The Big Six On The Run 1

The Big Six On The Run How renewables are disrupting big energy firms everywhere

2 The Big Six On The Run

‘‘The biggest story you’ve never been told ‘Europe’s electricity producers face an existential crisis.’ Headline in The Economist, Oct 20131

’’1 The Economist, ‘How to lose half a trillion dollars’, October 2013, http://www.economist.com/news/briefing/21587782-europes-electricity-providers-face-existential-threat-how-lose-half-trillion-euros

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Contents

Introduction: The biggest story you’ve never been told 4

1. Renewables surge forward 6

2. How renewables disrupt markets 8

3. How big energy firms are getting all shook up 12

Conclusion: The Big Six on the run 18

Recommendations 19

Authors: Guy Shrubsole, Alasdair Cameron

With thanks to: Sophie Neuburg, Anna Watson, Simon Bullock, Andrew Pendleton, Paul Steedman, Naomi Luhde-Thompson and Professor Catherine Mitchell, who all reviewed drafts of this report and offered comments.

Designed by: Leanor Hanny (layout), Claire Bracegirdle (graphs).

November 2014

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The biggest story you’ve never been told

An energy revolution is underway across the globe, and the old order is running scared.

Big energy firms, once the greatest beneficiaries of liberalised electricity markets, are suddenly seeing their profit margins slump, their very futures imperilled. The traditional privatised utility model that has reigned supreme for twenty-five years is being rapidly undermined. The effects are being felt most strongly in Germany and the US – but increasingly Britain’s Big Six energy firms are also under threat.

In short, the Big Six are on the run. What’s causing them to take fright is the disruptive power of renewable energy – particularly small-scale renewables owned by lots of people. The reasons for this are actually quite simple, but seldom explained.

The first reason is that the Big Six are facing a growing army of competitors. When the utilities were first privatised in the 1980s, they portrayed themselves as the face of a new popular capitalism. The famous ‘Tell Sid’ adverts of the Thatcher years caught the mood as thousands of people bought up shares in the new energy companies. But as the electricity market developed the number of shareholders and firms dwindled and ossified into the small oligopoly of suppliers that exist today. Dogged by numerous scandals, from doorstop mis-selling to accusations of price-fixing and competition inquiries, the Big Six today are hugely unpopular: purveyors of expensive electricity that’s dirty to boot.

Yet where regulators, governments and legislation has failed, a new David is rising up to challenge the big energy firms’ Goliath. Hundreds of thousands of households, businesses and investors have been investing in solar and wind power. Large numbers of non-traditional players have entered the electricity market and are challenging the dominance of the conventional utilities. A people’s army has risen up that’s taking ownership of the energy system. It’s perhaps unsurprising that renewables should be the beneficiaries of this: besides being hugely popular – with large majorities consistently supporting solar and wind over any other energy technology – renewable energy is inherently decentralised. Supplies of coal, oil, gas and uranium can be readily stored and controlled; but sunlight falls on every inch of the globe and there are few places where the wind never blows.

In some countries over the past decade, mass ownership of renewable energy has become a reality: in Germany, for instance, 50% of all renewables are owned by households, farmers and cooperatives. Less than 10% are owned by big energy firms. The remainder are owned by other private investors and businesses who have emerged as challengers to the traditional utilities.

The second reason why renewable energy is disrupting the big utilities is because it has certain inbuilt advantages over conventional forms of power generation. To generate power from the sun and wind, you need to invest upfront in solar panels and wind turbines – but once they’re installed, the power is basically free (or as economists say, ‘near-zero marginal cost’). That poses a major conundrum for utilities whose main power generation assets are fossil fuel power stations with ongoing fuel costs – and increasingly high fuel costs at that.

