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The distinct whiff of ministerial greenwash

Green virtue signalling has become so prominent that even Tory ministers are getting in on the act.  Today, Business and Energy Secretary Greg Clark will announce a new Industrial Strategy that, apparently, aims to power the UK economy with solar panels.

What’s not to like?

Except, of course, that this is the same government that closed down the Department for Energy and Climate Change just two years ago; the government that wilfully undermined the renewable energy industry by prematurely removing its subsidies; the government that is building the nuclear monstrosity at Hinkley Point; the government that is actively encouraging Britain’s onshore oil and gas cowboys to frack as wide an area of the UK as they can manage.  In short, however much of a warm emotional glow you get from all things green, you should treat this announcement with a heavy dose of scepticism.

Technology not fit for purpose

In fact, Greg Clark’s announcement is a tacit acknowledgement that we are far from ready for the solar revolution that the government is currently spinning.  As we have pointed out, the National Grid is a complex machine that has to be carefully calibrated to deliver safe electricity when and where it is needed – it is most definitely not some kind of plug and play device in which any kind of electricity generation can be slotted into a spare USB terminal.  Adding intermittent generation from solar and wind is more akin to putting diesel into a petrol engine… sure it will run, but it will do a lot of damage too.  This is why the main thrust of Clarke’s announcement (rather than the journalistic spin around it) concerns the £246 million government investment into battery technology:

“As part of our Industrial Strategy Challenge Fund I am today launching the Faraday Challenge, which will put £246 million into research, innovation and scale-up of battery technology.

“The first element will be a competition led by the Engineering and Physical Sciences Research Council to bring the best minds and facilities together to create a Battery Institute.

“The most promising research completed by the Institute will be moved closer to the market through industrial collaborations led by Innovate UK.”

Storage technology (pumped hydro, flywheels, compressed air, batteries, etc.) is an essential component of any future renewable energy system; since it provides an essential buffer between the intermittent electricity source and the synchronised Grid (Tom Scott’s video provides a good explanation of this).  For the moment, gas power stations play the buffering role, quickly ramping up when renewable generation falters.  However, as coal and nuclear power stations close and the UK becomes more dependent upon renewables, gas generation will be unable to take up the slack, leading to dangerous power surges and power outages.  Computerised and networked battery storage has the potential to resolve the problem.  Indeed, a joint venture in South Australia between Tesla and Neoen is currently deploying grid-scale battery storage in an effort to solve precisely this issue.

This, however, calls into question the UK’s £246 million investment in new battery technology.  If Tesla (and others) are already doing battery storage, why is the UK wasting money duplicating the process?  After all, as a comparison, Panasonic alone just invested $1.6 billion (£1.23bn) in Tesla’s $5 billion (£3.83bn) battery “Gigafactory.”  Meanwhile, Daimler is investing $543.5 million (£416.73m) in its own battery plant as part of a $1 billion (£0.7bn) investment in battery technology.  This suggests first, that the UK government is not spending anywhere near enough on this research and second, and more importantly, that the UK government does not believe that existing lithium ion battery technology is fit for purpose.

The “Internet of Things” fantasy

Although Greg Clark does not mention it himself, journalists have warmly embraced the so-called Internet of Things in which our household appliances, connected to the Internet could resolve the intermittency problem.  That’s a rather big “could” given the current state of the technology.  The smart meter roll-out is behind schedule, and there are problems with the early smart meters than will require either expensive updates or replacement.  So National Grid’s ability to remotely switch our household appliances on and off remotely may be a decade or more away – that’s assuming that we would want them to do so at all.  As UK whitegoods point out, there are several issues of concern with internet-connected technologies, including:

  • Exclusive servicing, which creates local monopolies and higher prices
  • Connectivity hardware and software problems
  • Privacy/big data problems

But these pale into insignificance when compared to the real show-stopper:

“Many people will think that these concerns are not really all that important when you consider the benefits and, that’s fine so long as the buyer understands from the outset what these abilities entail. We suspect most will not.  However the final nail in the coffin if you like is the costs of blessing your fridge with the ability to communicate over the internet.

