New Meters – Not So Smart for Consumers?

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Source: Wikipedia.

Rush for ‘Smart Meters’

 

Why the rush for so-called ‘smart meters’? I had been slowly writing a blog on this. Too slowly; the Sunday Times has now published an excellent article confirming that the main beneficiary of these meters will be energy suppliers, not energy consumers. Yet consumers will pay for them!

The estimated investment cost of these meters stands at £11 billion. Spending is set to be roughly £220 per meter including administration and installation. The cost for a typical urban dwelling with two meters, one for gas and one for electricity, is therefore £440.

The return to consumers is not high enough to justify the proposed rapid installation rate. The energy saving is usually quoted as £20-25 per year. But there are plenty of other areas in which to spend £440 on energy-saving technologies. If this spending was targeted, the returns would be £75-100 per year or even more.

To bear out more optimistic energy-saving claims than £25/year, a visible display screen is probably needed in the building. This would have an extra cost and an extra electricity consumption.

 

Covert Motives

 

DECC and the Big Six energy companies should reveal the covert reasons for imposing ‘smart meters’ on energy consumers. It may not be wholly or even very closely linked to ‘saving energy’.

‘Smart’ electricity meters look like part of the process of a government imposing lifestyle changes on consumers to coincide with its policy of electricity replacing gas heating. See my blog of 12 May 2014. It is about ‘managing’ peoples’ electricity consumption, hour to hour and changing their lifestyles to suit future electricity output.

The government probably realises that if it succeeds in its aim of increasing electricity consumption and moving away from fossil-fuelled generating plant to more nuclear and more renewables, the national grid would become a less stable source of electricity. In effect, it wishes to outsource the resulting imbalances between supply and demand from electricity producers to electricity consumers.

Unlike gas, oil or even hot water, electricity cannot easily be stored even from minute to minute. It must be produced as needed. Gas-fuelled or hydroelectric generating plants can be flexibly turned on and off to meet the changing demand but it is challenging for nuclear, wind or solar generators to meet demand at the times that people actually want to consume electricity. These types of generator would need a lot of help in the future from more responsive generators; e.g., fossil or renewable gas-fired plants, hydro and/or pumped storage.

The government probably envisages that future consumers can be sold extra electricity by cutting the price if demand is low and the system is full of nuclear power stations which have been built and must generate all the time to repay their vast cost. Conversely, consumers can be disconnected or, put more delicately, rationed by price if not enough nuclear, wind or solar power is being generated.

Because piped gas is easily storable, short-term fluctuations in gas consumption do not cause the network operators such great problems as varying electricity consumption causes them. A possible reason why energy companies are so keen on smart gas meters – why would they not be, if the hapless consumers are footing the bill? – is that they can cut off gas consumers more easily for non-payment of bills. Disconnection today needs not only a court order but a physical visit to the meter. This is expensive.

 

Who Pays?

 

If, as the Sunday Times notes, energy suppliers are the beneficiary of ‘smart meters’, why do they not fund them? Years ago, fitting meters with a few genuinely useful functions; e.g., remote meter reading or fixed time-of-day or -year electricity tariffs could have been made part of the supplier’s duty when meters are replaced anyway. Replacing meters on this more relaxed timescale would not cost £11 billion.

Energy-efficient consumers with a houseful of A+++ appliances, no electric heating and a consequent electricity bill of only £150-200/year are set to pay as much or more for a smart meter than they will save. They impose no undue peaks on the national grid, given the diversity between peaks in one household and another, giving little benefit to electricity suppliers from installing such a meter except the remote meter reading facility.

If a consumer is in this position, can he/she opt out? Extraordinarily, he or she cannot. From 2015, all consumers must pay an extra £14 per year even if they decline to have a smart meter fitted. The whole exercise seems to be a questionable use of scarce resources and an unwarranted bonanza for energy suppliers [7].

 

 

Notes:

 

[1] http://www.thesundaytimes.co.uk/sto/business/money/article1424765.ece.

[2] https://en.wikipedia.org/wiki/Smart_meter. One must ensure that such equipment does not consume too much. Standby power of 5 W would cost £6 per year, negating a quarter of the promised saving. I think that the costs would be substantial. Many dwellings have an electricity meter outside the building or in an outbuilding such as a garage.

[3] The diversified maximum demand from lights and appliances is from 0.75 to 1 kW(e) per dwelling. Peaks for lighting or appliances or central heating pumps in one dwelling do not coincide with peaks in another. Countries without much electric heating have high load factors and relatively little seasonal variation in consumption.