It means that anyone selling renewable power into the grid has a competitive advantage. Since an extra unit of power output from a solar panel is essentially free, solar can outcompete coal, oil and gas. In nations with large amounts of solar, this is starting to cause wholesale electricity prices to crash, and eat into company profits. At the same time, distributed renewable energy systems place fewer demands on expensive transmission grids, theoretically allowing them to supply power locally at low cost. It is a classic instance of what the economist Josef Schumpeter called ‘creative destruction’, whereby technological innovation rips up the profits of the old order.2

Of course, up until recently, renewables have remained a more expensive alternative because of the upfront costs of installing these technologies – requiring public subsidies to get a look-in. But this brings us to the third reason why traditional fossil-fuel utilities are under threat. Renewables, particularly solar but also onshore wind, have plummeted dramatically in cost over the past decade and in some parts of the world are now cheaper than fossil fuels, even without subsidy. In fact, investment bank UBS predict that solar combined with batteries and electric vehicles will soon be cheaper than grid electricity and fuel in key markets like Germany,

2 Josef Schumpeter, Capitalism, Socialism and Democracy, 1942.

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Spain and Italy.3 This is quite apart from the fact that fossil fuel generators aren’t paying the full costs of their pollution (or ‘externalities’).

All this has meant that large utilities in Germany, the US and elsewhere are seeing their market share reduced, and profits undercut. Many are being forced to adapt – or else lobby hard against the oncoming changes. “Utility companies that refuse to let go of an archaic system are losing investors’ money”, says US energy thinker Amory Lovins.4 “Distributed energy is to utilities as social media is to newspapers”, argues the CEO of Bloomberg New Energy Finance, Michael Liebreich.5

In the UK, energy firms appear to be at a crossroads. With two of the big German utilities, EON and RWE, also major players in Britain, how is the renewables revolution that’s sweeping the continent affecting

3 John Vidal, ‘Big power out, solar in: UBS urges investors to join renewables revolution’, The Guardian, 27th August 2014, http://www.theguardian.com/environment/2014/aug/27/ubs-investors-renewables-revolution

4 Amory Lovins, ‘Let’s Celebrate, Not Lament, Renewables’ Disruption of Electric Utilities’, 6th February 2014, http://blog.rmi.org/blog_2014_02_06_celebrate_renewables_disruption_of_electric_utilities

5 Michael Liebreich, Bloomberg New Energy Finance conference April 2014 keynote speech. Viewable online here: http://about.bnef.com/video/summit-2014-michael-liebreich/ And see @MLiebreich’s tweet here: https://twitter.com/MLiebreich/status/457498076828426240

what they lobby for in the UK? Will the Big Six continue to pressure government behind the scenes to keep Britain from going the same way as Germany? And how can the British public reap the benefits of surging solar, plummeting prices and mass energy ownership?

Because if David beats Goliath – if the popular army of small-scale owners of renewables triumph over the clunking Big Six energy firms – then everything changes. Households, communities and businesses get to be producers of energy, not simply consumers. They’ll no longer be at the mercy of annual price-hikes by a narrow set of suppliers but will get to benefit from fuel-free power and greater ownership of the energy system themselves. We’ll see Britain’s energy supply cleaned up, our emissions from electricity generation plummet, and the road cleared for mass roll-out of electric cars and heating.

This is a big, dramatic story that hasn’t yet been properly told. Indeed, it’s still unfolding. It’s the energy equivalent of when mobile phones leapfrogged landlines; when email replaced post; when canals got lapped by railways. In those earlier examples of technological transition, the lumbering incumbents failed to spot the disruptive power of their smaller, smarter competitors, and got squashed. This is the story of how the power of the sun got the Big Six running scared.

» Bringing it home: Farmer Adam Twine and advisor Liz Rothschild at Westmill Sustainable Energy Trust, set to be one of the biggest solar cooperatives of its kind in the world. Friends of the Earth has been showing that, far from being too expensive, a switch to clean energy and less waste is good for the economy and jobs – as well as the planet.

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Since the 1970s, environmentalists have promoted renewables as an alternative, cleaner source of energy to the traditional dirty forms of coal, oil, gas and nuclear. At first, renewable energy – whether from the wind, sun, tides, or waves – appeared marginal, too unreliable and expensive to ever make a serious contribution to our energy needs.

The oil crisis of the mid-70s panicked western governments into researching alternative forms of energy, but as oil prices slumped again, so did renewable investment. Then, in the late 1980s, came climate change. Suddenly there was a new imperative to quickly phase out fossil fuels and power up with clean energy. Governments around the world were generally slow to act; some opted for nuclear, others to simply switch from coal to gas.

But many nations also chose to invest in renewable energies, and as research and development progressed, costs began to fall and deployment grew. With the warnings of climate scientists growing louder and more insistent, by the 2000s, serious programmes of investment into renewables had begun around the world.

