2nd June 2008

The Microgeneration Industry today called on the government to bring forward strong policy measures underpinned by legally binding government targets for the numbers of consumers producing their own sustainable energy.

Against the background of rising fuel prices, this call follows a report published today on the largest piece of independent consumer research ever conducted into the market potential of microgeneration. The report concludes that as many as nine million microgeneration installations could be in place in the next twelve years with an ambitious policy support framework. If this was to happen, microgeneration could produce as much energy as five large new nuclear power stations and by 2030 we could be saving as much carbon as if we were to take all HGVs and buses off our roads.

The report also makes clear that supporting policy measures underpinned by legally binding targets for microgeneration will act as a confidence boost for investors.

Dave Sowden, Chief Executive of the Micropower Council welcomed the report, adding:

“This report is one of the most professionally conducted and robust pieces of consumer research into the microgeneration market we have seen. It clearly shows that with the right policies in place, the ability for citizens to save money, make a marked difference to tackling UK emissions and future-proof their homes in a world of uncertain and unprecedented energy price movements is substantial.

“It is now clear that setting binding targets would lead to greater certainty for investors, lower costs for consumers, leading to more microgeneration and greater carbon savings from British households. It would also play a substantial part in fulfilling the Prime Minister’s pledge that all homes should be low carbon over the course of the next decade.

“Now we have the supporting evidence base, we call on Ministers by November to fulfil specific assurances to Parliament on 25th January 2006 and commit to setting a target so investors can be confident of where microgeneration fits in the Energy Policy mix.”

Key findings of the report are:

• With ambitious policy measures, up to 9 million microgeneration systems could be installed by 2020, producing as much energy as 5 nuclear power stations. This compares to an estimated number of current installations of less than 100,000.
• By 2030, microgeneration equipment could be saving thirty million tonnes of CO2 - an amount equivalent to removing the emissions from all Heavy Goods Vehicles and Buses from UK roads.
• If consumers are to take up microgeneration in these numbers, they need to see a compelling economic reason to do so – environmental benefits are not sufficient on their own to create a genuine mass market.
• That legally binding government targets for microgeneration, supported by concrete policy measures, would improve the confidence of those investing in the sector.
• A government target of 2-3 million units installed by 2020 could readily be met through a combination of cost-effective measures.
• That a range of these support measures would be needed, including:
  
  1. A long lasting and consumer-friendly financial incentives scheme to stimulate substantial uptake (to deliver the equivalent of over 40p/kWh in above energy price for wind and photovoltaics, 5p/kWh for microCHP and 2p/kWh for sustainable heat technologies such as heat pumps and solar thermal systems).
  2. Flexibility for consumers to choose to receive these incentives up-front or spread out over a long period to help with the high initial costs of equipment and installation.
  3. Adhering to the policy of zero carbon new build housing from 2016 and all buildings in 2019, with clarity over the extent to which developers are allowed to offset their consumption using offsite electricity generation.
  4. Large scale field trials or an early public procurement scheme to support technologies that are not yet ready for full-scale commercial production.
  5. Continued consumer campaigns to improve consumer accounting for energy-based decisions, focused on lengthening consumer time horizons when considering energy purchase.

Media contacts: Jane Vaus, Head of Media and External Affairs, Micropower Council, 077480 10447 or mailto:jane.vaus@micropower.co.uk

Notes to editors:

• The government is under a duty to set targets for microgeneration under the terms of the Climate Change and Sustainable Energy Act 2006, if the evidence suggests it is advantageous to do so. In determining whether setting targets is appropriate, it is required to take into account any research into the effect that setting a target would have on the likely uptake of microgeneration. The Minister, Malcolm Wicks, assured a Parliamentary Committee in January 2006 that: “If by November 2008 the indications are that a target would have a beneficial impact on market penetration by microgenerators, we will be able to undertake further work to develop a suitable target or targets”.
• The report, ‘The Growth Potential for Microgeneration in England, Wales and Scotland can be found at www.berr.gov.uk/energy/microgenerationresearch The report has been written by a team led by Element Energy Ltd, supported by TNS Social and the University of Newcastle.
• The work was overseen by a Steering Group made up of representatives of each funding partner, chaired by Professor John Chesshire.
• The funding partners are: The Department for Business, Enterprise and Regulatory Reform; British Gas Service Ltd; Ceres Power plc; E.On UK plc; The Ashden Trust; The Energy Saving Trust; Micropower Council; National Energy Action; Renewable Energy Foundation; North West Development Agency; East Midlands Development Agency; South West of England Development Agency; South East Development Agency; London Development Agency
• The report builds on previous work done in this area in the following ways:
  
  1. Identifies the types and priorities of the key consumer groups that hold the key to adopting microgeneration.
  2. Estimates the numbers of each microgeneration technology installed up to 2007.
  3. Provides up-to-date technology cost and performance data for each microgeneration technology, with an analysis of the most relevant technology-specific issues.
  4. Presents the results of a model for supply and demand for microgeneration, indicating likely uptake in the absence of government support and as a result of announced policies.
  5. Presents the results of the analysis of a suite of possible future policy interventions to incentivise the uptake of microgeneration.
  6. Highlights key uncertainties and sensitivities around microgeneration uptake.
  7. Provides implications for policy development and the setting of microgeneration targets.