[4] The report LESS IS MORE: Energy Security After Oil, published by the AECB (February 2012) discusses why, with our dependence on electricity for essential services, a stable grid is more important than a smart grid. It outlines a strategy to secure it after fossil fuels have gone, principally by (a) not transferring the heating and transport loads to electricity and (b) ensuring that, as today, the majority of electricity comes from despatchable generating plant.

[5] Virtually all UK installed hydro capacity is in Wales and Scotland. There are few initiatives to fit a significant amount of the remaining UK potential which is limited anyway.

[6] Other types of renewable generating plant such as double basin tidal lagoons or hot dry rock geothermal could possibly produce electricity on demand. But UK activity in such areas is limited.

[7] There are also some data protection concerns. Will OFGEM, the regulator, protect consumers from having their electricity consumption details, which qualify as ‘personal data’, being sold to third parties without their informed consent, despite the wording of the Data Protection Act and the Privacy and Electronic Communications Regulations?

 

 

What is the Point in Insulating a New House Better?

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Pointless?

 

We tacitly assume that we have a financial incentive to fit higher wall or roof insulation levels on a new house, especially a self-build project. With fuel prices soaring in recent years, this will surely save us money year after year?

Well, possibly not. Council Tax valuation methods could make it almost pointless to insulate a new dwelling beyond a basic level. I have only examined the situation for a fairly modest-sized detached house but I suspect that similar issues would arise in smaller and larger dwellings.

 

Valuations

 

The Valuation Office Agency calculates the liability of a house to Council Tax from its external floor area, not from its internal floor area. If a house utilises thicker walls or roof and becomes larger and more imposing externally, its Council Tax rises. The usable floor area, measured to the inside of the external walls, may stay exactly the same.

The Council Tax payable if you are in a particular band differs between Councils. I assume broadly that a Band D house pays £1,500 per year and that a Band E house pays £1,830/year.

 

A Hypothetical Case

 

You are one of the significant number of self-builders who build their own house on their own land. Being in this position, you will not normally know your Council Tax band until the finished house is valued. But I can show you already that you have a potential problem.

The situation is this. You have bought a typical suburban infill building plot, measuring roughly 13 x 40 m. You plan to construct a modest self-build 120 m2 detached house. It is laid out on two floors. It measures 6 x 10 m in plan, measured internally.

You and your architect have already decided that you will use at least 150 mm insulation in the cavity walls. So the proposed house measures 6.7 x 10.7 m in plan externally, giving an external area of 72 m2. But you are still debating whether to increase the wall insulation thickness by another 150 mm to 300 mm; i.e., more typical of the Passivhaus Standard.

Your architect, or an energy expert, has advised you that the extra insulation will cost you around £2,100 and will reduce your need for heat by 1,580 kWh per year. Assuming that the house has a 92-96% efficient natural gas condensing boiler, at 4 pence per kWh you will save £69 per year worth of gas. While this is not a stellar return on a £2,000 investment, you reluctantly accept it as a cost of ‘going green’.

What you have missed, though, is that the resulting 9 m2 increase in your house’s ‘external area’ adds statistically around £70/year to your Council Tax bill. Having spent £2,000 on better insulation, you might like to have saved something on your overall bills, albeit only £69/year. But you have not. The extra tax that on average you must pay is similar to the value of the fuel which you save.

It works like a lottery too. If, with better insulation, a dwelling is valued one Council Tax Band higher, it costs you £330 per year in extra Council Tax. This exceeds the fuel saving. Other dwellings may stay within the same Council Tax band and will make a £69/year saving.

 

A Flawed Tax?

 

Hardly anyone planning a self-build project is aware that they risk becoming a victim of this ‘stealth tax’. Nor does the disincentive seem to be getting any less. Although real fuel prices nearly doubled over the last ten years, Council Tax rose sharply too.

Council Tax is problematic in other ways. But while we wait for a better system, if we take the government’s word for it that it is committed to energy efficiency, why does it not correct such basic flaws in the existing system?

 

 

Notes:

 

[1] http://www.voa.gov.uk/.

[2] Thought to be typical of the West Midlands region but only based on a short check of four councils; i.e., Herefordshire, Malvern Hills, Wychavon and Bromsgrove.

[3] Large compared to UK developer-built or RSL housing but modest in scale by the standards of UK self-builders or homes elsewhere in Europe or North America.