Now, over the past decade, renewables have surged forward in countries around the globe:

n In Germany, the amount of solar power installed grew from 2 Megawatts (MW) in 1990 to 37 Gigawatts (GW) in 2014 – 37,000 Megawatts.6

6 Dr Bruno Burger, ‘Electricity production from solar and wind in Germany in 2014’, Fraunhofer Institute for Solar Energy Systems (ISE), 18th August 2014, http://www.ise.fraunhofer.de/en/downloads-englisch/pdf-files-englisch/data-nivc-/electricity-production-from-solar-and-wind-in-germany-2014.pdf

That’s equivalent to nearly half of the UK’s entire power generating capacity7. On one sunny Sunday in May 2014, Germany’s solar panels and other renewables provided almost 75% of total national electricity demand.8

n China has currently installed 18GW of solar, according to the International Energy Agency9. In May 2014, the Chinese government announced a new target to reach 70 GW of solar by 2017 – in other words, committing to install nearly as much solar power as there is total UK power generating capacity, in just three years.10

n By mid-2013, the US had installed 10GW of solar,11 and in the first quarter of 2014 installed a further 1.3GW – a rise of 79% on the same quarter last year.12 The rapid expansion of onshore wind has played a role too. In 2014, the cost of

7 At the end of 2013, UK installed generation capacity that could feed into the grid was around 77GW. See Digest of UK Energy Statistics, chapter 5 (Electricity), 2014, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/337649/chapter_5.pdf

8 Clean Technica, ‘Germany Reached Nearly 75% Renewable Power Use on Sunday’, 15th May 2014, http://cleantechnica.com/2014/05/15/germany-reaches-nearly-75-renewable-power-use-sunday/

9 IEA, ‘Snapshot of Global PV 1992-2013’, http://www.iea-pvps.org/fileadmin/dam/public/report/statistics/PVPS_report_-_A_Snapshot_of_Global_PV_-_1992-2013_-_final_3.pdf

10 Business Green, ‘China aims for 70GW of solar in race to ditch coal’, 19th May 2014, http://www.businessgreen.com/bg/news/2345344/china-aims-for-70gw-of-solar-in-race-to-ditch-coal

11 Renewable Energy World, ‘US Joins 10-GW Solar PV Club, Prepares For Liftoff’, 10th July 2013, http://www.renewableenergyworld.com/rea/news/article/2013/07/us-joins-10-gw-solar-pv-club-prepares-for-liftoff

12 Bloomberg Businessweek, ‘U.S. Solar Power Rises 79% as Home Panels Beat Warehouses’, 29th May 2014, http://www.businessweek.com/news/2014-05-29/u-dot-s-dot-solar-power-rises-79-percent-as-home-panels-beat-warehouses

1. Renewables surge forward

» Below left: Hong Kong’s first zero carbon building, located at Kowloon Bay.

» Below: Wind Turbines, Coachella Valley, Palm Springs, California.

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new wind power fell to 2.5 cents per kWh – the lowest of any new energy source in the US.13 In mid-2014 it was announced that the US had generated 14% of its electricity from renewables, something the International Energy Agency had once stated would not happen until 2040.14

n By the start of 2014, the UK installed its 500,000th solar panel – up from 200,000 just two years previously and a huge increase on the tiny numbers deployed prior to the start of the Feed-In Tariff in 2010.15 The UK has suddenly become investors’ country of choice for solar – two-thirds of planned European solar projects for 2014-15 are in the UK.16

Accompanying and driving this surge in solar installations is the tumbling cost of photovoltaics. Solar PV has developed in leaps and bounds since its origins as a space-age technology. As Figure 1 illustrates dramatically, in the 35 years from 1977 to 2012, the cost of solar PV declined by 99%. Some call this ‘Swanson’s law’ (named after a US solar advocate) – that for every doubling of solar PV installations worldwide, there is a 20% drop in costs.

Together, these trends paint a very different picture to the doom-and-gloom we are used to hearing about climate change and dirty energy. Decades of campaigning, policy change and investment are starting to pay off. We are witnessing a quiet revolution in the way we obtain our energy, and not everyone has yet woken up to this fact. Just as canal engineers were trumped by railway industrialists, and record companies have fallen prey to online downloads, so solar and other renewables are preparing to bury their dirty fossil-fuel competitors. The next chapter explains how.

