There is often negativity surrounding the accessibility of renewables, with many taking the view that they only benefit those who can afford them. But, argues Griff Thomas from GTEC, if everyone who could generate and store their own power did, the costs of electricity would come down for everyone:
The government has finally announced that it will cut VAT on energy saving products to 0% as part of a package of measures to increase the deployment of renewable technologies. Zero rating is something that many people in the low carbon sector, myself included, have been asking, for many years – I welcome the decision.
VAT in this area has been unnecessarily complicated in recent years due to an EU court ruling outlawing reduced VAT on energy saving products. Consequently, contactors have been required to carry out complex calculations to work out if they should charge their customers 5% VAT or 20% VAT.
The decision to simplify the VAT process will help to push the low carbon sector forwards by streamlining sales and improving accessibility for consumers. It also links nicely with the launch of the Boiler Upgrade Scheme this month, which will help to stimulate uptake of heat pumps and secure the supply chain to bring down costs in the long run.
These policies only support those who are ‘able to pay’ but we need to move on from thinking that the benefits of renewables stop with consumers who can afford them. If everyone who could generate and store their own power did, the cost of electricity from the national grid would come down for all, accelerating the UK towards the point at which we do not require fossil fuel power stations at all.
Energy prices to consumers are dictated by wholesale prices and wholesale prices are dictated by demand and availability; for example, the OPEC decides to up production and the price per barrel of oil drops and/or stabilises. We can’t do much about that but we can help to reduce demand by altering how we use and generate heat at home.
We all have a role to play
As I write the IPCC has just published a new report calling for changes across all sectors to reduce carbon emissions by 50% by 2030 – something that is well within our reach if we scale up climate change policies and regulations to stimulate innovation and lifestyle changes.
Boosting energy efficiency does not have to be expensive. Simple things like draught-proofing doors and windows and using thick curtains, altering thermostats, only heating rooms we need to heat and making better use of TRVs and smart controls can make a difference to demand.
But those who can should seriously consider investing in domestic renewables.
A well-positioned south facing roof will produce around 3600 kWh’s per year. Whether or not that is used by the consumer or exported to the grid via the Smart Export Guarantee (SEG), it will offset demand on major energy producers.
The solar industry has experienced strong growth in recent years, independent of subsidies, and now stands strong on its own merits. We currently install around 4,500 new domestic PV systems per month which equates to 16.2MW of capacity per year. Due to the zero rating and rising energy
costs, we can expect this to increase to 6,000 – 8,000 installations generating 28.8 MW and resulting in reduction in demand from large-scale generators and, in time, more competitive pricing. According to some calculations, if every house in the UK (excluding flats) installed solar panels and battery storage, it could provide around 60% of domestic demand at a cost of around 6.0p per kWh. As a project, this would cost around £133 billion – around three and a half times more than the track and trace system.
Air source heat pumps
We currently install around 30,000 heat pumps per year. If we assume the average household has heating and domestic hot water requirements of 12,500 kWh per year, converting these households from gas to heat pumps removes around 400 GWh of demand from the gas network – something that will only increase under the Boiler Upgrade Scheme.
Yes, electricity demand will increase but cumulatively overall demand will drop – and as energy demand drops so does price. If those who can invest in renewables do so, they are contributing to a much bigger picture and driving down the cost of energy for everyone.
Over the next decade, we will see increasing pressure on governments to implement policies that scale up climate action and stimulate innovation and demand – its time for installers to get trained up to deliver renewables on a large-scale.
GTEC delivers renewables training from its centre in Hawes, North Yorkshire, as well as locations throughout the UK. For more info, please visit: https://gtec.co.uk/