Merton doesn't Rule, OK

One way that politicians and civil servants have tried to drive the uptake of renewables is through the application of what became known as the Merton Rule (after one of the first councils to introduce the measure) to planning policy. The Merton Rule stipulates that developers must include a certain proportion of on-site renewable-energy production (typically 10 or 20 per cent, depending on the council) within the fabric of the buildings they are developing.

Why a particular proportion should be encouraged is not clear. Faced with a choice of a technology that could supply a notional 10% of the property's energy needs for £X at an operating cost of £Y/MWh, or another technology that could supply 80% of the property's energy needs for £2X at an operating cost of £0.1Y/MWh, the rational developer focused on the bottom line (and they mostly are) will install the former as the most cost-effective way to meet the Merton Rules.

Nor is it obvious why one would want to target incentives at new-build, rather than providing equal incentives for the existing housing stock, which is vastly more significant. In one way, older buildings offer greater potential, as the lower energy-efficiency results in more energy-consumption (relative to its size), which means higher utilization of any renewables installed, which means faster recovery of the capital cost.

Nor is it fair to assume, as the planners do, that one knows how much energy a particular technology will contribute in particular circumstances, and how much energy will be consumed in total in that property. It's an arbitrary measure that rewards bullshitters (those who provide inflated claims for how little energy will be required for the building or how much energy their technology will produce).

But let's say that they really could plan and assess this accurately. The system would still encourage perverse outcomes. As a supplier of wood pellets, we are seeing at first hand one of the more perverse consequences.

For individual properties, solar panels (thermal or PV) are probably the winning option for many developers. But for larger properties, such as blocks of flats, installing a pellet-boiler that could meet part of the heat load is often a good option.

To minimize cost and maximize convenience, the pellet boiler will be installed to feed the hot-water buffer tank in tandem with one or more gas boilers. Because the Merton Rule is satisfied regardless of whether the equipment ever runs (it requires only that it should produce a certain amount if it were run), and because gas (and oil) are currently cheaper as fuel than pellets (because of stupid energy policies designed to keep domestic fossil fuels as cheap as possible), the developer has no interest in installing a pellet boiler that will run effectively because the plan is for it to rarely run at all. It will be undersized (because you only need renewables to be able to supply a fraction of the properties' energy, and heat is such a big proportion of the whole). It will be the cheapest model available, regardless of whether that model will give trouble-free and efficient operation. It will have an inadequately-sized fuel store, which further pushes up the cost of running, as many suppliers will not supply small loads, and those that will (such as us) will charge much more per tonne for small, frequent deliveries than large, infrequent deliveries. The fuel-store will be located wherever suits the architect, regardless of whether it is practical to get the pellets to that location. The flange, to which the delivery-lorry connects in order to blow the pellets into the store, will be positioned wherever is convenient to the architect and developer, regardless of whether the delivery lorry can get near it, or can stop there (e.g. on double-yellow and red lines). The reality is that no one intends to run the boiler, so who cares?

Recently, this logic may have taken a step further. A developer is touting around a pair of "barely used" pellet boilers of the cheapest, nastiest type, which he is taking out of one of his sites. Are we seeing the start of the next wave, where developers will install the obligatory renewables just long enough to get signed off by the planners and Building Regulations officers, before taking them out and selling them on for installation in the next development that needs to meet the Merton Rule targets? A handful of boilers and solar panels could deliver multiple permissions and positive SAP ratings. The authorities' figures will show that large numbers of properties are running on renewable energy, while in reality most of those properties carry on being as dependent on fossil fuels as ever. The figures for numbers of properties where renewable boilers were installed will no doubt be presented as a tremendous success, and the authorities will be mystified when our fossil-fuel consumption figures once again don't fall in proportion to the displacement that has supposedly been achieved (just as for EEC/CERT/CESP). There will be more head-scratching, and then someone will come up with an even more complex and perverse scheme to encourage displacement of fossil fuels whilst keeping the costs of those fossil fuels as low as possible. And so the cycle continues...

It's very simple. If you want people to use less of something, you need to make it more expensive. If you try to make them use less of it by pushing efficiency-improvements at them whilst keeping the price cheap, demand will rebound - it's an effect well-known to economists as the Rebound Effect. The purpose of these policies is to get us to reduce our fossil-fuel dependence, whether for environmental, economic, social or energy-security reasons. And yet the Government persists in trying to keep domestic energy prices as low as possible while promoting these policies aiming to reduce our consumption, and all the opposition parties and most of the commentariat support them. We really are cursed with one of the dumbest intellectual classes of any nation on earth.