13 Clean Technica, ‘How Low Can Wind Energy Go? 2.5c per Kilowatt-Hour Is Just The Beginning’, 23rd August 2014, http://cleantechnica.com/2014/08/23/cost-of-wind-energy-25-per-mwh-and-falling/

14 PV Magazine, ‘US electrical generation from renewables hits 14.3%’, 27th August 2014, http://www.pv-magazine.com/news/details/beitrag/us-electrical-generation-from-renewables-hits-143_100016232/#axzz3Bgqvw1KJ

15 DECC, Weekly Solar PV installation data, last updated 2nd April 2014, https://www.gov.uk/government/statistical-data-sets/weekly-solar-pv-installation-and-capacity-based-on-registration-date

16 Solar Power Portal, ‘Two-thirds of Europe’s planned PV projects are in the UK, says IHS’, 28th May 2014, http://www.solarpowerportal.co.uk/news/two_thirds_of_europes_planned_pv_projects_are_in_the_uk_says_ihs_3296. See also EUObserv’ER, ‘Photovoltaic Barometer for the EU’, 2013: http://www.energies-renouvelables.org/observ-er/stat_baro/observ/baro-jdp11_en.pdf.

Figure 1: The tumbling cost of solar. Source: Bloomberg New Energy Finance, 2012.17

17 Bloomberg New Energy Finance analysis, 2012, graph featured in The Economist, ‘Sunny Uplands’, 21st November 2012, http://www.economist.com/news/21566414-alternative-energy-will-no-longer-be-alternative-sunny-uplands

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Renewables are different from fossil fuels in one obvious respect – they generate power cleanly, without emitting carbon dioxide and thereby driving climate change. But renewables also differ markedly from fossil fuel in their economics. As a fuel-free source of power – or rather, a source where the ‘fuel’ is provided for free by the shining sun or blowing wind – they are very different from fossil fuel and nuclear power stations, which require coal, oil, gas or uranium to be dug out of the ground and processed.

The way renewables interact with energy markets is, therefore, different – and disruptive. Here’s why.

a) Plummeting wholesale electricity pricesRenewables generate at near-zero marginal cost. So in some countries with high levels of renewables, there have been increasing instances of short-term surges in renewable generation which have collapsed the spot price of electricity. In other words, there has been more electricity generated than needed for large periods of time. In Germany, for example, surging quantities of solar and wind have helped depress the wholesale price of electricity by over 30% over the last three years – as the graph below shows.18

18 Bloomberg, ‘German Power Costs Seen Dropping for Fourth Year’, 3rd January 2014, http://www.bloomberg.com/news/2014-01-03/german-power-costs-seen-dropping-for-fourth-year-energy.html

2. How renewables have disrupted markets

Figure 2: Plummeting wholesale electricity prices in Germany. Source: EnBW 2013 Factbook.19

19 EnBW 2013 Factbook, https://www.enbw.com/media/downloadcenter-konzern/factbook/enbw-factbook-2013.pdf

This happened most famously in Germany on June 16th 2013, when high output from solar and wind power, combined with low demand, caused wholesale prices to plummet to minus 100 Euros per megawatt-hour.20 In other words, prices sloughed off to negative to encourage companies to actively remove generating power from the grid; the system couldn’t cope with the sudden rush of renewable energy.

b) Holding down peak electricity pricesElectricity usage isn’t steady, but instead varies over the course of a day: ramping up as people get up in the morning and go to work, spiking at tea-time in the evenings, and reducing as people turn out the lights and head for bed. In many countries there may be spikes during hot days as air conditioning kicks in. Matching demand for electricity with a constant supply is the challenge that national grids successfully deal with every day.

Traditionally, electricity grids have coped with fluctuating demand by turning on and off various forms of electricity supply. Relatively inflexible forms

20 See for example the account given by Dr Kathrin Goldammer, ‘Electricity for free? Negative electricity prices and their consequences’, Institute for Advanced Sustainability Studies (no date), http://www.iass-potsdam.de/research-clusters/global-contract-sustainability-gcs/news/electricity-free-negative-electricity

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Figure 3: Modelled impact of 22GW of solar on peak electricity demand. Source: National Grid briefing for DECC.25

25 National Grid solar briefing for DECC, 2012 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/66609/7335-national-grid-solar-pv-briefing-note-for-decc.pdf.

of electricity generation, like coal and nuclear, have provided a constant ‘baseload’, whilst spikes in demand have been accommodated through quickly turning on flexible ‘peaking plant’, like gas. Electricity markets pay a premium to operators of flexible fossil fuel plants to bring forward peaking plant at times of sudden high demand.

