Renewables: Great expectations?

2015 may have seemed like a bad year for renewables, but that wasn’t quite the case.

Yes, there were significant changes to the incentives for renewables: Renewable Obligation Certificates and feed in tariffs (FITs), the abolition of the zero carbon homes ambition, and the Green Deal was put out of its misery.

There was the counter-intuitive application of the climate change levy to technologies that are installed specifically to reduce the impacts of climate change. And many businesses in the energy efficiency or renewables sector have gone out of business. Despite that it wasn’t all bad news; the FITs cuts were not as severe as expected and the Renewable Heat Incentive (RHI) looks likely to remain for now.

The price of renewable technologies continued to drop and the future of power storage has excited the industry. In addition, the Energy Saving Opportunity Scheme audits have identified lots of efficiency and renewables opportunities. Finally, of course, the COP 21 conclusion in Paris has surely put beyond doubt that we are travelling towards a renewable energy powered planet.

So what can we expect in 2016 for our buildings?

The biggest change for renewable power is going to be that solar and wind will have to be designed (sized) to not exceed the minimum on-site demand. This is because when power is used on-site you are saving the retail price of electricity ~10-15p per kWh, whereas when the power is exported you receive less than 5p per kWh. Up to now developers/estate managers have often sized systems to the maximum a site can take or to maximise benefits from subsidies.

The cost is still too high but, just like solar, the projected price drops are so rapid and the level of investment so high that it is just a matter of when, not if, it becomes affordable

Now we are working with clients to analyse half-hourly demand data to optimise system sizing, where we are looking at future demands and what % of output is acceptable to export. For example, exporting electricity when a factory is likely to be closed over Christmas. This further dependence on local power consumption to provide a return may mean that there will be a lot more, but smaller installations.

If the proposed government review of RHI subsidies does mean they are reduced in April then a similar process will also happen to heat pumps and biomass heating. Exporting of heat is generally not possible so investments will need to focus on sites where existing heat is expensive, such as oil. Most RHI investments already work this way, but as they focus increasingly on fundamental savings for the consumer, site selection and design will have to be tighter.

Power storage linked to renewables will be a game changer and in some cases it is already financially viable where charges for the use of the electricity network are high.

The cost is still too high but, just like solar, the projected price drops are so rapid and the level of investment so high that it is just a matter of when, not if, it becomes affordable. One of the complexities with energy storage is that there are so many different investment options at the moment that it is actually putting people off.

Power storage also overlaps with demand side management (reducing on-site power demand when requested), which offers similar benefits to storage but may be a lot cheaper in the right situation. For now it is a complex area where careful analysis is required.

Most excitingly, (perhaps paradoxically), as explicit subsidies are removed from renewables it will release their true potential. Once renewables are reliant only on the value of the energy they produce it will be the market that decides how much we deploy, not the government. But we are not quite there yet, and a lot of investment in renewables has been based on government guaranteed revenue, whereas now it will rely on private sector organisations, often over a number of sites. Inevitably there may have to be some adjustment in business models or investors, but with prices dropping and strong demand it remains a bright outlook for the renewable sector.

Barny Evans, associate for energy and sustainability, at WSP Parsons Brinckerhoff