[4] Government Regulatory Impact Assessments (RIAs) in the early 2000s indicated that adding extra cavity wall insulation to a new building costs typically three times more than the insulation material itself; i.e., full-fill, semi-rigid mineral fibre. The premium reflects labour charges and the extra costs of the wider roofs, deeper window reveals, etc. The calculations used the Passivhaus Planning Package 2007 version in average UK climatic conditions and an internal temperature of 21.5̊°C; i.e., as monitored in Passivhaus-level buildings.

[5] Estimate for dwelling floor areas typical of Bands C, D, E and F; i.e., detached houses with internal floor areas broadly from 90 to 225 m2, located in the West Midlands region.

[6] The bulk of householders could experience a drop in local government taxation under a revised system: http://www.jrf.org.uk/publications/council-tax-impacts. The Rates, which preceded the Council Tax, were considered in hindsight to have been cheaper to collect and less regressive.

 

 

Zero Carbon, Zero Reality? Part 2

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Electric Heat Pumps

 

 

 

 

 

 

As my last blog noted, the government’s Renewable Heat Incentive (RHI) is subsidising wood-burning devices which may be worse for the climate than the oil or gas boilers that they replace. The RHI is also disbursing taxpayers’ money on electric heat pumps. These are the subject of this post.

Has DECC considered the potential consequences if consumers react to its offer by installing heat pumps by the 100,000? There are worries over network stability. There are even doubts that spending this money will reduce CO2 emissions.

Some recent Dutch work [2] examined a scenario in which significant numbers of dwellings change from gas-fired boilers to electric heat pumps for their space and water heating. In the early stages, the impact would be to overload the local transformers which reduce the mains voltage to 230 V AC. That could make it more difficult to recover from winter power cuts [3].

As critics have already pointed out, really large-scale use of heat pumps – beyond the Dutch scenario – would mean that the national grid would have to be extensively replaced. The existing cables and transformers are too small to ‘heat electric’ although they are perfectly adequate for our lights, appliances, fans, pumps and electronic devices.

It is not only that the national grid’s cables are insufficient for a large increase in peak load. Since we closed our oldest, dirtiest coal-fired power stations, very little spare generating capacity has been available compared to the winter maximum demand [4]. Privately-owned diesel generators are being called on to keep the network stable. With growth in peak demand, even this contribution could be insufficient.

We had major, unpleasant and disruptive power cuts in the early 1970s. An industrial dispute between the government and miners led to coal shortages in which the government failed ‘to keep the lights on’.

Today’s governments are terrified of any repeat of this. If it happens, it is regarded as a humiliation. Ministerial resignations or sackings are inevitable.

I think the odds are still better than evens that the network operators can maintain supply between 2014 and 2020; i.e., the period particularly highlighted by OFGEM. But why raise the risk by subsidising electric heating – of which one form is heat pumps – and thereby raising winter peak demand at a time when margins are so tight? [6]

The fact that CO2 emissions do not necessarily fall if an electric heat pump displaces a condensing gas or oil boiler system makes the policy look doubly foolish [7]. It should have been better thought out. If consumers install so many subsidised heat pumps that the network in the late 2010s or early 2020s struggles to cope, this attempt at ‘zero carbon’ will have backfired as badly as the ‘dash for biomass’ cited in my last blog of 2 May 2014.

 

 

Notes:

 

[1] By respectively 7 p and 19 p per kWh of heat, rounded to the nearest 1 p.

[2] http://www.energygo.nl/en/publications/dynamic-pricing-by-scalable-energy-management-systems-field-experiences-and-simulation-results-using-powermatcher and http://www.energygo.nl/download/PES2012_PM_Achievements.pdf. The tacit assumption is that resistance heaters are used when the heat pump cannot meet the full demand.

[3] Even if the network could meet the steady-state demand, the transient demand on reconnecting all the loads at once would exceed the capacity of the transformer.

[4] The nationalised Central Electricity Generating Board required a plant margin of 24% above the simultaneous maximum demand. Today’s plant margin is 5%.

[5] If anything, a disruption to electricity supply might have greater consequences now than it did then. ‘Life as we know it’ is more dependent on a continuous supply of electricity in 2014 than it was in 1974. 40 years ago, London Underground operated its own power stations. It could switch between those and the national grid for greater security of supply. Shop tills were not yet electric. The telephone system had battery backup. In fact, the landline system still does but mobile telephone masts do not. The internet was not yet in use.

[6] Replacing a gas boiler by a heat pump adds a peak demand of 4.5 kilowatts (kW) to the national grid, assuming an existing house with a peak heat demand of 8 kW, a heat pump with a peak coefficient of performance/COP of 2.0 and network losses of 12% between the power station and the dwelling. New blocks of flats with electric heating also increase the peak demand.