Surging renewable energy installations have complicated this picture. Solar, of course, only operates during the day; but on sunny days it can deliver huge quantities of power very fast. The same is broadly true for wind power (though the wind of course also blows during the night). This will result in two major changes to how grids manage moments of peak demand in the UK, as is happening already in Germany.

Firstly, a lot of solar isn’t fed into the high-voltage transmission system – it’s installed on the roofs of buildings and feeds power directly into appliances and the local networks, and appears as a reduction in electricity use. So when solar is generating, it can shave off a chunk of demand for grid electricity. This may leave a smaller market for operators of traditional power generating kit to sell their electricity into. In the UK, there is some evidence that this effect may already be visible: in the summer months of 2013, demand ‘dropped’ from 2012 levels by around 5%-6% during sunny days.21

Secondly, solar and wind power that is connected to the grid will inevitably push down on trading prices when it is in operation, because it is generating electricity at near-zero marginal cost. In some markets, or at certain times of the year, this can have a particular effect on generation around peak times. This is particularly the case in places where demand spikes from air-conditioning frequently coincide with warm summer days, such as in California or Southern Europe. Wind too is often well matched to eat into early evening power demand, and in the UK is at its strongest in late afternoon and early evening.22 And as renewables generate at

21 Chris Goodall, ‘Look carefully and you can see solar PV output denting UK electricity demand’, CarbonCommentary, 7th June 2013, http://www.carboncommentary.com/2013/06/07/look-carefully-and-you-can-see-solar-pv-output-denting-uk-electricity-demand/

22 Graham Sinden, ‘Characteristics of the UK wind resource: Long-term patterns and relationship to electricity demand’, Energy Policy, 2006, http://www.eci.ox.ac.uk/publications/downloads/sinden06-windresource.pdf

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near-zero marginal cost, they get taken up by the grid first before other sources.

In the UK, maximum daily demand usually occurs during the afternoon and in the early evening. This means that solar and wind output has the potential to significantly eat into one of the largest markets for peaking generation. A study conducted by the National Grid includes estimates of how 22 GW of solar power would eat into the summer and winter peaks of energy electricity demand (see Figure 3 below).23 This effect can disrupt fossil fuel operators’ profits, particularly in summer. Evidence from Germany suggests this has already begun to happen. In 2008 the average price for peak electricity was €14 above the baseload price, while by 2013 it had fallen to just €3.24 Essentially, the ability to ramp up peak plant has become less valuable.

23 National Grid solar briefing for DECC, 2012 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/66609/7335-national-grid-solar-pv-briefing-note-for-decc.pdf.

24 Fraunhofer Institute for Solar Energy Systems, ‘Electricity Spot-Prices and Production Data in Germany, 2013’, January 2014, http://www.ise.fraunhofer.de/de/downloads/pdf-files/aktuelles/boersenstrompreise-und-stromproduktion-2013.pdf

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Of course, flexible supply will still be needed to cover fluctuations in demand, but the nature of this market is changing. The times in which peaking-generation will be required will be less predictable, and the number of hours it may be needed to operate for and the amount of capacity regularly required may reduce.

Furthermore, while it’s clear that a high-renewables electricity system needs ways to balance variable supply and demand, there are lots of ways this can be done besides paying for new fossil fuel back-up plant. Smart grids utilising demand side management techniques to better match electricity supply and demand; electricity storage like batteries, pump hydro stations, and electric vehicles;26 more undersea electricity cables to plug into the European grid – all these alternatives are technically viable, and many are growing very fast. Like renewables, they go against the grain of traditional utility business models. Yet they are already making their impacts felt. Germany, for example, has recently installed Europe’s largest battery storage system.27 And current trends suggest that in many countries – such as Spain, Italy, Australia and Germany – the combination of solar and home battery storage systems will be cheaper than electricity bought from the grid in just a few years, and it some cases already is.

c) Retail prices remain highOf course, declining wholesale prices aren’t the whole picture. There’s a difference between the price at which electricity is traded wholesale, and the retail price it ends up being sold at to consumers. It’s a bit like the difference between the cost of a barrel of oil, and its price at the petrol pump. Along the way, wholesale electricity costs are added to: electricity suppliers price in the costs of transmission and distribution, marketing, taxes, balancing costs and, of course, profits.