“It isn’t cheap.

“A connected appliance is normally very considerably more expensive to buy and, when it does break, expect to pay a lot to have it repaired or, you will need to sign up to an expensive service plan. No matter what way you slice it, this costs and could cost a lot.”

As we discovered from the BBC last week, there is a good reason why wealthy British people avoid talking about money… usually it is because somebody is getting screwed.  There is good reason to be very suspicious when a government minister makes an announcement like this without saying who is going to foot the bill.  Without a serious reform of the way the electricity system is currently funded,  the main cost of creating the new solar-powered smart grid is going to fall disproportionately onto the already overburdened shoulders of Britain’s small businesses and households.

Who pays?

It is highly unlikely that the government itself is going to be coming to fit solar panels on our roofs (assuming we have them).  In any case, not all roofs are equal.  Only south facing roofs provide optimal electricity.  West facing roofs may be adequate, but it will take significantly longer to recoup the investment (£4,000-£6,000).  North and East facing roofs simply do not see enough sunlight to make them worthwhile, so if that is you, tough!

Then there’s the cost of batteries.  At present, rooftop solar systems are not fitted with additional storage, but use inverters to feed excess electricity into the Grid.  Batteries would allow households and businesses to store more of the electricity they generate for use at times when they are not generating enough.  But this doesn’t come cheap.  As  Adam Hayes at Investopedia explains:

“Rechargeable lithium ion (LiOn) batteries have become the most widely used in these applications and are found in everything from mobile phones and tablets to laptop computers to electric vehicles. While microchips and integrated circuits have become exponentially more powerful, smaller and cheaper, battery technology has lagged woefully behind. During this same time, improvements in LiOn batteries have only been small and incremental.

“Take for example a modern smart phone. The computational effort is all packed into a tiny portion of the device while the battery takes up most of the available space. The battery also is a large factor in the total cost of the device. For electric vehicles, the problem is compounded: the cars are essentially an array of battery packs on wheels. Tesla’s flagship car, the Model S has approximately sixty kilowatt-hours of electrical capacity, meaning that around $30,000 – an impressive 42.25% of the sticker price – is directly attributable to its batteries.

“Lithium is also a very unstable substance, and therefore the batteries must be built carefully so that they won’t be damaged during a typical car accident. Even small amounts of exposure to air or to water can make lithium burst into flames. Ensuring that each battery is properly sealed and secured is an added layer of cost.”

UK households with enough spare cash to invest will soon be able to purchase a Tesla Powerwall system.  According to Victoria Woollaston at Alphr:

“The UK price for the Powerwall is listed as £5,400 for a single 14 kWh Powerwall battery. The supporting hardware costs £500 (including VAT.) Additionally, each Powerwall requires a £400 deposit and typical installation costs range from £800 to £2,000. This does not include solar installation, electrical upgrades (if necessary), permit fees, or any connection charges that may apply.”

That’s considerably more than the solar panel array itself… something that very few ordinary UK households struggling on or below the UK median disposable income of £26,300 will be able to afford.  At a time when UK household savings are at record lows, there aren’t going to be many ordinary people queuing up to buy a new Powerwall or any other battery system that comes to market.

One option, of course, is for the government to offer grants and subsidies to enable homeowners to fit solar generation and storage systems.  However, this would exacerbate the already parasitic nature of renewable energy as practiced by neoliberal governments, in which those wealthy enough to own a home and invest in solar systems enjoy free electricity and generous feed-in tariffs that are funded out of the bills of those households that can afford neither.  With more than 3 million households in the UK experiencing fuel poverty, and with that figure likely to increase as energy prices rise, without radical reform, this way of funding renewables will become politically unsustainable in the not too distant future.

The energy death spiral

As with other forms of electricity generation, solar (and other renewables) enjoys huge hidden subsidies.  This is because cost calculations usually stop at the point that electricity is generated.  However, not all electricity is equal, and the intermittency of renewables mean that they can only operate with huge back-up systems and subsidies – hence the need to have battery (and other) storage systems before they can be rolled out much further.

