Solar PV hits interesting times in the UK

We begin our case study into the development of a solar PV niche in the UK at a very interesting moment in its history. Of course, the saying, "may you live in interesting times", is reputed to be an old Chinese curse. Certainly for PV, the things that make it so interesting right now leave its fortunes in some doubt. One of the key policy measures for supporting solar PV (amongst other renewable energy technologies) has been cast into doubt, threatening confidence in the sector precisely at the moment when it was finally enjoying something of a take-off. Many solar firms have come to the UK to take advantage of the burgeoning market, local installers are increasing in number, and UK manufacturing capacity for panels is growing.

Last week, Chris Huhne, the Secretary of State for Energy and Climate Change, announced an early review of the Feed-in-Tariff scheme for renewable energy that had been in operation since April 2010. Solar PV was singled out as a chief cause of this unscheduled review. Ostensibly, there is concern in government that the tariff rate for solar PV generation (currently up to 41.3 pence/kWh, depending on the system installed) was attracting some very large, farm-scale projects, whose impact on payments, electricity bills, and Treasury targets under the FIT would be disproportional if there were a great many of these schemes. However, the energy secretary has defined large energy projects as those over 50kW, considerably smaller than the 5MW solar farms that were causing Huhne so much concern. The 50kW scale brings into the definition of ‘large’ many street, public building, and community-scale developments that were being developed by local groups, social enterprises and solar entrepreneurs alike.

Unsurprisingly, the review announcement has received heavy criticism from the solar industry and supporters. Given that only a few solar farm projects have been announced to date, some suspect lobbying from large energy businesses interested in other energy technologies. Others in government have criticised solar PV and FIT as a very expensive way to cut carbon emissions. Some in government take quite a narrow neo-classical economic perspective, and expect it to stand up to narrow price per tonne of carbon reduction evaluations. Justine Greening, economic secretary to the Treasury, was reported last year as saying:

"We will focus on the most cost-effective approaches [to tackle climate change] ... In fact, the more you care about climate change, the more value for money counts. We have to make sure every penny saves the maximum emissions possible. And we will put a stop to the last government's obsession with equating high levels of expensive inputs with high impact."

Such a view brackets out other benefits claimed by niche advocates, such as the creation of jobs, other environmental benefits, and resilience in the face of local energy security concerns. These broader energy and industrial policy expectations are held by other groups, but who might consider other renewable energy niches (alongside nuclear and CCS) along similar lines, and trade one off against the other. It is interesting that some solar advocates claim the ‘knife has been twisted’ when local community tax breaks for boosting onshore wind are muted by energy ministers at the same time as the FIT review. The diversity of views and expectations implies groups are framing the solar PV niche in very different ways. The politics of niche development certainly seem to be heightened at this ‘interesting’ moment for solar PV.

First nuclear, then CCS

After months of negotiation a new Dutch government is almost in place. The coalition of the Christen Democrats and Liberals, with support from the Party for Freedom, is planning major budget cuts including those for energy and environment. National ambitions for renewable energy are reduced from 20% in 2020 to the European target of 14%. Support for environmental organisations is removed. And nuclear energy is prioritized.

The priority given to nuclear is not so surprising. Over the past years several utilities expressed an interest in building a new nuclear power plant next to the only existing one in Borssele. In many other countries nuclear has seen a revival with many plans for, and actual construction of a few, new plants. In the light of the climate change challenge, nuclear promises large-scale, low carbon power generation. Social protests are limited, safety has improved with third-generation plants, and nuclear waste problems and proliferation issues can be controlled. And renewable energy capacity will not be able to increase sufficiently fast to meet ambitious climate change targets, so nuclear power advocates say.

The central-right government is responding to these claims by promising in its coalition agreement that new permit applications for nuclear plants will be granted. Nuclear power advocates will be happy with this political support.

Advocates of another low-carbon technology, carbon capture and sequestration (CCS), are responding differently. The coalition agreement makes a coupling between CCS and nuclear by arguing that CCS will only be allowed after one or more permits for nuclear power have been granted. Environmental organisations in the Groningen and Drenthe regions speak of blackmailing. CCS initiatives in these regions, with a large geographical potential to store carbon, will now have to be delayed and wait for nuclear power plant permits.