The economics of renewables energy means that, as explained previously, there is a relatively high upfront cost to install renewable technologies, in order to

26 For more on the potential of electric vehicles to act as a giant battery, see Professor Dame Julia King, ‘Four things about electric vehicles’, 16th May 2014, http://www.foe.co.uk/blog/four-things-about-electric-vehicles

27 Business Green, ‘Germany charges forward with opening of Europe’s largest grid battery plant’, http://www.businessgreen.com/bg/news/2370677/germany-charges-forward-with-opening-of-europes-largest-grid-battery-plant

access fuel-free power later. This cost is rapidly falling, but in most parts of the world, renewables still require public subsidies to be brought forward, for a few more years at least. To fund their installation, many countries place green levies or taxes on their utility companies, which ends up being passed onto the consumer as part of the retail price of electricity. In the UK, this remains a small fraction of an average electricity bill – about 11% in 2012.28

Nevertheless, green levies for renewables do marginally push up retail electricity prices. Bringing more variable-output renewables (like solar and wind) onto the grid also slightly increases the costs of balancing supply and demand. Sometimes, the role of renewables in driving up retail prices has been increased by the way governments have shared out the costs – in Germany for instance, heavy industry is exempted from paying for renewables, lumping the cost onto households instead. Around 3/5ths of the extra cost that renewables adds to German retail electricity prices is actually due to this exemption for heavy industry.

Yet rising retail prices also, seemingly paradoxically, encourages more people to invest directly in renewables. This is because the higher retail prices rise, the more it makes sense to invest directly in some solar panels, lessen your reliance on expensive grid electricity, and benefit from the attractive paybacks of selling your power onto the grid. This circle of higher renewable deployment leading to still higher renewable deployment can also become a ‘death spiral’ for traditional utilities – further lowering wholesale prices and reducing demand for grid electricity. In the future, as costs continue to fall and storage becomes more affordable, it will further increase the incentive for individuals and communities to generate their own power. The process will likely accelerate rapidly as domestic renewable energy sources reach grid parity, something expected to happen in the UK for solar PV by 2020.

d) Wider ownership of electricity generation assetsAs more and more people invest in renewables – from the half-million households going solar in the

28 House of Commons Library Standard Note, Components of an energy bill, January 2014: http://www.parliament.uk/briefing-papers/SN06751/components-of-an-energy-bill

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UK to the 50% of German renewables owned by farmers, individuals and cooperatives – the stiffer the competition for the established big energy firms. It’s a fascinating and transformative development in how our economies operate. Once, energy supply was the jurisdiction of monolithic, nationalised utilities; then these got broken up and sold off to private companies; now those companies appear to be being eaten up as their own energy customers become energy producers. In the same way that social media has allowed an explosion of decentralised news sources, shaking up the old journalistic models, so the advent of renewable energy is altering the very foundations of the energy markets.

Of course, this isn’t to say that traditional utilities aren’t investing in renewables themselves; many are, and we explore this later. But it’s also harder for utilities to invest in them than it is for households or non-energy company investors. Utilities struggle to invest in small-scale, distributed energy systems like solar, as it’s harder to aggregate them. Utilities have also sunk huge chunks of their capital into fossil fuel or nuclear assets, and have a vested interest in maintaining the profitability of those assets (many of which have long lifespans) – so are conflicted in investing in ‘challenger technologies’ like solar and wind that directly undercut their existing assets.

e) Accessing and managing the electricity gridA number of other factors put small-scale renewable generators at an advantage compared to large energy firms.

