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What do we want from the Energy Review?

Solarcentury submission 13th April 2006


A/ Successive White Paper and other commitments
1/ DTI Low Carbon Buildings Programme Consultation June 2005
Para 6.2 The programme will deploy significant volumes of small-scale renewable technologies

Para 6.3 The currentgrant schemes have not delivered the scale of projects that require the level of mass
production, that in turn, leads to cost reductions.

Para 6.7 Capital grants will not be available from the DTI for the energy efficiency measures

2/ Governments Response to the House of Commons Environmental Audit Select Committee Eighth
Report on the Energy White Paper Empowering Change 19 November 2003

The strategy for the deployment of photovoltaics is largely set out in the 14 recommendations of the
Government-Industry PV Group Report of March 2001. The principal recommendation was for a 10 year 150
million programme with a target of 70-100,000 roofs. (paragraph 24)

There are other recommendations which we are still working on, including changes to Building Regulations,
encouragement of equal tariffs, and PV on Government buildings. These issues are all part of the long-term
development of the market and overcoming the barriers to the market. (paragraph 25)

3/ Energy White Paper February 2003:

"2002-2012: Implementation of solar PV Demonstration Programme in line with our competitors, as set out in
the "Opportunities for All" white paper." (p55 A Renewables Timeline).

"we committed in the Opportunities for All white paper to embarking on a major initiative with industry and
others to achieve a UK solar PV demonstration programme in line with those of our main competitors. The
current programme, worth 20 million over 3 years is first stage of this process." (p58)

4/ Opportunities for All White Paper February 2001

4.36 By supporting renewable energy in the UK, we can also ensure that British industry is well placed to
exploit the growing global demand for renewable energy technology.
We will embark on a major initiative with industry and others to achieve a UK solar photovoltaic demonstration
programme in line with those of our main competitors.
4.38 The programme we propose, subject to approval by the European Commission, will establish the UK as a
credible player in the PV market, alongside Germany (100,000 roofs by 2007) and Japan (70,000 roofs by
2002).

B/ Why is PV relevant to the UK?

We search in vain for the Government consultation or report that begins with the words, the
UK has an abundant resource of daylight. But solar PV can play a significant role in
delivering both diversity and security of supply in the UK electricity market. The recent EST
study Potential for Microgeneration suggested that simply on the basis of energy export
equivalence domestic solar PV installations alone could supply almost 4% of total UK
electricity needs.
But solar PV is far more than a proven domestic micro technology. In Germany for
example, multi MWp solar farms are already a common sight, and here in the UK large-scale
building integrated applications such as the Manchester CIS tower are already delivering 400
kWp plus projects.

The main policy drivers required to maximise the contribution from solar pv to 2020
renewables and energy efficiency targets are a combination of those set out in the 2003
Energy White Paper and new measures. There is no reason for example why the 4%
contribution from domestic solar PV based on energy export equivalence cannot be delivered
over a far shorter timeframe ie by 2020 than that suggested by the EST report.

Solar PV in the built environment

A key part of the challenge for this Review is to understand that the value of PV (and other
building integrated technologies) in the built environment cannot be judged purely in terms of
comparing the cost of generation today with that of large-scale fossil fuel or wind energy
plants.

Solar PV is a building material in its own right, with UK knowledge based firms such as
solarcentury already at the forefront of the rapidly growing UK and global building integrated
PV market.

PV is uniquely suited to Britains largely urban environment, with few barriers in terms of
planning permitted development rights or public acceptance.

A proven, reliable and robust technology

Technically, it is already a proven and reliable energy efficiency technology with 1 kWp (7
m2 of modules) needed on the average house built to 2006 Part L building regulations to
reduce the dwellings carbon emissions by a further 23% - ie adding this sized system to a
2006 Part L house would deliver total carbon savings of 63% over the equivalent house built
to 2000 Part L standards.

Sharp, the worlds largest solar PV manufacturer has been making solar PV modules since the
mid 1960s. Their first lighthouse installation in Japan is still working some 40 years later.
All solar PV modules come typically with 25 year warranties and will last far longer. In this
sense, for Government to describe solar PV persistently as an innovative or emerging
technology alongside eg domestic gas micro CHP, is highly misleading.

The growing UK manufacturing and installer base

There are over 60 accredited installation companies in the UK with EST reporting literally
hundreds of expressions of interest through the lifetime of the solar PV MDP. A UK
manufacturing base is developing. In 2005, Cabinet Ministers opened two plants in County
Durham and Wrexham operated by Romag/BP Solar and Sharp UK respectively. The Sharp
assembly line now employs over 300 people, with further investment plans for the UK
currently on hold, given current uncertainties over the LCBP and the UK Governments
medium term policy objectives.

