The government should extend its support scheme for renewable electricity to cover heat, according to its own Business Taskforce on Sustainable Consumption and Production.
The recommendation is in a report on promoting decentralised energy, issued by the taskforce in March.1 The task force, chaired by Johnson Matthey chief executive Neil Carson, formed in 2006 to make policy recommendations on how to lower the environmental impact of products and services (ENDS Report 374, p 6 ).
Distributed energy has a "key role to play in the shift to sustainable consumption and production", the report says. It defines distributed energy as renewable energy connected to local distribution networks and gas-fired combined heat and power schemes.
However, there are hurdles preventing business taking forward such schemes. These include "the complexity [of projects] for companies who don’t see themselves as power firms", the difficulty of finding users for any energy generated, the high capital investment in systems, often with a payback period over three years, and low feed-in tariffs offered by energy suppliers. Technical and planning issues are raised as well.
Among ways to overcome this, the report mentions extending the Renewables Obligation to heat. "Fiscal measures that currently promote renewable electricity alone need to be modified to recognise [heating and cooling]," it says. "Extension of renewable obligation certificates to cover heat and, ultimately, the creation of a carbon reduction certificate will drive these efficiencies."
The task force is the latest body to make such a call, but importantly the first from within business. In February, the Business Department (BERR) issued a "call for evidence" on the subject some 30 months after its own Biomass Task Force had first told it to do so (ENDS Report 397, p 42 ).
Unfortunately, the task force’s recommendation is lost somewhat among a plethora of other calls for policy changes in the report. None of the recommendations are prioritised or described in much detail, and several of them are already being dealt with either by BERR or energy regulator Ofgem.
For example, in a section on "grants and fiscal measures", it makes recommendations for everything from providing more grants for decentralised energy, "particularly to smaller business", to shifting the tax system to a carbon base.
Talking to individual businesses that are trying to invest in decentralised energy reveals the list of recommendations could be streamlined without making the need for change appear any less urgent. For example, brewer Scottish & Newcastle is to commission a 4.7MWe biomass-fired CHP plant at its Tadcaster brewery in Yorkshire by the summer. A unit of similar size will be commissioned at its Royal Brewery in Manchester by December. Both will be fuelled by a mix of spent grain from the brewing process and wood chip, providing 60% of each site’s steam and nearly all of the sites’ electricity.
Project manager Andrew McMurtrie’s main message to government is the need for a guaranteed rate of support per MWh of generation, including new support for heat. "Anything like that would take away some of the uncertainties you currently have with the price of credits under the EUETS, the uncertainty of ROC banding and so on. The projects are difficult enough without those boundaries constantly changing."
The other major issues for Mr McMurtrie are the bureaucracy in the regulatory process, the time it takes to get decisions - up to six months for Environment Agency permits - and the different approaches electricity distribution companies are allowed to take with such projects. A project to install a CHP plant at Scottish & Newcastle’s cider works in Hereford is now in doubt, he says, partly because of the local electricity distribution company’s estimated £500,000 cost to connect the works to the grid. This is more than half again that asked for at the other sites.