In a subsequent comment, Mel Starrs asked me for my sources. It’s such an important fact, I think it’s worth fleshing out.

In a 2008 report, Poyry cited the UK government’s own figures stating that of the 76 GW of connected capacity in 2007, 22.5 GW are due to close by 2020. That’s about 30% of the UK’s generation capacity coming offline.

DECC currently estimate that around 20GW of capacity will close in the next decade, a nearly identical figure to Poyry’s from 2008.

As a soundbite, it’s definitely not languishing in quiet obscurity. Highlighting the energy gap is now a key ingredient in many of the executive summaries of papers and consultations coming out of DECC. Here’s the intro from the recent Electricity Market Reform white paper:

With a quarter of the UK’s generating capacity shutting down over the next ten years as old coal and nuclear power stations close, more than £110bn in investment is needed to build the equivalent of 20 large power stations and upgrade the grid.

Whether the figure is 25% or 30%, the core of this shocking statement is true. But while people agree on the facts, views are strongly divided about how to address the problem. In the DECC quote above, the statistic is being used to create urgency behind the Electricity Market Reforms, which are the Government’s mechanism for subsidising new nuclear (however loudly they protest to the contrary). But it can just as easily be used to justify arguments for fracking, energy efficiency or renewables, depending on who’s doing the talking.

So what’s behind these plant closures?

The mothballing of UK generation plant is due to two main factors. About 12 GW fossil fuel plant (including 8 GW of coal) will have to shut down by 2015 because they can’t meet the minimum clean air requirements under the EU Large Combustion Plant Directive. That’s around 15% of UK capacity going offline in the next three years. Meanwhile the UK’s first and second generation nuclear power plants are coming to the end of their lives. While some of the second generation (AGR) plant may get sweated a bit longer, any stay of execution is unlikely to last long.

What should we do about the energy gap?

According to Poyry, just meeting our 2020 renewable energy and energy efficiency targets would mean no new fossil fuel baseload plant would need to be installed until the end of the decade. In other words, there would be no energy gap. Given that this is something we have to do anyway, it makes you wonder why there’s such a panic – you could be forgiven for thinking we don’t intend to meet our renewables target!

So expect to hear more about the UK energy gap in mainstream media in the coming days. It’s scary and it demands action (though which action isn’t clear). And worst of all, it’s true.

DECC cnsltn out on gas gen. Um, 25% of UK elec gen lost by 2020. 20 yrs to new nuclear. No coherent RE strat. #DoneDeal #Fracking #3Degrees

…but somehow it doesn’t immediately convey the whole point. So here’s an expanded version:

DECC has today published its call for evidence  to “to inform a gas generation strategy to deliver a secure and affordable route to a low carbon economy.”
It’s lovely of them to ask. But consider the backdrop to this consultation:

• Between a quarter and a third of current UK electricity generation capacity will come offline by the end of the decade. (It’s worth reading that sentence again – the implications are massive.)
• New nuclear will not fill the gap. It will take at least 8 years to build each new nuclear power station and the stable of new UK nukes is struggling get out of the gates – that 8 year clock hasn’t even started ticking. In a massive setback to new nuclear, last month RWE and Npower abandoned plans for two new power stations in the wake of the collapse of the German nuclear market.
• Without a radical change in policy, Renewables and energy storage will not grow at a sufficient rate to fill the gap.

So what does that leave us?

Electricity from gas.

A rash of new combined cycle gas turbines will almost certainly be used to keep the lights on. They’re quick to build and reasonably economic to run. And given the UK policy framework at the moment, they’re just about the only game in town, even if they will cause us to miss our legally binding carbon targets.

Where will all this gas come from? Expect a massive push for expanded fracking operations in the UK, with proponents citing the wild “success” of fracking in the US (to the point that the gas price has plunged and the US is now exporting its surplus). Many analysts believe that this extraction method won’t result in the same gas abundance in the UK and Europe  – but that’s unlikely to stop the entrenched players from giving it a go. And meanwhile the balance will be imported from the same old sources.

The explosion in gas generation capacity seems inevitable (am I being fatalist?).

So it’s very polite of DECC to ask us our views on gas generation in the UK. But I strongly suspect they already know the answers to their questions – this call for evidence is the first step in softening us up, the starting gun in the new dash for gas.

As a post script, there could be some positive outcomes from this. CCGT is a compact technology. Ignoring CO2 for a moment, it’s particulate, SOx and NOx emissions are relatively low. So it can be incorporated directly into urban environments where people need the heat that would otherwise be thrown away. If we’ve got to have it, put it in the cities.

And as a post-post script, sometimes it takes more than 140 characters to get your point across.

But the bill for refurbishing our stock to the required standard is very high: something like £7bn to £15bn per year until 2050. A hell of a pill for treasury to swallow as part of general spending.

Enter Green Deal. Under this arrangement, Government don’t have to fork out the money. Instead, Green Deal captures the estimated value of future energy savings that result from a low-energy refurb, converts these annual savings into one lump sum and then uses this lump to carry out the refurb in the first place. Get it all just right, and the capitalised savings are worth more than it costs  to carry out the refurb. Brilliant! Refurb bill sorted.

