At a meeting last week, the message from BERR’s side of the table was that the consultation on Zero Carbon (originally planned for summer, then autumn) is now unlikely to come out until 2009. That’s going to give industry at most 6 years to tool up to delivering zero carbon. Given that ministers are long past the point of no return on this, it’s extraordinary that by delaying this consultation they’re making things even harder for themselves and for developers.
Archive for the ‘energy’ Category
Zero Carbon consultation delayed (again)
Posted in Code for Sustainable Homes, energy, stamp duty exemption, tagged BERR, Code level 6, zero carbon, zero carbon definition on September 30, 2008| 3 Comments »
payback periods – clients gone mad
Posted in climate change, energy, engineering, renewable energy, sustainability, tagged payback period, WACC on September 23, 2008| 1 Comment »
Over on Zero Champion, Phil brought up the subject of payback periods, citing some examples from clients: 12 months, or 18 months, or 39 months.
Those periods equate to ridiculously high rates of return! 100%, 67%, and 31%! Are there so many fabulous investments out there that clients can justify hurdle rates like this?
Could it be that clients are being deliberately obstructive? Or maybe they just want to carry on doing things the way they’ve always done them? By demanding short payback periods they ensure they won’t be lured out of their narrow comfort zone. But this approach is completely unjustifiable.
Ignoring the inherent benefits and taking a purely financial view, a client ought to evaluate low carbon technology in the same way they would look at any other potential investment. Let’s assume our client is a developer with a weighted average cost of capital of 12.5%*. That means they should seriously consider investments that will achieve better than this rate of return. Being conservative, let’s bump it up to 15% – a very attractive investment. We’re still talking nearly 7 years before you’ve recouped your money.
There’s an issue of risk, but only with immature technology. CHP, solar thermal, PV, wind, hydro, biomass heating: these are all tried and tested and, given good site data, their performance can be predicted with a high degree of accuracy. Even with something trickier like biomass gasification, you can factor things like increased downtime into your figures and take a pessimistic view when predicting performance. But that doesn’t mean your hurdle rates suddenly leap into the stratosphere.
So it’s disappointing to hear that client’s are requiring payback periods like 12 months or even 39. They’re taking a distorted view of technology and, in the mean time, promoting the impression that low carbon is somehow so shoddy, so flawed, such a special case, that it should only used if it promises a financial miracle.
* For this example, assume of our developer’s capital, 40% is equity and 60% is debt. Assume cost of debt is 7.5% (LIBOR of 5.5% plus another 2%) and cost of equity is 20%. I’ve ignored tax.
Building Mag responds
Posted in biofuel, biomass, climate change, energy, renewable energy, sustainability, tagged building magazine, michael willoughby on August 26, 2008|
Building Mag says biomass only efficient if used within 20 miles
Posted in agriculture, biofuel, biomass, climate change, energy, engineering, renewable energy, sustainability, tagged building magazine, michael willoughby, phil clark on August 21, 2008| 6 Comments »
There’s a short video on the Building website of Phil Clark and Michael Willoughby discussing biomass. At one point Michael claims “it’s not efficient to transport biomass more than 20 miles.” Holy smokes, where does this fact come from? I took a stab at the numbers and came up with a figure of 3000km (1900 miles) by truck before you lose the carbon benefit. That’s 100 times more than Michael’s figure. Looks like one of us (or possibly both) has got it wrong.
I’ll be just fine, says planet
Posted in climate change, energy, tagged Daily Mash on August 18, 2008| Leave a Comment »
Excellent article, via Bealers, from the Daily Mash.
being an economist is so easy
Posted in climate change, energy, tagged BBC radio 4, economics, our food our future on August 14, 2008| 3 Comments »
I’ve been listening to the excellent Radio 4 series, Our Food Our Future, over the past two weeks. In episode one they interview Alan Swinbank, an economist from University of Reading, who argues that following the current spike, food prices will resume their general downward trend.
In support of his argument, he pulls out the increasingly tired chestnuts:
1. Higher prices drive innovation
2. Technology can achieve whatever advances are required in order to support continued growth
3. Don’t worry if we don’t know what the solution is yet: the next technology may be unforeseen
4. Liberalisation of trade will ensure most effective sharing of the resulting benefits
Here the economist is talking about food but he’s using the same arguments you often hear from his brethren about energy, particularly in the context of fossil fuels: the market will fix it. It seems to be the warm fluffy blanket that they wrap themselves up in at night. And you’ve got to admit, it’s a seductive fluffy blanket.