In some countries, renewables are given legal right of first access to the grid, before other forms of electricity generation. This disadvantages fossil electricity. But it’s worth noting that the inherent economics of renewable electricity – being near-zero marginal cost – means that even in countries without this legal right, renewables are likely to come onstream first before the grid starts buying electricity with a fuel cost.29

Secondly, critics have argued that small-scale renewable generators often don’t have to pay the

29 It’s worth noting that decentralised renewables are also being held back by grid connection in countries like the UK. For example, the District Network Operators who manage local electricity grids are becoming increasingly reluctant to connect new wind turbines and solar farms.

full costs of grid balancing and transmission. In the US, for example, domestic solar producers benefit from ‘net metering’, which exempts them from paying for grid charges. But a lot of solar doesn’t need the entire grid; it’s installed on people’s roofs, right next to the appliances that use it. As for grid balancing, the costs that utilities have to pay are usually not that substantial. Rather, there is a strong argument that utilities are the ones getting a free ride, through exemption from the full cost of the pollution they produce, and through inherited monopolies. Private energy companies have benefitted hugely from inheriting grid infrastructures that required large public investments, and were often sold off at bargain-basement prices during privatisation firesales. This begs the question: who are the real freeloaders here?

Together, these factors amount to a series of severe disruptions to the way traditional electricity markets operate and the way big utilities do their business. The next question is, how are they coping?

» In Holland: Ice skating on a lake with wind turbines in the background.

12 The Big Six On The Run

3. How big energy firms are getting all shook up

Plummeting worldwide costs for renewables are causing a surge in the deployment of solar and wind, and this is exacerbating the inherently disruptive effects that renewables have on electricity markets. In turn, the currently-dominant players in these electricity markets, the large privatised and state-run utility firms, are having their business models shaken up. Some utilities are being forced to adapt; others are putting up a fight and lobbying hard against renewables. This chapter looks at how big energy firms have been reacting in Germany, the US, and lastly, the UK.

GermanyGermany’s biggest energy firms have been hit hard by the country’s Energiewende, or ‘energy transition’, that has been taking shape over the last twenty years. The Energiewende has been characterised by: a long-term suspicion of nuclear, culminating in Angela Merkel’s commitment to phase out nuclear entirely in 2011 following the Fukushima disaster; a price on carbon, though not yet to the extent that Germany has squeezed out all its coal and lignite; strong support for renewables through Feed-In Tariffs; and a tradition of federal government, cooperatives and a strong SME sector that have all contributed to the promotion of distributed energy ownership.

Figure 4: German renewable energy ownership.30

30 Craig Morris, ‘Citizens own half of German renewable energy’, Energy Transition website, 29th October 2013, http://energytransition.de/2013/10/citizens-own-half-of-german-renewables/

Critics have claimed the Energiewende has led to grid instability and increased use of brown coal (lignite). Yet current evidence does not support this. After an initial increase in coal use, predicated by low carbon prices and a slump in coal prices, use of lignite and hard coal in Germany dropped by 16% in the first seven months of 2014 against the same time period a year earlier.31 Meanwhile, grid reliability and growth in renewable energy seem to go hand-in-hand: the amount of time lost to power outages appears to affect countries with high levels of renewables, like Germany and Denmark, far less than nations with lower levels, like the UK and US.32

Germany has three main energy utilities, RWE, EOn and EnBW, all of which have been seriously affected by the Energiewende. In 2013, the three firms announced capacity cuts amounting to 15GW of old fossil fuel

31 Dr Bruno Burger, ‘Electricity production from solar and wind in Germany in 2014’, Fraunhofer Institute for Solar Energy Systems (ISE), 18th August 2014, http://www.ise.fraunhofer.de/en/downloads-englisch/pdf-files-englisch/data-nivc-/electricity-production-from-solar-and-wind-in-germany-2014.pdf

32 Craig Morris, ‘German grid more stable in 2013’, Energy Transition website, 25th August 2014, http://energytransition.de/2014/08/german-grid-more-stable-in-2013/

Other1.5%

The Big Four energy suppliers6.5%

Other energy suppliers7%

Industry9%

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Farmers11%

The Big Six On The Run 13

plant.33 There has been a huge mothballing of gas plant no longer considered profitable as solar and wind have eaten into peaking demand and forced down wholesale prices.34 There has been a startling decline in wholesale electricity prices in Germany in recent years, intimately connected to the development of renewables (see Figure 2, earlier in this report).

The three main utilities have responded quite differently, however.

