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The argument for green solutions is not just about climate change – traditional sources of power will soon cost more Wind turbines, along with other types of renewable energy technology, are being produced in greater numbers at lower unit cost. Photograph: Thomas Trutschel/Photothek via Getty Images No wonder the big energy companies are spooked by the green dream. Have you seen their share prices lately? Witness npower last week , which warned that green policies will drive a 20% rise in energy bills by 2020. Npower is owned by the German utility RWE. In 2008, RWE’s shares traded at a whopping €100 each. Today they are worth less than €20. EDF and E.ON, which have 5.5 million and 4.8 million UK customers respectively, have seen a similar drop. It’s a precipitous 80% fall triggered by investors alarmed at the prospect of losing an effective oligopoly of supply and with it a healthy stream of profits. These are the companies that want to supply us with natural gas from Norway, liquid petroleum gas from Qatar and electricity from imported coal and oil. Some want to build a new generation of nuclear reactors, though given the parlous state of their share prices, they want massive subsidies and cast-iron guarantees from any government willing to commission them. Their argument is that big power generation keeps the lights on. Everything else is a bit flaky and without economies of scale, more costly. Of course, this is not their official stance. They are all sponsoring green events like crazy and pushing their green credentials. But the message from the big energy suppliers is that imported gas, piped to households or burnt by its latest power stations, should remain a major element of any energy strategy. Arguments against going green tend to focus on particular technologies. Solar fails to heat our homes on winter evenings. Wind turbines leave us in the dark when the breeze drops. Tidal, which creates its own environmental problems, has yet to make the kind of breakthrough hydro has managed. Biofuels deny people perfectly good food. Nuclear gets lots of votes from green tech supporters, but is bedevilled by technological hiccups, is frighteningly expensive to build and suffers from even more nimbyism than onshore wind turbines. Then there is the supposedly high cost of renewables set against the economies of scale that flow from big power stations pumping megawatts of energy across a massive grid. Npower also assumes in its calculation that the government initiatives promoting energy saving, by companies and households, will fail. Sam Fankhauser, co-director of the Grantham Research Institute at the London School of Economics, says it is hard to believe that consumption will not be limited to some extent by efforts to save energy. “Npower is taking an extreme view in this respect,” he says. The argument that renewables chain the economy to high-cost energy is ebbing away. For instance, solar panel costs have fallen so far and so quickly that many companies that borrowed heavily to enter the market have gone bust. Research aimed at improving the efficiency of the silicon at the heart of each panel is becoming redundant as the cost of panels plummets. Combined heat and power units, wind turbines and other renewable energy sources are also being produced in greater numbers at lower unit cost. In the US, biofuel plants only use the waste products from maize rather than burn the whole plant. In the UK, power generators are planting trees to burn much as the now dying newspaper industry encouraged fields of pine to supply the industry with pulp. In addition, Fankhauser, who helped the Committee on Climate Change’s analysis of the government’s energy bill, points out that carbon-burning sources will be forced to charge for cleaning up after themselves using carbon capture and storage, much as water companies pass on the cost of their sewage works. Under this scenario, traditional sources of energy will soon become more expensive than renewables. It would be laudable if the share prices of all the big energy suppliers were down 80% because all politicians understood this trend and renewables prospered under a cast-iron guarantee. While that is the case in Germany, uncertainty plays a big role in the UK after the failure of successive governments to give a clear signal of their intentions by putting the necessary infrastructure in place. There are targets and some initiatives, but the green grid is still embryonic. The Public Accounts Committee recently criticised the Treasury’s infrastructure plan as “a list of projects, not a real plan with a strategic vision and clear priorities”. The business community is also confused, with 67% of companies not confident that the energy infrastructure will improve in the next five years. The CBI poll found 69% have doubts about water infrastructure. A couple of weeks ago when George Osborne was outlining his effective freeze on infrastructure spending at £50bn a year into the next parliament, the lobby group Green Alliance highlighted a list of growth-generating green infrastructure projects worth £205bn that should add 0.7% GDP by 2015 or knock GDP by 2.2% if they are abandoned. The charity’s chief economist, Julian Morgan, said while most are funded by the private sector, they are subject to being scaled back unless the Treasury backs the move to low carbon. Missing from the plans are rules for using the national grid that encourage local generation as much as they do large corporates. Fankhauser says it would be impossible to move to a situation where all energy is generated and used locally, bypassing the national grid, but he agrees the government should encourage municipal authorities to co-ordinate projects that allow local businesses, households and amenities such as schools to generate their own energy. Much of our electricity is lost in the grid, making local production potentially more efficient. So shifting the balance to local production has many benefits. Yet organisations set up to co-ordinate investment in local projects complain that weaknesses in the grid, such as the need for a substation upgrade, must be paid for by local providers. A mix of renewables and a backstop of gas can supply all our needs without breaking the bank. At least no more than oil and gas will, whatever the shale miners will have us believe. Contractors who currently install gas boilers will learn to install different kinds of kit. What was once a big industry will morph into a different beast that happen to install machines that generate power differently. Of course there are still the climate change deniers, who can be allied with the almost nihilistic argument that flows from Stephen Emmott’s docu-play, 10 Billion. The scientist, who heads the Microsoft Labs in Cambridge, has just turned his stage hit into a book. The play allies the already rapid rise in carbon and the prospect of another 3 billion people on the planet (hence the 10 billion title) to concoct an ecological nightmare of monsoons, droughts, extinctions and widespread starvation. On finishing the last chapter, many people will conclude that the only sensible option is to break out the champagne and party while burning the world’s resources with reckless abandon. The renewables debate is underpinned by the need to avoid the worst temperature rises, if possible, but is also about energy security, localism and lower costs over the next 30 years, which are all achievable. Continue reading →