But I’m uneasy about economists’ faith in market magic. It seems inevitable that the worlds of compound growth and finite resources are doomed to collide sooner or later (read: sooner; or even: as we speak). Sure, as limited fossil fuels become even more costly, other technologies will become more attractive. But Adam Smith didn’t reckon on the sticking power of entrenched energy interests.
I think I might convert to Economicism. Do I get to wear a funny hat?
FEMA says: convert your car to wood gas
Posted in biomass, chp, climate change, energy, engineering, renewable energy, sustainability, tagged gasification, syngas, wood gas on August 5, 2008| 3 Comments »
On a project at Fontenergy we’re looking at some small scale gasifiers that claim to have overcome the traditional problems associated with wood gasification. While doing some research I came across this manual from the Federal Emergency Management Agency in the US, with detailed instructions of how to convert your car, truck, or tractor to run on wood gas in the event of extended petroleum shortages. The practice of using wood gas in internal combustion engines was very common in Europe during the Second World War (apparently 95% of mobile farm machinery in Denmark ran on wood gas – I love Denmark) and this guide is aimed at preserving that knowledge.
I’m taking a sickie, grabbing the tool box and heading for the garage.
28 day rule is on holiday
Posted in energy, utilities, tagged 28 day rule, NETA on July 30, 2008| Leave a Comment »
Prompted by a conversation Nick and I were having this morning, it’s worth pointing out that the 28 day rule originally brought in with NETA has been switched off on a trial basis. On the assumption that consumers are now more savvy and able to look out for themselves, it’s now possible to lock yourself into an agreement with an energy supplier without the ability to switch for the term of the contract. Longer contracts and more certainty means that suppliers can potentially offer more attractive terms but of course caveat emptor still applies.
liquid biofuel CHP: officially renewable or not?
Posted in agriculture, biofuel, biomass, chp, climate change, Code for Sustainable Homes, DER Calculation, energy, engineering, london, renewable energy, SAP, stamp duty exemption, sustainability, tagged biodiesel, Code 6, Renewables Obligation, RO, ROCs on July 25, 2008| Leave a Comment »
Love them or hate them, liquid biofuels are increasingly being put forward as a renewable fuel for CHP. Currently they’re eligible for ROCs and so appear to be considered renewable by BERR and OFGEM.
But when I spoke to the SAP team at BRE, not only did they confirm that liquid biofuels aren’t considered under SAP, they also said that “because of mounting doubts over the extent of emissions from biofuels”, you have to use the emissions factor for oil when carrying out your SAP calcs. Did they expect the treatment of biofuels to change for the 2010 review of SAP? Adamantly, they did not.
Then I called the BREEAM helpline. They told me that liquid biofuels also aren’t considered under the Code for Sustainable Homes. So no help in scoring points under ENE1 or ENE7.
So liquid biofuel CHP is eligible for ROCs but will do little for your Part L and Code requirements. Without achieving these requirements, the case for biofuel CHP for new buildings is severely undermined. Obviously this situation could change. With CLG on the lookout for ways to meet the 2016 zero carbon homes target, there might be considerable pressure applied in favour of making biofuel renewable under SAP. But for now the official line is that biofuels are not a solution for carbon reduction in new build.
UKGBC: Boom! Take that BRE!
Posted in Code for Sustainable Homes, energy, engineering, renewable energy, sustainability, tagged BRE, Paul King, UK Green Building Council, UKGBC on July 15, 2008| 2 Comments »
The UKGBC is launching plans for a Code for Sustainable Buildings to “address the confusion arising from the myriad of different green building standards.” Although they’ve used the name, this isn’t the same Code for Sustainable Buildings that we were promised a few years back and that was eventually pared down into the Code for Sustainable Homes. This is an “open-source” UKGBC-managed standard which could then be used in other standards.
Reading between the lines, the UKGBC have just pre-empted a situation in which BREEAM is adopted wholesale as the basis of a future Code for non-residential buildings (a situation like we saw with EcoHomes and the CfSH). It looks to me like they’re looking to usurp BRE’s place as guardian’s of the public interest when it comes to building performance and I suspect the use of the words “open-source” is a stinging reference to BRE’s increasingly mercenary approach. So take that BRE – you’ve just been King-slapped.
Or am I just looking for drama on an otherwise dull Tuesday?
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