The experience of other markets eg Japan and Germany also suggests that very rapid increases
in installation rates can be delivered by the private sector given the right policy mechanisms
and long-term Government commitments eg the German programme saw annual installation
rates rise from 9 MWp in 1999 to 500 MWp in 2005. This puts into perspective the
assumption in the UK that measures to support a rapid increase in the take-up of PV and other
micro-renewables are premature in the absence of a wider installer base.

Solar PV and cloudy Britain

The average sized 2.5 kWp domestic PV system in the UK generates 2,160 kWh per
annum, the equivalent of nearly three-quarters of the electricity demand of the typical
house. Some PV modules will generate more per kWp. It is therefore the absolute
performance of the technology in the UK that matters, not its relative performance in
comparison with more tropical climates, as is so often argued by the Carbon Trust and other
consultants.

Knowing for example that the UKs typical output of 2,160 kWh from a 2.5 kWp system
would be higher in Central Africa or California is quite meaningless in terms of UK public
policy. But this was the starting point for the hugely damaging Carbon Trust Renewables
Innovation Review of February 2004. It is a source of frustration to the solar PV industry
internationally that this discredited report which played a key role in the decision to abandon
successive White Paper commitments to the sector still appears to carry such weight within
the UK Government.

C/ What does solar PV need the four policy drivers required

The four main policy drivers to ensure that the contribution from PV can be maximized by
2020 are:

(i) Capital grants to 2012 and ECAs

A short-term increase in capital grant funding in the medium term to 2012 to be


delivered in part by the current Spending Review, to ensure that the six year Low Carbon
Buildings Programme is an effective market building measure capable of deploying
significant volumes of small-scale renewable technologies (LCBP June 2005 consultation
para 6.2). Since the 2003 White Paper, PV and other renewables have been told repeatedly
that capital grants are the preferred policy driver for all technologies effectively outside the
RO. The current 28.5 million budget over 3 years for the LCBP is woefully inadequate to
deliver the DTIs own aspirations for this new programme as set out in the June 2005
consultation document.

Given the grant caps under both the solar PV MDP and the LCBP and the competitive bid
nature of commercial sector projects under these programmes, it is also essential that solar
PV is made eligible for Enhanced Capital Allowances from the 2007 budget.

(ii) Feed-in tariff

If the Energy review confirms that the capital grant route is no longer the DTIs preferred
second tier policy driver for renewables, an alternative option is to deliver the
Governments 2001 and 2003 White Paper commitments made specifically to PV by
introducing from 2009 a feed-in tariff mechanism.

The only serious objection to a feed-in tariff approach in the UK has been on the grounds that
it is incompatible with our liberalised energy market. But the Government is prepared to
intervene in other ways in our free liberalized electricity market not least through the EEC
and the RO itself. In our discussions with DTI and EPIA, officials have admitted that theirs
is not an objection in principle, and that given political will (leadership?), it could be
overcome.

(iii) require all local planning authorities to adopt variant of the Merton model

A requirement for all local planning authorities to adopt a variant of Merton-style positive
planning policies for micro-renewables policies, subject to local consultation and conditions.
This is particularly important for new buildings eg the 6.6 million new dwellings to be built
between now and 2050. The advantage of this approach politically is that these policies have
already been developed and implemented successfully by Labour councils. It is therefore
surprising that the Government has opposed precisely this measure proposed by the
Conservative opposition in the Climate Change and Sustainable Energy Bill committee stage.

The main barrier to ODPM now requiring all authorities to adopt similar policies appears to
be a fear that sustainable housing is incompatible with affordable housing. But many
social housing tenants are already benefiting from reduced utility bills as a result of social
landlords investing in solar PV and other renewables in both new-build and retrofit projects.

There is some enthusiasm for the Merton model within the DTI but given current ODPMs
current stance, there is a danger of overestimating the numbers of lpas likely to adopt such
policies and underestimating the length of time required to develop and implement them in
local plans.

(iv) Changes to Part L building regulations

Announce now that the next revision of Part L of the Building regulations expected in
2009/10 will require PV and other renewable technologies to deliver 10% carbon emission
savings in all new buildings over 1000m2 and in large residential developments. The marginal
cost to developers now of doing this in todays tiny UK market is already less than 1% and
depending on the renewable technology used less than 0.5%

The ODPMs 2005 Part L consultation commented that in future there will be an increasing
amount of building integrated renewable energy systems. Building designs will therefore
need to adapt so that they can readily integrate such systems in efficient and cost effective
ways (eg PV panels as a cladding material). The ODPM 22 February 2006 press release
observed that the revisions to Part L will raise performance standards to a level that will
provide a strong incentive to consider low and zero carbon systems.

In our view, the experience of the gas condensing boiler market in the UK suggests that
leaving it to the market is not enough. Defras decision to pre-empt the current Part L
process, by requiring SEDBUK A and B boilers from 2005 sets a prescriptive technology
precedent that should be extended to renewable energy technologies from 2010 onwards.

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