Except we now know that getting it just right (also called fulfilling the “golden rule”) is very tough. In fact, you can usually only fulfil the golden rule for measures that have a very quick payback. Like loft or cavity wall insulation – the same low hanging fruit that the energy suppliers have been targeting under CERT, probably resulting in carbon cuts of only around 15%. Nothing like the 80% cuts we’re legally bound to achieve under the Climate Change Act.

What happened to solid wall insulation? Double or triple glazing? Insulated floors? MVHR? What happened to the sort of comprehensive refurb that delivers high efficiency and deep cuts in carbon?

They’re off the menu because they’re too costly. Instead, Green Deal looks set to deliver the same old measures that the big 6 have been rolling out for years. Only GD may be much much worse at it, even leading to a massive collapse in the number of lofts and cavities filled.

Discussion and debate about Green Deal is raging in the media at the moment. Green Deal was compulsory if you carried out significant home improvements (the infamous conservatory tax). Then suddenly it wasn’t. The Tory’s were all for Green Deal. Then they weren’t. The big retailers were in. Then they were out. George Monbiot hated it all along. Private banks won’t lend unless the GIB does first. GIB won’t lend unless the private banks promise to shoulder the whole burden – someday. And on and on.

And in the midst of all this noise, we failed to grasp a crucial fact: Green Deal won’t deliver the carbon cuts we need from existing stock. Not even close. While we’re busy arguing about stealth taxes, cowboy salesmen and mobilising early movers, the existing stock timebomb carries on ticking.

Bob Kerslake’s Nokia 3310

Ok, I’ve joined Twitter (@carbonltd). Me and Bob Kerslake, the head of the UK civil service.

We were pissed up in the American bar at the Savoy on Monday night (best martinis in London) and I was like Sir Bob, we should totally join Twitter. And Sir Bob was like get stuffed mate, I’m not joining Twitter. And I was all you’re just scared that I’ll get more followers than you and he was all am not and I was all are so. And then he was like fine so I said I’ll get a round and you break out your smart phone and sign us up. Only he doesn’t have a smart phone, all he has is an old Nokia 3310. The dude is old school. So he got the drinks and I signed us up. And then we just sat there ripped and playing Bantumi until about 2am.

Now it’s Thursday and he’s got 710 followers and I’ve only got 1.

What was I thinking?

Actually it didn’t really happen that way. But it should have. In truth, Bob and I joined separately and for totally different reasons than described above.

I’m not comfortable with Twitter. The word evokes memories of meeting Phil Clark for a chorizo sandwich in Borough Market only to have him greet me briefly and then excuse himself for a minute so he could tweet that he’d just met me for a chorizo sandwich in Borough Market. Phil has chilled out considerably on the Twitter front since then but for me that summed up the danger of tweeting.

And not everyone has chilled out over the years. Signing up has confirmed my suspicions that Mel Starrs requires urgent intervention. And Nick Duxbury is a lost cause.

Joining wasn’t an easy choice. I’d manfully pitched my tent in the anti-Twitter camp. But I was on the Housing Today website a couple of weeks ago, where they’ve got a live Twitter feed of #greendeal and I picked up quite a bit of information in a short time. I thought, wow this is a really good resource.

In addition, since I started blogging again about a month ago (inspired by a conversation in a wine bar with Mel – this one actually happened), I’ve noticed that people don’t comment on blogs as much anymore and instead they tweet their comments. Now I’m getting far more referrals from Twitter but fewer site comments. Bit sad as it makes it hard to have a meaningful exchange.

It’s as if blogging is too slow a medium to capture people’s opinions. They’d rather fling their comments into the ether, where they spark for a moment and then burn out.

But Twitter’s so easy. In fact you don’t even have to have 140 characters worth of original thought. You can just retweet and remind your followers that you exist. It seems to be more about presence than about content.

Anyway, I’m in – for now. My big questions are:

1. Will Twitter actually improve my quality of life? This is the number one criterion for new technology (and my reason for ditching LinkedIn).
2. Can you actually have a meaningful exchange via Twitter?
3. How do I get value out of this thing and filter out the spam?

Deep breath. Keep calm. We’ll see how it goes.

And finally a PS: leave a comment, you buggers. You’re just being lazy.

There are various steps in there aimed at simplifying the scheme, including drastically reducing the nuber of fuels (from 29 to 4) and cutting the requirements for reporting. But many, including the CBI, are asking what the point of the consultation is, given that the scheme is almost certainly destined for the scrap heap.

Given that I’ve written about this twice in a week I almost added a “CRC” category on the blog. But on second thought I don’t think I’ll bother.

Mies’s work is still hugely influential and mostly loved – but always horrifically inefficient and guaranteed to overheat. And four decades after his death, we’re still cranking out the glass boxes. ARCHITECTS, IT’S TIME TO MOVE ON!

Ah well, happy birthday mate.

Basically, he sees it as an unfair burden on business. And to sort this out…

…the Government will consult on simplifying the CRC Energy Efficiency Scheme to reduce administrative burdens on business. Should very significant administrative savings not be deliverable, the Government will bring forward proposals in autumn 2012 to replace CRC revenues with an alternative environmental tax…

So CRC is good as gone.

