City leaders need to use hard-headed economic arguments to promote renewable energy.
By Simon Virley, KPMG in the UK
City leaders need to use hard-headed economic arguments to promote renewable energy. Renewables can help bring down energy bills and free cities from their dependence on large corporations and central government. Saving the world, vital though that may be, is lower down the priority list for the majority of the population.
Renewables are no longer a fringe source of energy. In the UK, a record 25 percent of electricity generation came from renewable sources in the second quarter of 2015, up from only 6 percent in 2007.1 Elsewhere in Europe, levels are much higher – for example, Sweden generates around 55 percent of its electricity from renewable sources2 and Germany, Norway and other countries are not far behind.
For too long political leaders at national and local level have focused on climate change as the main motivation for renewables, at the expense of a hard-headed economic argument in their favor. Even now, when a quarter of electricity generation in the UK is from renewables, they are often perceived as marginal, unreliable and expensive. It is time to leave this alternative image behind and emphasize its concrete financial and political benefits.
The old criticisms of renewable energy no longer stack up. Renewable energy is cheaper than ever before. At a residential level, solar is comparable with retail prices paid by consumers.3 As the cost of solar panels continues to fall around the world, there will come a point when it will no longer need any form of subsidy. Technological advances are also bringing down the costs for other renewable energy sources, including wind and biomass (for both electricity and heat).
These cost reductions, when combined with other technological breakthroughs, including the falling costs of battery storage, the roll out of smart meters and the development of demand side response (DSR) technologies, provide the basis of a very different way of producing and consuming energy in the future. These changes will enable consumers to take control of their energy usage, exporting power back to the grid when it is economically advantageous to do so. Optimizing energy usage and production in this way offers the prospect of lower energy bills for households and consumers.
It also offers the prospect of greater independence – both from fluctuations in world energy prices and from large energy suppliers. City leaders wanting to promote renewables should emphasize the security and stability created by this greater local generation and energy independence.
This was exactly the approach taken by Hillary Clinton in her recent statement on energy policy. She promised 1 billion solar panels across the US by 20204, with the aim of reducing bills and freeing people from dependence on large energy suppliers. It was a canny move - few would say no to paying less for their energy, greater independence and the potential to make a profit in times of surplus production.
If people own their energy generation, they are more aware of their own behavior. It is an important benefit – often overlooked – and it should help people reduce their bills. We are all used to simply flicking a switch and paying a monthly direct debit, without any idea of where our energy comes from. Taking charge of your own power is a small step towards responsible consumer behavior and – whisper it – reducing carbon emissions.
Different locations will favor particular renewable energy uses. Bristol, like many UK cities, is already deploying solar panels on its public buildings and has set up its own municipal energy company. Nearby there is also the Swansea Bay tidal lagoon project, looking to use the power of the tide to drive a turbine beneath the waves.
I would suggest that every city authority looks to their local environment to see what possibilities there are to generate renewable power. For some it will be solar on public, commercial and residential buildings. For others it might be district heating or Combined Heat and Power using household waste.
Green consumers will not need convincing of the importance of renewable energy generation. For those too busy to save the world, using solid economic and political arguments is the route to success.