficient to promote substantial consumer uptake of microgeneration. In the absence of changes to the fundamental energy economics, microgeneration technologies will require a supportive policy framework ... Even with relatively optimistic cost reduction projections up to 2050, microgeneration technologies will struggle to compete for consumers without policy support.
In particular, the most pure and righteous green home power technologies - rooftop wind turbines and solar-electric panels - require huge subsidies, several times the consumer price of electricity, to make them worth installing. Even then, most home users need loans to afford them; and the loans must be cheap or the revenue from selling high-priced subsidised power to the grid still won't cover the payments. Home windmills and solar-cell panels didn't produce enough power to seriously affect carbon emissions in any of the scenarios modelled. But there are many other kinds of microgen equipment, and it was these which seemed likeliest to be successful.
Keeping the home fires burning
Especially attractive in some scenarios are Combined Heat and Power (CHP) installations. Many Brits nowadays heat their homes and water using gas boilers, wasting a good deal of the energy they buy even with the most modern kit. Gas CHP plants cost a lot more than a combi boiler, but generate 'leccy as well as heat; wasting less overall, and so saving money over time. In future, CHP plants might use fuel cells rather than relatively ordinary options such as gas motor or Stirling-engine powered generators.
Making "cautious" assumptions about fuel-cell CHP - which isn't yet available for home use - the report's authors thought it could be brought down to the same kind of price as a combi boiler by using a within-the-realms-of-possibility subsidy regime. This meant that CHP, and particularly fuel-cell CHP, tended to dominate the future microgen projections. Like windmills or solar cells, CHP plants would sell electricity back to the grid if it wasn't immediately required. The difference is that CHP generates a lot more power.
Another crafty option for the parsimonious home owner is heat pumps, which work just like a fridge. Instead of making their insides cold and dumping heat into the kitchen, however, they make the air outside a house (or the ground beneath it) colder, and dump the heat into your radiators or your hot water system. The electricity required to drive the heat pumps is potentially much cheaper than a normal heating bill; but, again, the upfront costs are so large as to discourage most people.
A variant on heat pumps is solar thermal, which accounts for nearly all the microgeneration kit now installed, largely because it's comparatively cheap and simple. A typical home solar-thermal setup uses the sun's heat to warm up domestic hot water before the boiler starts on it, saving a good deal of energy. This is normally done by simply piping the water through rooftop panels, sometimes nothing more complex than old radiators painted black. Kit of this type obviously isn't much use on overcast, freezing winter days, but can yield cheaper showers and laundry during the summer. However, the scope for home solar-thermal is limited in the UK. The report's projections didn't show it becoming a big factor.
Finally, of course, there's our old friend biofuel. In the case of home microgen, you're normally talking about burning sustainably-produced wood in a furnace, which is potentially low-carbon provided you aren't burning rainforest to clear land for cows or something. This doesn't necessarily have to be a case of heaving logs about every day, either; there are pellet-fuelled jobs available now which just need their feed bin topping up from time to time.
Keeping up with the neighbours
Many of these things are already widely used abroad, and various people frequently suggest that they'd be a good fit for the UK. Colossal German subsidies (£10bn and counting) have seen up to a gigawatt of solar-electric installed there every year of late, for instance; but there are signs that even the green Germans are finding this unaffordable, and it's early days yet. (One should note that each gigawatt of installed solar capacity satisfies less than half a percentage point of Germany's electric demand - and electricity is only a portion of overall energy use). The cheap government-backed loans which make it possible for ordinary Teutons to start selling electricity to the grid at hugely subsidised prices have been discontinued, and it seems that the German home-solar gravy train is no longer easy to get onto.
In Germany, where [a subsidised, very high payment for electricity sold back to the grid] has stimulated installation of [solar cells] ... uptake by domestic consumers was largely dependent on the availability of soft loans. This ... overcomes the capital cost barrier, and the value of [the money made selling expensive 'leccy to the government] in Germany is sufficient to offset the loan repayments. Since soft loans were discontinued in Germany, purchases by domestic consumers have fallen significantly and most uptake is now by commercial and industrial consumers who have access to low-cost finance ...
The big obstacle to takeup of heat pumps or wood burning in Blighty is the fact that we have a widespread gas grid as well as our electric one. Scandinavians use heat pumps and Austrians use wood furnaces largely because they can't get gas, according to the report's authors.
In Sweden, the heating market is dominated by direct electric systems whose running costs have risen significantly in the last few years. This makes the installation of heat pumps a natural transition ...
Pellet boiler sales in Austria followed two decades of R&D that delivered a product that was much more attractive and easy to use than the wood and oil boilers that they replaced.
In the UK, the convenience and low cost of gas-fired central heating provides a strong barrier to microgeneration uptake ...
In Austria, despite the high sales of modern pellet boilers, there has also been a transition from biomass and oil to gas as the dominant fuel ...
Microgen through green-tinted spectacles
So getting us Brits to start using microgeneration is going to take major subsidy, as it has in Germany. The report's authors consider a range of options here. The headline grabber, gleefully seized upon by the UK microgeneration industry  and reprocessed hastily by hard-green zealots , would see £21bn in new subsidies handed out by 2020. This would result in around 9 million microgeneration units in service by then, seven million of them the notional CHP fuel cells which aren't even for sale yet.
