DTI improve on wasting efficiencies

The Department of Trade & Industry seems to be in a bitter and very personal battle with the Department for the Environment, Food and Rural Affairs to see who can fritter away the most public money. It seems the DTI have struck the latest blow with their low carbon buildings programme, designed to boost the installation of solar panels and wind turbines on houses.

Yet another token effort by the government to make it sound like they are doing something, when they are actually just paying lip service to popular issue of the day – achieving absolutely nothing and throwing away our money in the process. Do they really think £3.5m worth of solar panels and wind turbines protruding from a few roofs is going to stop anything (apart from the neighbours view)? They have managed to burn their way through their annual budget in just six months! That’s £3.5m spent on achieving absolutely nothing and it was all done twice as fast as they had planned to do it. Brilliant. Miliband has his work cut out.



Well said, James, and that's from someone in the environmental business. Let's be clear what £3.5m of grants could achieve:

  1. If put into photovoltaic (PV) roof panels as 50% grants, it could hypothetically help to deliver around 1 MWp (peak mega-watt). The trouble is, PV panels don't deliver their peak output for much of the day or the year, so that capacity would produce around 800 MWh of electricity. That's less than one-quarter of one-thousandth of a percent of our electricity demand, or one-ten-thousandth of one percent of our total energy consumption. Even with the generous support currently available to renewables, the combined output of the panels would be worth around £80,000 p.a. to set against the £3.5m provided by taxpayers and the £3.5m that the householders would have to find to match the grants. Not a great return, environmentally or economically.
  2. If put into roof-mounted wind turbines as 50% grants, it could deliver around 3,500 1kW (nominal) turbines. Though better than PV, low availability would again impact production, with output likely to be in the region of 4,000 MWh of electricity. That's a stunning five-fold improvement on PV, but nevertheless little over one-thousandth of one percent of our electricity demand, or three ten-thousandths of one percent of our energy consumption. At £750,000 p.a. to set against the taxpayers' £3.5m and the householders' £3.5m, the economic returns are also better, but still not exciting. Without the huge subsidies available in grants and price-support, they would be no more practical than PV.

But carbon has a cost to the environment, and the government should take account of that cost by supporting "good" technologies, right? Well, sort of. The cost of carbon should be the same regardless of how it is produced or saved. The fossil-fuelled production of electricity releases somewhere between 0.1 and 0.3 tonnes of carbon for each electrical MWh, depending on fuel and technology. Let's call it 0.2 tonnes of carbon per MWh on average. So those PV panels are saving roughly 160 tonnes of carbon annually. Even if you spread the grant over twenty years of output and ignore the other generous support under the Renewables Obligation, Climate-Change Levy and indirectly from the EU Emissions Trading Scheme, that grant is costing over £1,000 per tonne of carbon saved. That's pretty expensive carbon. Even at £200 per tonne of carbon saved by wind turbines (with the same provisos), that carbon isn't cheap.

Price matters, because if there are cheaper ways of saving carbon that do not receive such generous support, we are saving less carbon than we could for the money, and causing more damage to the economy than necessary. And there are indeed cheaper ways of saving carbon. Energy-efficiency and green heat receive minimal support compared to this. The government clearly values the carbon saved by those means less highly (in fact, barely at all) compared to carbon saved by sticking solar panels on our roofs.

A simple means of pricing carbon equally across the board (such as a carbon tax) would discover which are the most efficient ways of delivering carbon savings. At £1,000 per tonne, it's a safe bet that PV would not be amongst the solutions chosen by the market, nor would many small wind turbines be installed at £200 per tonne.