DEFRA submitted 7 April 2006

In late March the government published its Microgeneration Strategy fulfilling the requirement of section 82 of the Energy Act 2004. The micropower industry, in the guise of the Micropower Council, has welcomed the new Microgeneration Strategy and described it as a step in the right direction. This short article sets out why.

Within the broader context of the current energy debate, micropower is poised to contribute significantly to tackling the challenge of Climate Change and rising energy costs. These impacts are frequently documented, with the global temperatures, if not curbed, expected to rise further this century to unsustainable levels leading to devastating rises in sea levels and all sorts of unpredictable severe weather impacts. However, annual electricity demand growth is not showing any signs of budging from the 1% - 1.5% seen for the last decade nor is overall energy usage of becoming decoupled from economic growth.

Rapid world economic growth is giving rise to exceptional growth in global energy demand, which is not only troublesome from an emissions standpoint, but has led to rapidly tightening fuel supplies and increased costs worldwide, with related concerns over security of supply.

But, small-scale solutions to these global problems are now being recognised by the UK government, and evidence suggests that direct benefit arising from the use of micropower technologies can be significantly amplified by the motivation and engagement they create in changing consumer attitudes and behaviour. In short, micropower technologies re-connect and re-engage consumers with their use of energy.

The Micropower Council has been calling for three principle things from government; confidence to invest in the micropower industry’s manufacturing and installation capability, the removal of unnecessary regulatory barriers, and pump-priming to help achieve long-run costs earlier. The strategy contains many of the policies that the industry believes necessary to allow micropower to play its full role, although government policy still needs to clarify and elaborate the overall role expected from each “technology” or fuel within the energy mix. The micropower industry has been pressing for some time for the setting of government targets for the micropower sector to encourage investment to reduce costs, and although there is not yet enough information available about the full potential of the range of technologies to allow it to set a meaningful target at this stage, an effective decision-making process needs to be put in place to allow investors to have confidence. The commitment made by government within the strategy to undertake the necessary research to better understand the potential for the full range of micropower technologies, along with amendments made to the Climate Change and Sustainable Energy Bill to introduce a conditional duty to set a microgeneration target, is warmly welcomed by the industry.

Many of the proposals within the strategy for the removal of regulatory barriers are also very much welcomed and in line with what industry has been looking for for some time. These include; the recognition of the need to allow microgeneration technologies such as wind and solar into the permitted development system, as well as the clear signal given to electricity suppliers about implementing a sensible scheme for rewarding electricity sold back by consumers. Allowing customers simpler access to their Renewables Obligation entitlements, increasing the scope for including all micropower technologies in the Energy Efficiency Commitment from 2008 onwards and the government’s initiative to introduce a single accreditation scheme to provide consumers with an independent indication of reliability and a single source for complaints, are also welcomed steps forward.

As for market stimulation, or pump-priming, the Chancellor’s announcement of an extra £50m, taking the total funding to £80m for microgeneration over the next three years, is most welcome. In fact the challenge has been set for the micropower industry to demonstrate that costs can be bought down through scale, and if the extra £50m is spent wisely, this should be perfectly possible. There is, however, a word of caution in relation to the grants programme. The existing industry runs the risk of grant funding for individually households under the Low Carbon Buildings Programme running out at an early stage, resulting in an unsatisfactory ‘stop-start’ situation once again. The industry remains of the view that a higher proportion of Low Carbon Buildings Programme funding should be allocated to householder’s grants under stream 1 in order to address this. The recent indications by ODPM that it will give micropower a boost through the Code for Sustainable Homes will also be helpful, particularly as it has also indicated that the Code will form the basis for future Building Regulations updates.

The Micopower Council firmly believes that micropower has huge potential to create the reality of Power coming from the People, especially with its unique selling point – it’s “gadget factor”, which could well catalyse a cultural change in the way consumers use energy. The Microgeneration Strategy marks a turning point for the micropower industry, clearly demonstrating that it is a sector whose potential is recognised by government, in the overall context of our national energy mix. We look forward to even greater recognition of this when the Energy Review conclusions are published.