This scenario would see 16 renewable (eg, low or zero carbon) terawatt-hours of heat and another two or four of leccy produced, equivalent to 1 per cent of the UK's total energy consumption turning green. In total, microgen would be delivering 118 terawatt-hours of heat and 30 of electricity. (Tables 3, 4 and 28 in the report).
This is said by the microgeneration industry and the Guardian to represent "as much energy as 5 nuclear power stations", though Element Energy confirmed to the Reg yesterday that they never said that.
Just for reference, Sizewell B - the only existing UK nuke station planned to last beyond 2023 - produces a little less than nine electric terawatt-hours annually and no useable heat.
The £21bn-subsidy microgen plan would produce as much clean electricity as half a nuclear power station, then, or as much clean energy all up as two nuke stations. Not five. Including dirty carbon-smeared CHP production, the whole £21bn microgen base would be about equal to seventeen Sizewell Bs - not five.
This subsidy plan would continue to cost the taxpayer £5.5bn each year forever, according to the report - that's as much as we currently spend on defence procurement, or enough money to buy 55 terawatt-hours of electricity every year at consumer prices, well over 15 per cent of the national leccy bill. And of course, we'd all still be paying our normal energy bills as well, and we'd still have done nothing to clean up the other 99 per cent of our energy usage.
By comparison, a nuclear power station half again as big as Sizewell B is said by French makers EDF  to cost about £2bn and by most other people to cost about £3bn. Four billion quid's worth of nuke stations would produce as much low-to-zero-carbon electricity as the headline microgen plan, which would cost conservatively five times as much just in subsidies - forget about the costs to the users. Even given swingeing regulatory, maintenance, staffing, decommissioning and waste-management costs (plus some pocket change for fuel) it's not surprising that the nuclear energy industry - unlike the microgeneration one - does not consider that it needs any subsidy at all in the UK.
Locking us in to carbon
And there's the rub. Microgeneration will only happen if it's subsidised; and it only makes sense to subsidise it if this does something good, like seriously reducing our carbon emissions or freeing us from the need to buy gas from Russia. But microgeneration reduces our carbon emissions by a few per cent at the absolute outside - more probably by less than 1 per cent - and it certainly doesn't wean us off gas.
Overall, no policy scenario leads to a dramatic decline in reliance on imported natural gas and hence security of supply by 2050.
And it gets worse. If grid electricity can be decarbonised even partially - by building wind farms or nuclear stations, say - the eco benefits of microgeneration disappear. We would find ourselves subsidising people to spew carbon unnecessarily, in fact. The report shows quite clearly that if the carbon burden of grid power can be halved, then burning gas in the home becomes a very eco-unfriendly thing to do, no matter how cunning the machinery used. Subsidies for CHP et al would then be highly un-green, as they would actually drive up carbon emissions rather than reduce them. Only heat-pumps, and perhaps some biomass kit, would be eco-worthwhile if grid electricity were less dirty.
The report's authors offer a stark warning to anyone fancying that micro-CHP plant.
There are reasons to believe ... that the grid will decarbonise rapidly. Key factors are:
• Possible expansion of nuclear capacity
• The EU’s 2020 target
• The Large Combustion Plant Directive ... expected to lead to a reduction in the number of coal plants connected to the grid
• Implementation of Carbon Capture
If a rapid decarbonisation and expansion (to cope with new heating demand) of the grid is possible then it may be prudent to encourage uptake of efficient electric heating technologies (essentially heat pumps) instead of, for example, micro-CHP ... it is important that this issue is tackled before substantial microgeneration support schemes are put in place. It would be possible to ‘lock-in’ UK consumers to the wrong microgeneration technology ... if overall energy policy is not thought through in a joined up and long-term fashion.
Or in other words, microgen subsidies would be stupid if we have any aspirations toward decarbonising the grid.
Did anyone actually read this?
In the end, everyone's drawing their own conclusions about this report. The microgeneration makers see it as an ironclad case for big subsidies. At least one other of the report's backers vehemently disagrees , headlining their release "Subsidy Unnecessary as Rising Fuel Prices will Make Microgeneration Attractive". This seems to be flying in the face of the report, to say the least of it:
Annual fuel prices rises have very small short-term effects ... By 2030, the combination of fuel price rises and reductions in capital costs are sufficient to increase the microgeneration stock ...
More abrupt price changes have a much larger effect ... doubling of fossil fuel prices drives uptake in nearly 10 million homes by 2030. The vast majority of this is CHP ... Biomass uptake remains comparatively low ... A 50 per cent decrease in fuel prices leads to a substantial reduction of microgeneration ...
A doubling of biomass prices [as might occur if lots of people used biomass] is sufficient to make wood chip and pellet boilers extremely unattractive ...
Conclusion – moderate fuel price rises lead to a large increase in microgen uptake relative to the base case by 2050, but overall numbers remain small compared with conventional technologies such as condensing boilers.
Most of the press so far are parroting the microgeneration makers' five-nuke-stations release.
As far as we at Vulture Central can see, what this report actually suggests is that lower carbon emissions and energy security are both a lot easier to achieve nationally using the electric grid than in the home using the gas network. As for trying to achieve these aims in the home without burning stuff - eg, using rooftop solar electric, wind turbines etc - that barely made a difference in any scenario, though it did offer the chance to piss away a lot of cash.
Given that Element Energy and most of the people who funded them are either well-disposed or at worst neutral to the general idea of microgeneration, that's actually a pretty damning indictment.®