But it’s not all doom and gloom, and in May I described how the Triodos Renewables portfolio and share price is relatively unaffected by the changes which only impact future developments, not the existing ones. The renewables sector, by its very nature, is versatile, resilient and able to tackle adversity – whether that be environmental or political. But let’s take a look at what we’re up against…
The hypocrisy of new energy legislation
Power to the people...sort of
The government claims to want to give power to the people, something at the very heart of the Triodos Renewables ethos. However, ‘power’ is being extended to the people in very narrow slices. which best suit poorly founded preferences – putting environmentally damaging energy generation first. The government has made changes to planning which means that the public get to veto wind projects on subjective grounds, while on the other hand the government has put measures in place to accelerate fracking proposals in which the public have much less say (1) . All this has gone ahead despite the public's concerns for fracking (with only 26 per cent support), while the majority (67 per cent) support wind (2) .
The apparent refusal to put environmental concerns first is happening across the board - not just with renewable energy generation. Recently, Vehicle Excise Duty (VED) has been altered so that those using a Porsche pay the same as those driving a Prius, which the AA has said will lead to drivers using more polluting cars (3) . Policy changes like these are two steps back – when we need to be striding forwards.
Lowering costs for ‘hard working families’ by making a more competitive market...
There is a common narrative used by the press to suggest that wind, solar and hydro are expensive for the consumer. This is frequently used to justify legislative change against renewables. But in reality, this simply isn’t the case. Seb Henbest, head of Europe for Bloomberg New Energy Finance has commented that “wind is now the cheapest technology in the UK and this means that old rules of thumb, such as ‘renewables are expensive’ or ‘unreliable’, need to be updated.” Something we’re clearly not hearing from our own government.
The cost to Britain’s ‘hard working families’ is another sticking point and is often misunderstood. A recent survey found that the UK public have a greatly exaggerated impression of renewable subsidies (4) while the reality (according to the International Monetary Fund) is that fossil fuels actually received six times the financial support of renewables in the UK last year (5) . The government is questioning if the UK can afford renewables, when the more appropriate questions are, ‘can we afford to continue to use fossil fuels?’ and ‘why are we not accelerating the transition to renewables as a means of delivering a more competitive economy?’
Properly promoting free energy saving measures and the promotion of positive behavioural change would be a good place for the government to start – for example, we could raise awareness of the environmental impact of generators meeting peak power demand, so that each of us think about the time in the day that we use our most energy intensive appliances. Additionally, altering the way our electricity bills work, reversing the standing charge, so you pay more when you use more power would be a great energy saving incentive.
The government’s hypocrisy is clear - if we are looking to save ‘working families’ money from their energy bills, why do we ask those with the lowest income to pay the most for their power through their pre-payment meters?
Renewables is about more than money
With austerity still on the agenda, it can be difficult to see past the media representation of Britain. As the world’s fifth richest country, endowed with excellent natural resources, it’s unacceptable that we are not willing to invest in cleaning up our energy system, to show global leadership and to create an industry to be proud of.
I could accept applying the brakes to renewable generation if the master plan was working and the wider economy was successfully decarbonising. But – aside from renewable electricity generation – what we are seeing is a failure in areas like transport, domestic measures an industry. We haven’t achieved the reduction in emissions that we need to, and the government need to be accountable for its admirable targets it is failing to meet. A Dutch community has recently successfully claimed that their government is failing its duty by not adequately addressing climate change and the associated risks. This is a clear message. Should we do the same?
New legislation will cost more, not less
We need to reduce cost and accelerate progress, but I fear new legislation will have the opposite effect. The removal of domestic energy efficiency incentives and a pro-nuclear, carbon capture and storage and fracking stance will lead to an increase in cost of delivery of carbon abatement, while slowing the delivery time frames. A growing fleet of electric vehicles being charged by a near derelict fleet of coal and nuclear plants is arguably higher risk.
What needs to happen is that the carbon abatement costs of all of these measures need to be understood in a transparent way, only then decisions on where to focus our attention will be clear. I suggest that, if the facts were clearly presented, we, the people would elect to pay a small margin now for future savings and sustainability.
For renewables to be effective, we need an even standing point. Renewable power is being delivered ever closer to grid parity. However, what the sector requires is a measured and gradual transition rather than a cliff face every 3-6 months, which is immensely unhelpful for infrastructure projects with a gestation period of 2-5 years. A ramp down is manageable, a huge step is less so. A largely home grown industry has been built employing over 110,000 (6) people. Let’s provide a framework with an achievable transition period to deliver genuine sustainability.
The cost of treating Sellafield’s nuclear waste has grown to £53bn (7) ; the cost to support renewables was 5.88 per cent (8) of this. And renewables delivered almost a fifth (9) of UK electricity demand. Do we really want the government to take the public purse in this direction?
Subsidy free energy would see renewables on top
If the government really wanted to use competition to drive down the cost of energy they would level the playing field, remove the complex labyrinth of support from fossil fuels and allow renewables to compete. Since August this year, we now have a situation where renewable generators like us are paying a levy for the greenhouse gas emissions we don’t produce. Similarly, the cheapest cost renewable sources appear to be excluded from the bidding for the new feed in tariff contract for difference.
Renewable energy generation will weather this storm of poorly founded policy decisions, and soon sustainable energy will flourish once more. At Triodos Renewables, our operational assets continue to make commercial and environmental sense. We’ve deliberately invested in wind power because it is the cheapest technology, and we’ll continue to adapt and grow in a genuinely sustainable and conscious way. Our portfolio is sound, and, importantly, we are motivated by sustainability - not loopholes in policies. We’re keen to support the government’s ideal of subsidy free renewable energy; we’d even take it one step further. Subsidy free energy – full stop – will allow the renewables sector to stand on its own two feet and prove its value over fossil fuels.
Renewables combined with smarter energy use is the way forward for a sustainable future. Getting behind this now will see us on the right side of history. Our shareholders ongoing commitment to sustainability is crucial to ensure that together we can continue to make progress towards a cleaner energy system.