What will the CCS community do? There seems little choice but to become part of the nuclear lobby. The faster a nuclear power plant permit is granted, the faster CCS advocates can start up their initiatives again.

Feed-in-measure opens space for PV innovation

Many people are beginnig to appreciate the opportunities presented by the new feed-in-tarrif for small electricity generation in the UK (less than 5MW). Solar photovoltaics, one of the case studies in our project, is benefitting in particular. The numbers of installations have exploded.

What is striking about this new measure, aimed at protecting these nascent smaller-scale energy alternatives, is the way they are generating non-technical innovations too. New business models are emerging, in which developers install panels onto (appropriately sited) houesholds for free. The households receive rediuced electricity bills thanks to the 'free' solar electricity, while the developers profit on their investment by collecting the feed-in-tarrif.

Protective space for developing solar photovoltaic energy rested for many years in subsidies for research and development, and applications in remote locations isolated from electricity grids. This allowed certain forms of experimentation and development of solar photovoltaic configurations, such as stand-alone units, and improvements in the core technologies. Subsequently, a series of grant-funding programmes made it possible for wealthier and prestige users to install solar photovoltaic technology within grid connected configurations (despite unfavourable electricity infrastructures and institutions). This identified reforms to the rules and charges for grid connection that would make this form of solar electricity easier to practice.

The recent feed-in tarrif (effectively subsidised through general electricity bills) alters the protective space again, and permits the wider diffusion of this technology. Innovative business models are emerging. Once again, the construction of protective space soon elides into nurturing niche development, with consequences for its future socio-technical configuration. However, some argue it is still better for households to own the panels themselves, assuming they can afford the investment. The feed-in means that this is open to more households than before.

This is significant for our research interest into the way 'protections' (from competition in 'open' markets) for low carbon technologies are won from government (and others), and what this means for the development of those technologies. Solar PV is the first of our case studies, so we will be considering this latest development in depth and in historical perspective.

Spain recently had to cut its feed-in tarrif for solar by 45 per cent, as the cost on energy bills was escalating due to high demand and installation for solar. So protective measures can be withdrawn as well. We'll have to wait and see what this means for the future development of this technology ...

Protective space dynamics in developing Asia

Yesterday I participated in the annual research day of the Eindhoven Centre for Innovation Studies (ECIS). I presented a second proposal that was recently granted by the Netherlands Organisation for Scientific Research (NWO) and is about the role of sustainability experiments in rapidly developing Asian countries such as India and Thailand.

Interestingly one of the responses I got was that in current transition theories there is limited attention for the role of donors or financially supportive individuals in experiments. They are indeed critically important, both in positive ways (making experiments feasible), as well as in more negative ways when experiments become too much dependent on external protective measures. Indeed a growing number of initiators explicitly stay away from external financial support and aim for strong local business models (one Indian example is here: http://bit.ly/cMjBzS).

What does it mean for a theory on protective space dynamics in niche building? For one thing, protective space dynamics matter and are under researched. It also exemplifies that protective measures are never straightforward and can enable but also constrain experimentation. Indeed, a challenging thought is that in certain contexts public protective measures are perceived as limiting entrepreneurship, and that a straightforward market-based approach is more desirable.

Luckily I could reply that we have another interesting project where exactly these kind of questions are central to the research.

The incremental and radical dilemmas of eco-innovation at the OECD

I was at the OECD yesterday, participating in a workshop that informs the development of an innovation handbook, as part of the new OECD Innovation Strategy. My role was to act as Rapporteur for the eco-innovation break-out group.

Our group consisted of government advisors, civil servants, policy analysts and researchers. What struck me most was just how widespread was the recognition, that eco-innovation that is truly sustainable requires the transformation of production and consumption systems, and not solely the incremental improvement in environmental performance of existing trajectories of product, service and process development.

It was hoped that sustainable 'systems innovation' would be win-win in the long-term. Personally, I am not so sure - it depends upon one's position - but everyone did recognise that in the shorter-term, there were some powerful innovation pathways being taken now that were making it difficult for system-level eco-innovations to succeed.

Addressing this termporal challenge requires institutional reforms that will be highly political in nature

Adrian Smith