The UK Clean Growth Strategy and the Role for Solar in Delivering it

15th February 2018
Guest blog by Stuart Elmes, STA board member and Viridian founder and CEO

In October 2017 the UK Government published its Clean Growth Strategy, setting out the actions that it will take to reduce emissions, increase efficiency and help to lower the amount that consumers and businesses spend on energy, and putting clean growth at the centre of a modern Industrial Strategy. Leastways, that’s what the foreword written by Theresa May said it would do.

A couple of months later, the Climate Change Committee (CCC), an independent body established by the Climate Change Act 2008 to advise government and report to Parliament on progress being made to reduce greenhouse gas emissions, published its analysis of the measures proposed in the strategy.

While welcoming the strategy and its ambition, the CCC identified significant gaps therein and predicted that – even if delivered in full – the policies in the strategy would still result in the UK missing fourth and fifth carbon budgets by a significant margin. The solar industry must hope that the government heeds its own adviser, because some of the gaps identified would provide a real boost for solar energy if properly addressed.

But what should the solar industry make of the Clean Growth Strategy? Let’s take a look at the sections that are most relevant.

Power Generation

Government has set out plans for the decarbonisation of UK electricity to below 100 gCO2 per kWh by 2030, a target with which the CCC agrees.  More renewables on the grid and a reduction in the use of coal for electricity generation mean that the UK has already made great strides in this direction (see my blog on this topic here).

Now coal has been all but removed from generation, the low hanging fruit has been plucked.  Future progress will be less easy and the government’s plans rely heavily on two risky assumptions. The first assumption is a successful programme to deliver two to three new nuclear plants in addition to Hinkley C, on-time and at ever-decreasing costs. The CCC describes this plan as ‘having associated risks’, which is a polite way of saying “you’re having a laugh”.

Government plans also rely on being able to import large amounts of low carbon electricity from interconnects with continental countries (presumably French nuclear). The CCC rightly points out that if the UK is sucking in low carbon electricity from the rest of Europe, that carbon intensity of electricity rises in other countries.

The CCC instead proposes that the government spend the £557m it has committed to funding Contracts for Difference (CfDs) more wisely – by including cost-competitive technologies in the auctions, technologies such as onshore wind and solar PV. In this way renewable generation could be expanded at no extra cost to UK ballplayers. The CCC advice to government on solar PV and onshore wind is that “Where they are cost-competitive and meet local planning criteria, these technologies should be allowed to compete for contracts against other low-carbon options.”

The exclusion of solar PV from CfDs has been a cause of great concern to the Solar Trade Association (STA) for quite some time and it is surely excellent news that such a respected body as the CCC has got behind the STA’s call for solar to be allowed back into the scheme.

New Buildings

Image: Viridian SolarPhoton Energy

Here’s what the Clean Growth Strategy has to say about new buildings: “Following the outcome of the independent review of Building Regulations and fire safety, and subject to its conclusions, we intend to consult on strengthening energy performance standards for new and existing buildings under Building Regulations, including future-proofing new homes for low carbon heating systems.”

At first glance, it looks like nothing new. The STA understands from CLG that following the conclusion of the Hackitt review of building regulations, commissioned following the Grenfell tragedy, there would next be a ‘Cost Optimality Review’ to assess whether there was any need to strengthen energy performance standards in new homes. Although the summary makes no mention of a cost-optimality review, the more detailed description is peppered with ‘where practical and cost-effective to do so’ caveats, which imply the review is still important.

There are, however, a couple of subtleties in the text that may (or may not) be significant.

The text mentions strengthening energy performance standards in new and existing homes under building regulations. Could this be a signal that the Daily Mail-Baiting ‘consequential improvements’ idea has been dusted down again? This common sense proposal that people adding value to their homes by extending them should be required by building regulations to apply low-cost energy efficiency improvements to their existing home was looking promising until it was presented as a middle-class-bashing ‘conservatory tax’ by right wing press and quickly dropped. Watch this space, I guess.

The last point on future-proofing new homes for low carbon heating systems raises an interesting prospect for solar – both solar thermal and PV. Hot water storage in new homes has disappeared for all but the largest properties, with combi-boilers preferred. Legislating for hot water storage would be a boon for solar thermal (reducing the extra-over costs for a solar cylinder), and for solar PV (with the ability to add excess power diversion at low cost).