[7] The Energy Saving Trust found in 2010 that a typical heat pump had a COP of 2.2. http://www.cibsejournal.com/cpd/2012-01/. This would give relative CO2 emissions of:

a) gas-fired condensing boiler 0.24 kg/kWh
b) condensing LPG boiler 0.27 kg/kWh
c) condensing oil boiler 0.30 kg/kWh
d) electric heat pump 0.53/2.2 = 0.24 kg/kWh.

The CO2 intensity of 0.53 kg/kWh for mains electricity is from the government’s Standard Assessment of Performance. The assumed CO2 intensity of natural gas is 0.22 kg/kWh. Assuming that, as published, 40% of electricity in recent years was generated from coal at 0.92 kg/kWh and 35% from gas at 0.50 kg/kWh, with 12% network losses to small buildings, the likely CO2 intensity is somewhat higher at around 0.60 kg/kWh.

A more focussed policy might address the needs of rural buildings which have no other means of heating than electricity, possibly because they lack space for fuel storage. Compared to electric resistance heating, even a heat pump of COP 2.2 would reduce CO2 emissions by 55%.

 

 

Zero Carbon, Zero Reality? Part 1

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Wood-Burning Appliances

 

 

 

 

 

 

 

It was alleged this week that the Department of Energy and Climate Change has been suppressing the ‘biomass calculator’ developed by its Chief Scientist, Professor David MacKay. To quote Prof. MacKay, this modelling tool makes it ‘fantastically [clear]‘ that over the next 20-30 years, burning wood is worse for climate change than burning fossil fuels [1].

The main reason for this awkward finding is that if trees are cut down and burned it takes a very long time for new trees to regrow to replace the combusted material. During the initial part of this period, the bulk of the CO2 which was emitted remains in the atmosphere and contributes to climate change.

The overall situation is not that burning fossil fuels is less bad for the environment than we thought. It is that wood burning is even worse for the environment than we thought. A lot of people outside government have been criticising the belief that wood is ‘near-zero-carbon’ for several years [2]. But it was a welcome move for a government scientist to acknowledge the point.

What makes it politically difficult is that a ‘dash for biomass’ is already well underway. With much fanfare, DECC launched its ‘Renewable Heat Incentive’ (RHI) which gives large subsidies to the users of heating systems which burn wood instead of oil or gas. 12 pence per kWh of heat is on offer for owners of approved wood-burning appliances [3].

The stately homes of England – Downton Abbey, indeed – could end up scrapping their oil-fired boilers for wood-fired ones. Drax power station may start burning shiploads of imported trees from the USA. The government probably depends on the truth of the assertion that wood burning is ‘zero carbon’ and hence ‘renewable’ to have a good chance of meeting its target of 15% of UK energy from renewable sources by 2020 [4].

It would be awkward to have to admit that certain devices which have been receiving a government subsidy risk making climate change worse, followed by hurried amendments to the rules of the RHI. Yet this would seem to be the honourable course of action to take.

Could the government be continuing on a technically flawed course in order to avoid something as basic as political embarrassment? I rather fear so.

No doubt the Secretary of State and his officials could not possibly comment. But energy consumers and taxpayers deserve better. They will pay for this folly in higher bills and taxes, yet the atmospheric concentration of CO2 will be as high as or higher than it would otherwise have been.

Part 2 of this blog will follow shortly. It deals with another technology subsidised by the ‘Renewable Heat Incentive’ which could risk causing more problems than it solves.

 

 

Notes:

 

[1] Private Eye, no. 1365, p. 32, 2-15 May 2014. The article asks if DECC may be able to stop release of the calculator using the argument that the government, as employer, owns the intellectual property generated by its employees. The Freedom of Information Act might still apply though. Note added on 27 June 2014: DECC informed the author that the calculator is now called the Biomass Emissions And Counterfactual Model and ‘will be published shortly’. Further note: the calculator was published on 24 July 2014.

[2] http://www.aecb.net/publications/biomass-a-burning-issue/. Many academic papers make similar points in greater detail. The matter is quite complex. A full study should take account of all other greenhouse gases, including methane, large and small soot particles and nitrogen oxides.

It should also look more critically at changes on the fossil fuel side. For instance, the emissions from ‘unconventional natural gas’ and from conventional natural gas transported as LNG are higher than from the piped natural gas we consumed for the last 40 years.

[3] It seems likely that most wood-burning installations will replace oil. This is the usual heating fuel in large rural properties.

