Face west, young man

The age of generous subsidies for renewables is over. Our new government will not be re-opening the coffers – unless the Greens make it into a true ‘rainbow coalition’.

Renewable technologies and installations will have to stand on their feet and be competitive in the open market. The cost of products has fallen rapidly, reducing the need for subsidy and driving us closer to grid parity with fossil fuels.

And that is how it should be…although it is fair to ask whether this would have happened without subsidy creating the market in the first place.

Whatever their merits at the time, feed-in tariffs overheated the solar PV market and led to a lot of inappropriate installations. Similarly with heat pumps; the subsidies meant developers were installing electric systems in homes on the main gas grid – leaving a legacy of systems that will never pay for themselves either economically or in carbon saving.

Fortunately, we now seem to be entering a new era where each possible solution – renewable or conventional – will have to satisfy economic and environmental criteria on their own merits. What might surprise people is that many renewable technologies will still be the most economic choice. 

Stranded
Building clients looking long-term are starting to view investment in fossil fuel technologies as decidedly uncertain – they are concerned about ending up with stranded assets in ten or 15 years’ time. Although we have enjoyed significant falls in tariffs since the oil producing countries, in tandem with emerging shale gas markets, drove down the wholesale energy price; the long-term picture for oil, gas and coal is increasingly uncertain and ‘energy security’ is coming back onto the agenda.

Couple that with growing maturity and more technical innovation in the renewable sector; and you have a recipe for greater investment in small scale, building specific renewables. For example, one big drawback with solar panels is that they are usually positioned facing south to capture the most intensive solar energy. However, demand for power tends to be lowest in the middle of the day because homes are unoccupied and commercial buildings use more natural daylight and less heating – but that is when the sun is in the south.

The industry has battled long and hard with the problem of how to store renewable energy for when you need it most, but it also has an alternative solution: Solar panels that automatically adjust their position east to west tracking the sun are now available. This makes it possible to use solar energy for longer periods in the day, which fundamentally alters the economic equation. We can expect to see their wider adoption in the UK in the near future.

This kind of solution is not expensive and is why technology is set to play a much bigger role than subsidies. As a result, the renewable industry has a much more sustainable, long-term look about it with greater job security for everyone it employs.

Energy was never their thing

The ‘greenest government ever’ marked their final weeks in power by confirming what most of us realised more or less as soon as they came to power: They never really got this energy efficiency thing.

Although on the face of it the last five years saw significant progress on carbon reduction and this was acknowledged by the Committee on Climate Change; this had more to do with the recession and the reduction in the use of coal in power generation – rather than anything the coalition did to promote energy efficiency.

On energy ‘policy’, the administration twisted and turned; chopped and changed; and moved in whatever direction they thought the ‘business’ world wanted them to go. Their policies on renewables and the Green Deal revealed their complete lack of conviction on this issue. And, as a final flourish, they set out to abolish Display Energy Certificates (DECs) from public buildings - just three years after announcing they planned to extend their use into the private sector.

Crossfire
The Conservatives are instinctively anti-regulation and consider anything to do with setting minimum standards an imposition on business. Unfortunately, almost every energy or carbon abatement measure was caught in the political cross-fire because the Conservatives set out to reinforce their business credentials ahead of the General Election and to emphasise the apparent anti-business stance taken by the Labour opposition.

I can understand, to a degree, their fear of over-regulation, but the UK is heading very rapidly towards the other extreme and we have clearly entered a period where it is not about developing long-term strategy on energy, but scoring political points. We cannot expect the market alone to deliver minimum energy standards in buildings because clients will, in most cases, opt for the cheapest solution unless there is, at least, some measure of compulsion.

Having said that, a number of private property firms have introduced voluntary DECs because they can see the commercial value in measuring, monitoring and being upfront about their energy performance.  How ironic in light of the government’s latest move.

Even more ironic is the fact that remote metering is being imposed on the private building sector by the department for Business Innovation and Skills (BIS). In a clear case of double standards, private users will be scrutinised in order to make it easier for energy suppliers to charge them – despite delays to the roll out programme and growing unease about smart meter technology; while DCLG sets about removing the one mechanism that has some chance of impelling the public sector to tackle its energy waste. 

U turn
You have to fear for the future of the regulations now in place designed to compel landlords to bring their properties up to EPC band E or F by April 2018. Is there a U-turn coming there as well? I guess we will see once we know the colour of the next administration.

DECs and EPCs - and BREEAM ratings for that matter - are far from perfect and suffer from poor enforcement. It is very rare for anyone to actually go back and check the building was performing as claimed, however, the principle is essential.

We cannot progress towards carbon and energy saving targets without proper measurement and monitoring of ‘actual’ energy consumption in buildings – this really is a first base issue.

It is also not an onerous burden on business. Quite the opposite; it adds value to buildings. A building that is cheaper to run is better designed and operated and, therefore, more comfortable to inhabit leading to more productive occupants. As has already been shown in Australia and other parts of the world, such buildings command better rents.

Blue chip property firms here have woken up to this fact, which is why they want higher energy ratings for their buildings - there is a clear business benefit. Why, therefore, did our ‘pro-business’ government not see it the same way? And can we hope that the next one will see this whole energy policy ‘thing’ differently?