In its report, the CCC calls on the government to develop new standards that deliver high levels of fabric efficiency and future-proof properties for low-carbon heat. As far as the solar industry is concerned, we want higher standards, but ones that leave a role for on-site generation. The STA will need to remain vigilant on building standards to ensure that regulations in this area are not tilted away from solar.

Improving Existing Homes

Image: Viridian Solar / Ecoliving

The Clean Growth Strategy is full of ambition for improving the energy performance of existing homes, stating that:

“We want all fuel poor homes to be upgraded to Energy Performance Certificate (EPC) Band C by 2030 and our aspiration is for as many homes as possible to be EPC Band C by 2035 where practical, cost-effective and affordable.
We will: “Develop a long term trajectory to improve the energy performance standards of privately rented homes, with the aim of upgrading as many as possible to EPC Band C by 2030 where practical, cost-effective and affordable”.
We will: “Consult on how social housing can meet similar standards over this period”.
All of which is a complicated way to say that all homes (of all kinds) should be no worse than EPC C by 2035.

Unfortunately, the CCC nails it when it says that: “Details need to be set out on how this will be delivered”. The strategy is big on setting out goals, but is somewhat short on concrete proposals.

I’ve written before about the tangled mess of policy government efforts to encourage greater investment in energy efficiency for buildings has left behind. The government’s proposals in the strategy unpromisingly includes throwing £3.6bn more money at the Energy Companies to insulate fuel-poor homes through the ECO scheme, as well as consulting on legislation for private landlords. This second is welcome because the current legislation has a huge loophole in it – read my blog on this issue here.

The CCC notes that government’s stated ambition to improve the energy efficiency of so-called ‘able to pay’ homes has no existing or even proposed policy attached to it.

Solar can surely play a huge role in getting properties to EPC C, so this is another area to keep a close eye on in coming months, as government starts to pull together plans to deliver these admirable targets.

Commercial and Business Energy Use

Image: Viridian Solar/ Solar Kingdom

In the Clean Growth Strategy, Government commits to developing a package of measures to support businesses to improve their energy efficiency by at least 20% by 2030. This package of measures includes:
• Improving the energy efficiency of new and existing commercial buildings.
• Raising minimum standards of energy efficiency for rented commercial buildings.
• Simplifying requirements for businesses to measure and report their energy use.
• Establishing an Industrial Energy Efficiency scheme.

The CCC broadly welcomes the targets, but detail is lacking again about how proposed package of measures would deliver the goal.

Solar on commercial rooftops ought to be a real sweet spot. High energy use during the day and the correspondingly high proportion of self-consumption of solar energy generated, comparatively simple roof access and economies of scale on large shed roofs should all add up to a compelling economic case. Unfortunately, the solar industry has been disappointed by the government’s business rates treatment of solar on commercial buildings. Despite a sustained and energetic lobbying effort from STA, the Clean Growth Strategy did not coincide with a reassessment of taxes that discourage investment in energy efficiency. It is to be hoped that the ambition for improving business productivity through energy efficiency outlined in the strategy can be used to reverse this harmful treatment of solar.

Low Carbon Heating

Government says it will: “Phase out the installation of high carbon fossil fuel heating in new and existing homes currently off the gas grid during the 2020s, starting with new homes,” and “Invest in low carbon heating by reforming the Renewable Heat Incentive, spending £4.5 billion to support innovative low carbon heat technologies in homes and businesses between 2016 and 2021.”

The CCC welcomes this but recommends that this should include heat pump deployment, which, together with installation in new-build properties, would develop heat pump markets and supply chains in order to prepare, if necessary, for potential widespread deployment in buildings connected to the gas grid from the 2030s.

Solar thermal is not mentioned, but the government ‘getting’ that energy is more than just electricity is long overdue, and based on this commitment in the strategy, there could be a role to play for solar thermal in providing low carbon heating – especially for homes that are well insulated and the remaining heat demand is domestic hot water.

In Summary

Overall, the CCC gave a cautious welcome to the Clean Growth Strategy while warning that there’s lots of work to do to turn the aspirations into deliverables. The solar industry should also welcome the strategy, giving as it does a fresh commitment to developing the policies required to deliver a low carbon future.

Now the hard work starts to make sure they get those policies right!

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