While CRC was deeply flawed and I don’t think anyone will miss it, at least it forced large businesses to take carbon seriously. The crucial thing now is that Government maintains a level of continuity as it transitions to something new. To waver on its commitments here would send business straight back into “sceptical do-nothing wait-and-see” mode.

On the upside, the transition gives an opportunity to address some of the really stupid aspects of CRC. In particular the new system should recognise contribution from renewables and sit happily side by side with any incentives such as FiT and RHI.

The figures show that, once Indirect Land Use Changes are counted, biodiesel from palm and soybeans is roughly as polluting as Canadian tar sands. And rapeseed oil (which OFGEM has classed as “renewable”) is nearly as bad. And all three are worse than crude oil.

Damning stuff, especially considering that the EU is still committed to 10% of transport fuels coming from biofuel by 2020.

And very bad news for UK schemes that have relied (or are planning on relying) on biodiesel boilers or CHP as their means of meeting Code and planning requirements. According to the leaked figures they might as well burn oil, whatever the Code says.

Estimating emissions for fuels must be a nightmarishly difficult job. There will always be groups who dispute the findings (like, say, the European Biodiesel Board), but clearly the EU is starting to take a closer and better rounded view of impact from biofuels.

It’s inevitable that this rethink at the EU level will filter down to UK regulations. And there’s little doubt that first generation biodiesel’s days as a renewable fuel are numbered.

So what are your options? You could export to the grid under an offtake contract with a licensed electricity supplier. But as a small generator your electricity is almost worthless to them so they won’t pay much for it: maybe 2 or 3p. So unless you’re able to negotiate a particularly sweet contract, this is usually a non-starter.

The obvious route should be to sell energy directly to people on the site where the energy is generated. That’s supposed to be the point of distributed energy, right?

Traditionally there’s only been one option for selling direct on site: private wire. I’ve written about private wire quite a bit elsewhere so won’t rehash it here. In summary, while it can be a good solution on sites that fall below the license exemption thresholds, it can also bring disproportionate admin burden and maintenance cost.

If you’re over the threshold or simply don’t want to deal with private wire, your choices are frustratingly limited. In fact this has been a major sticking point for local generation (perhaps the major sticking point) and OFGEM has been very keen to find a solution.

The problem is this: in order to get power from the plant room to your customers, you have to cross wires that belong to the distribution network operators (DNOs). As soon as you touch those wires, you’re on the hook for their use of system charges (DUoS). And here’s the kicker: it doesn’t matter if you’re taveling 50 miles or 50 feet across those wires – the charges are the same.

That doesn’t make sense does it? The DUoS charges should reflect the cost to the DNO shouldn’t it? And given that I only want to move electricity from my plant room to users on my site, the impact on DNO infrastructure should be pretty small. It’s common sense.

That’s our view and was OFGEM’s view as well. The key to unlocking this barrier was to bring in a short haul tariff and cost reflective pricing for local generation. Back in 2008, OFGEM pursued this line with the DNOs, who played along for a while. Then they took their ball and went home – and OFGEM stood there and watched them leave.

OFGEM’s fallback strategy is something called license light. This is effectively a way for an on-site generator to operate under the licensed regime while avoiding the millions in cost that are associated with getting and keeping a distribution or supply license. Under license light the licensee doesn’t need to comply with the industry codes themselves, provided that they’re quarterbacked by a licensed supplier. Theoretically it should work, provided the on-site generator can sign a suitable agreement with a supplier at reasonable cost. If you fancy a geek-out, we wrote a white paper on it back in 2009. And three years down the line, not much has changed.

There are still huge questions around license light. How will a small generator afford the legal costs for putting together an agreement? How can a site afford the credit they’ll need? What level of IT integration will be required with the licensed player?

But the woolly mammoth in the room is: why the heck would a licensed supplier enter into this kind of contract in the first place? OFGEM isn’t going to force anyone to the table. And while a 500 home development might be big from a distributed energy perspective, it’s a dust mote to the suppliers, who rely on standardisation and automation to achieve their profits. Why would they customise their systems and processes for a dust mote?

I put this question to a DECC representative at the ZCH energy working group at the end of last year and he basically said: we haven’t tested this with the suppliers. The subtext was: we’re just going to hit and hope. Or maybe: we asked and they’re not interested but we’re hoping we can change their minds. Not a lot of reassurance there.

Nevertheless, DECC and the GLA have been pressing ahead, securing funding to put together a set of contracts that small generators can use and thereby avoid the bulk of the legal fees. The GLA’s ultimate aim, as I understand it, is to put together a license light toolkit by the end of March.

The plan is for a number of London Boroughs to then go to market to seek a licensed supplier partner. And we’ll see how the suppliers respond.

So will license light boost local generation? I hope so but given this was always a “make-do” option, I’m not optimistic. The best thing to do at this point is to let the GLA and LBs try to blaze a trail and see if the market develops. In this case there doesn’t appear to be any advantage in being an early mover.