[4] It is not so much that the target is vastly overambitious, given the higher percentage of energy coming from renewables in other EU states, except for Luxembourg. Rather, the UK has been slower to develop a policy on heat or transport fuel than on electricity. Possibly officials were not fully clear what they were signing up to. Did they confuse energy with electricity?

 

 

A Dash for Shale Gas

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The UK’s ‘peak gas’. The rate
of North Sea gas production
in
gigawatts or GW. 1 GW
equals one million kilowatts.

 

 

Source: reference [1].

 

The UK’s oil, coal and gas production continue to decline steadily. Precipitate could be a better word for the rate in decline of North Sea gas output, see the chart above.

The main action visible from the government has been a second ‘dash for gas’, but this time a rush to award various subsidies for ‘unconventional gas’. Unlike North Sea gas, this new natural gas resource is tied up in shale deposits and is only extractable via the process of hydraulic fracturing or ‘fracking’.

Fracking-type processes have a very long history and have sometimes been used in ‘conventional’ oil or gas extraction without apparent fuss. The recent earthquakes from the Gröningen gas field in the Netherlands have been larger than from fracking [2]. So maybe some intrinsic problems are less than the worst scare stories suggest.

But we lack basic answers to many questions. Government answers so far to these six seem to risk misleading us as much as they inform us:

  • How much higher are greenhouse gas emissions from shale gas vs. conventional natural gas? The government estimated that shale gas has similar emissions to imported liquefied natural gas from Qatar but it has probably underestimated the methane leaks [3].
  • The theoretical amount of shale gas in place under various regions of the UK, as cited by the British Geological Survey, is very high. But no-one ever expects to extract all the oil or gas which is present. It is much more useful to estimate the recoverable amount of gas. Was the larger figure so widely quoted by accident or was it an attempt to mislead?
  • How much of the theoretical amount is recoverable at an acceptable energy return on energy invested (EROEI)? EROEIs are crucial to the viability of new energy sources. Shale gas may be less good than conventional gas fields and better than a few other sources which the government is subsidising. But one would like to base energy policy on hard evidence. There seems to be uncomfortably little.
  • Why the apparently low level of interest from four of the world’s five main oil companies? It is not exactly a vote of confidence on a par with their enthusiasm to drill the North Sea for conventional oil 40 years ago.
  • How many wells per year must be drilled in order to supply gas at a significant rate in relation to UK consumption? Production from a shale well falls off quite quickly. If developers want the most rapid return, other wells must soon be drilled nearby. Is the answer ‘too many for comfort in a small, very densely-populated country’?
  • If this is a ‘last gasp’ of the natural gas industry, the gas may not be particularly cheap. So why is it apparently to go on being wasted in heat-only boilers [4]?

Re the last point, it strains credulity to call shale gas ‘a bridge to sustainable energy’ if it is to be burned off as fast as possible in one of the most wasteful ways possible. By taking this approach to conventional gas, we exhausted the North Sea in 40 years flat. But nothing very decisive on implementing energy efficiency seems to have happened since DECC issued a ‘strategy’ on it in November 2012 [5] and an ‘update’ on it in 2013 [6].

I still hope that an effective policy is maturing behind the scenes, benefiting from the approaches which were found to work or not work elsewhere around the world. But at times I fear that the modern meaning of ‘strategy’ or ‘update’ could be the same as the old Civil Service phrase: ‘The matter is under review’. This was a euphemism for: ‘File it and forget about it’.

 

 

Notes:

 

[1] Historical Gas Data: Gas Production and Consumption and Fuel Input 1920 to 2013. DECC (31 July 2014)

[2] http://www.knmi.nl/research/seismology/3Dlocation.html.

[3] www.carbonbrief.org/blog/2013/09/climate-change-is-biggest-shale-gas-risk,-government-scientists-say/.

[4] UK gas power stations reject enough cooling water to heat the domestic sector. Denmark, just across the North Sea, uses the bulk of its natural gas considerably more efficiently in combined heat and power plants. The heat piped to houses is two to six times less CO2-intensive than heat from a gas condensing boiler. These figures refer respectively to heat from a small 500 kW(e) reciprocating engine and from a 300 MW(e) or larger combined cycle gas turbine.

Using reject heat from power stations is as much an energy efficiency measure as insulating buildings. The first measure uses less fuel to provide heat; the second uses less heat to provide comfort. We need an astute combination of both, especially for historic buildings in UK cities.

[5] www.link2portal.com/energy-efficiency-strategy-aims-avoid-22-power-stations.

[6] www.gov.uk/government/collections/energy-efficiency-strategy.