At present, the UK National Grid uses expensive compensation schemes to even out intermittency.  Large energy users – mainly heavy industry – are paid to use more electricity than they need during the summer months and less during the winter in order to balance supply and demand.  Additionally, conventional (nuclear and fossil fuel) generating capacity is kept on standby in order to quickly ramp up supply – essentially, generators are paid to sit around doing nothing most of the time.  Once again, the (highly fluctuating) cost of compensating industrial users and of maintaining largely redundant generating capacity is passed on to ordinary households in their bills.

This poses problems for those energy suppliers that must also build the cost of maintaining and expanding the Grid infrastructure into their charges.  As the International Energy Agency recently warned:

“Network investment remains robust for now, but worries have emerged in several regions about the prospect of a “utility death spiral” as the long-term economic viability of grid investments diminishes. The still widespread regulatory practice of remunerating fixed network assets on the basis of a variable per kWh charge is poorly suited for a power system with a large amount of decentralised solar PV and storage capacity.”

In effect, renewable energy generation is parasitic – depending upon but not paying for the Grid infrastructure that it uses.  This leaves the energy companies having to pass the cost of the system as a whole onto customers’ bills.  But this sets up a “squeezed middle” problem in which wealthy businesses and households are incentivised to deploy their own renewable systems (thereby adding to the problem) while increasing numbers of poor and not so poor households and small businesses are obliged to cut their electricity use to a bare minimum.  The result is that those households and businesses in a shrinking middle must shoulder an increasing proportion of the cost of the nation’s energy infrastructure.

Resurrecting the “N” word

There is a fairer way of funding the kind of Grid infrastructure that would allow the widespread use of wind, solar, tidal and wave electricity – one, ironically that will be possible once Britain has left the EU.  This is to simply fund the Grid from general taxation so that those with the deepest pockets (who also tend to have the highest energy use) pay the most for the infrastructure.  This is what the EU refers to as “state aid,” and is currently banned under EU law because it involves taxpayers financing the profits of private companies and investors.   Similar problems have cropped up in other EU states too, but current EU law simply prevents a rational, cost-effective solution.

The problem in Britain is compounded by the austerity policies pursued since 2010.  The result is that, next to Greece – where austerity was at least forced on the government – the UK has seen the lowest growth in the EU.  Its people are increasingly impoverished and its businesses are struggling to stay profitable.  Adding what amounts to an additional hidden tax within business and household energy bills at a time when, collectively, the economy is still struggling to pay back the debts run up prior to the 2008 crash, risks a politically explosive (think Trump, LePen, Brexit, etc.) recessionary deflation.

This leads to the one solution that the current Tory government simply will never countenance – renationalise the UK’s energy infrastructure… and before you turn purple with apoplexy at the thought, let me just ask you who pays for the road outside your house?  Even in the arch-conservative USA, people take publicly-owned roads for granted.  In more civilised European countries, hospitals, libraries, schools and a raft of other critical infrastructure is also in public hands.  There is no reason why something as essential to a modern functioning economy as electricity should not also be in public hands.  Indeed, by unifying all of the costs and all of the infrastructure (renewable, fossil fuel and nuclear) nationalisation (within which I would include not-for-profit, cooperative and even public-private operation) provides the only means of ensuring that those who benefit from the system also pay their fair share for it.

Of course, Theresa May’s government is not going to even whisper the N-word, even though the growing energy crisis is becoming too great for market-based solutions.  But in a sense, that doesn’t matter to them.  Because a grossly unequal country in which rich millionaires bask in the illumination of their subsidised solar power systems while millions of Britain’s poor and not so poor households shiver in the dark is exactly in line with the vicious assault on the poor that has been the hallmark of government policy since 2010.  So if, dear reader, you are inclined to give Mr Clark’s announcement a thumbs up on the basis of a thin veneer of greenwash, I can only suggest that you are simply not paying attention.

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