Renewable Energy Technology

The Ofgem Consumer First Panel – outlined in Chapter 1 – consisting of members of the general public, highlighted key energy priorities as access to safe and secure energy supplies, reductions in carbon emissions and delivery of affordable warmth (Ofgem, 2010). To achieve carbon reduction targets, energy efficiency measures are to be invested in the built environment through energy supply systems and clean energy technology, such as renewable technology (Hamza & Gilroy, 2011). Renewable energy is derived from naturally occurring forces in the earth’s environment, named as such as they are not depleted through use (Energy Saving Trust, 2006). Furthermore, they produce few greenhouse gasses (Energy Saving Trust, 2006), thus, increased deployment of renewable energy technologies, in place of fossil fuels, would decrease carbon emissions.

Research indicates that the use of renewable energy would better prepare businesses for managing unexpected changes in energy prices, due to their lower energy use and operating costs (Henriques & Sadorsky, 2010). This principle is directly applicable in the domestic sector. In recognition of the opportunity renewable energy proffers in addressing the issues of energy security, carbon emissions and affordability, the adoption and utilisation of renewable energy is a core focus of the EU’s approach to addressing climate change (Helm, 2008) and a target has been set in the EU of increasing the contribution of energy supply from

53 renewable resources to 20% by 2020 (da Graca Carvalho, 2012) as part of the EU climate package. In the UK, a target of 15% energy from renewable sources has been set for within the same timeframe (DECC, 2009).. With the level of renewable energy contribution recently reported at 3% in the UK, this emphasises the

significant increase required in renewable technology installations in order to achieve targets.

Current research indicates that a key barrier to the implementation of renewable technology into properties is the upfront capital cost of the installation (Jenkins, 2010). Dowson et al (2012) outline the same, further stating that major barriers to energy efficient refurbishments include upfront cost, perceived hassle of installation, uncertainties over lower fuel bills and lack of knowledge over payback periods. These issues may all be applicable barriers to the private homeowner but a different dynamic exists in the social housing sector. Any upfront costs are the social

landlord’s responsibility, so this does not surface as a barrier to tenant adoption of renewable technologies. Furthermore, payback on the installation of renewable technologies does not impact the tenant in terms of recouping expenditure;

however, the tenant would be the person to receive the payback benefit of reduced fuel bill costs. The landlord does not receive the cost benefit in return for their capital investment. The benefit to the landlord is the fulfillment of their obligations, such as the Decent Homes Standard and the Code for Sustainable Homes, and there may be some monetary gain observed through lower maintenance costs. However, the barriers outlined of perceived hassle of installation and uncertainty over lower fuel bills may be of concern to social housing tenants.

Various grants and finance schemes have been available over recent years in order to reduce the cost barrier to installations. Since 2008, Government incentive schemes have been a key driver in reducing CO2 emissions from the housing sector (Dowson et al, 2012).The Carbon Emissions Reduction Target (CERT) was the primary scheme from 2008-2011 which placed responsibility with large domestic energy suppliers to achieve carbon reduction targets from their customers. It was stipulated that 40% of this should be focused on the priority group of vulnerable households, including low income homes and pensioners over 70 years old

54 (Dowson et al, 2012). The Community Energy Saving Programme (CESP) ran in parallel to the CERT scheme, which also placed responsibility with energy suppliers to provide funding to community partnership groups, housing associations and local authorities for retrofit measures to improve energy efficiency in low income and hard-to-treat homes. A hard-to-treat home is defined as one that cannot

accommodate ‘staple’ or cost-effective fabric energy efficiency measures; for example, homes with solid walls or off the gas network (BRE, 2008). The CERT scheme reached far more homes than the CESP scheme, yet both addressed measures in homes regarded as difficult to treat (Dowson et al, 2012).

The Low Carbon Buildings Programme (LCBP) was a scheme run by the Department of Energy and Climate Change, offering grants for renewable

technology installations to be done by public sector and charitable organisations. The scheme provided grants to approximately 20,000 projects between 2006 and 2010 (BRE Group, 2011). Organisations could apply for 50% of the project cost for an installation, to a maximum of £200,000, which could be applied to more than one building (DECC, 2009). This programme helped to drive renewable technology installations in the social housing sector through the assistance available with the upfront costs.

The LCBP closed for renewable technology for electricity production in early 2010, being replaced by the Feed-In Tariff (FIT) scheme. The FIT scheme has been running in the UK since 2010 and offers payment for electricity produced from renewable sources. Under the scheme, bonus payments are also given for surplus renewable electricity exported to the grid. This tariff has been in place in other countries and is the most prevalent national renewable energy policy in the world. It has already driven rapid and dramatic growth in renewable energy capacity in theEuropean Union (Rickerson et al, 2007).It could therefore be assumed that the same trend will be observed in the UK over coming years. The LCBP was replaced altogether in Spring 2011 by the Renewable Heat Incentive (RHI). The RHI is the equivalent of FIT for heating production, offering payments for heat generated from renewable energy. Bonus payments are not applicable however with the RHI as there is no ‘National Grid’ to export heat to. However, as heating contributes a large part of

55 domestic energy use in the UK, payment for production offers a great incentive for transferring to renewable heating technology and thus an increase in installations will be observed.

The Green Deal is now the UK’s core energy efficiency policy (Dowson et al, 2012). This programme is an attempt to increase the implementation of retrofit energy efficiency improvements by removing the upfront capital cost. The cost is privately financed and repaid through a charge on the consumer’s energy bill. The initial ‘loan’ to retrofit energy efficiency measures remains attached to the property, not the occupier should they move on to a new property (Dowson et al, 2012; Guertler, 2012). It is hoped that the Green Deal will promote significant increases in retrofit energy efficiency measures but it has come under heavy criticism over its limitations and potential barriers (Guertler, 2012). It is clear however that the Green Deal has the potential to have an impact on reducing CO2 emissions and to contribute to tackling fuel poverty (Guertler, 2012).

As evident, the key barriers to tenant adoption of renewable heating technology into their home are the perceived hassle of the installation and wariness over the benefit they will receive from having it put in. Achieving targets to mitigate the effects of climate change relies as much on individuals making the “right choices” as governments creating effective policies and suitable products being available (Hamza & Gilroy, 2011). This places the onus on the end user both in terms of making the choice to adopt low energy technologies in their home and to utilise the technology effectively. Whilst it has been illustrated that social housing tenants have less choice over their homes than private homeowners, they do need to accept the new renewable technology and run it efficiently. Dowson et al (2012) outline that retrofit measures may only be half as effective as expected if not installed and monitored adequately or due to subsequent inefficient use of heating.

Some renewable technologies currently being used to reduce energy demand from fossil fuels in domestic properties include: solar panels, which convert energy from the sun’s radiation; heat pumps, which convert heat energy from the ground, water or air; biomass boilers, which use plant material as fuel. Biomass is included as a

56 renewable source because the carbon it produces, from the burning of plant

material, is reabsorbed. The material must, however, be obtained from a managed, replanted source. This thesis is focused upon ground source and air source heat pumps. These renewable technologies are already being implemented in social housing and particularly with the grants and schemes available as previously outlined the number of installations is increasing. For example, the CERT funding resulted in 2000 ground source heat pumps being installed over the 3 years it was in place (Dowson et al, 2012).