RWE’s share price had already been declining continuously since 2008. But the true scale of its financial woes became publicly apparent in October 2013, when the Energy Post journal obtained an internal RWE strategy document that stated: “The massive erosion of wholesale prices caused by the growth of German photovoltaics constitutes a serious problem for RWE which may even threaten the company’s survival.”35

In an earlier presentation from May 2013, RWE states that “Generation earnings are coming under severe pressure”, that there is a “deteriorating [situation for] conventional power generation”, and that earnings from conventional power generation in 2013 were “significantly below last year’s level.” The report warns that “old gas fired power plants are under most pressure but even some new state of the art gas plants are cash flow negative”.36

RWE’s chief executive, Peter Terium, has lamented that his company had been slow to embrace change. “We were late entering into the renewables market – possibly too late,” Terium told reporters at RWE’s 2013 annual press conference.37

33 The Economist, ‘How to lose half a trillion dollars’, October 2013, http://www.economist.com/news/briefing/21587782-europes-electricity-providers-face-existential-threat-how-lose-half-trillion-euros

34 Mothballing of plant: See Bloomberg, ‘German Utilities Hammered in Market Favouring Renewables’, 12th August 2013, http://www.bloomberg.com/news/2013-08-11/german-utilities-hammered-in-market-favoring-renewables.html

35 Energy Post, ‘Exclusive: RWE sheds old business model, embraces transition’, 21st October 2013 http://www.energypost.eu/exclusive-rwe-sheds-old-business-model-embraces-energy-transition/

36 RWE presentation, ‘Steps to long-term value’, May 2013, http://www.rwe.com/web/cms/mediablob/en/1947722/data/2300728/3/rwe/investor-relations/events/roadshows/2013/RWE-company-presentation-3-Steps-to-long-term-value-Fixed-Income-2013-05-06.pdf

37 Renewable Energy World, ‘CEO of German Utility RWE Says It Should Have Invested in Renewable Energy Sooner’, 15th April 2014, http://www.renewableenergyworld.com/rea/news/article/2014/04/ceo-of-german-utility-rwe-says-it-should-have-invested-in-renewable-energy-sooner

The company has come to the conclusions that in order to profit in future, it should undertake “seasonal and permanent mothballing” of its fossil fuel portfolio; concentrate on “asset-light projects”; and focus on “value enhancing growth over volume expansion, especially in renewables”.38 Yet it also warns that “Our cost of capital will not be competitive against funding from private and institutional equity investors” who have got involved in financing renewable energy.39

RWE’s largest competitor in Germany, EON, “has fared somewhat better”, in the eyes of some – partly because its portfolio of assets is spread over a wider range of international markets. Holdings in Turkey and Brazil have “provided some protection from the German power market”.40 Even so, the FT reported that EON ditched its profit target for 2013 after warning that its gas-fired power plants had become “‘barely profitable to operate’ because of weak economic conditions and a surge in renewable energy in Europe.”41

The third and smallest of the German energy utilities, EnBW, has perhaps been most forthright in its apparent embrace of the Energiewende. The firm has been forced to close ‘uneconomical’ coal plants,42 and suffered a 15% drop in profits in the first quarter of 2014, “weighed down by a mild winter, lower wholesale power prices and a rise in renewable capacity that has hit its thermal power plants.”43

But it appears to understand these trends are not merely surface-level, stating in its company factbook in September 2013: “Traditional business

38 RWE presentation, ‘Steps to long-term value’, May 2013, http://www.rwe.com/web/cms/mediablob/en/1947722/data/2300728/3/rwe/investor-relations/events/roadshows/2013/RWE-company-presentation-3-Steps-to-long-term-value-Fixed-Income-2013-05-06.pdf

39 Energy Post, ‘Exclusive: RWE sheds old business model, embraces transition’, 21st October 2013 http://www.energypost.eu/exclusive-rwe-sheds-old-business-model-embraces-energy-transition/

40 Renewable Energy World, ‘CEO of German Utility RWE Says It Should Have Invested in Renewable Energy Sooner’, 15th April 2014, http://www.renewableenergyworld.com/rea/news/article/2014/04/ceo-of-german-utility-rwe-says-it-should-have-invested-in-renewable-energy-sooner

41 FT, ‘Eon warns on conventional power’, 13th November 2012, http://www.ft.com/cms/s/0/47fe92d6-2d71-11e2-9988-00144feabdc0.html#ixzz31mW4U87b

42 Power Engineering International, ‘EnBW looks to close uneconomical coal-fired power plants’, 3rd March 2014, http://www.powerengineeringint.com/articles/2014/03/enbw-looks-to-close-uneconomical-coal-fired-power-plants.html

43 Reuters, ‘German utility EnBW first-quarter profit falls 15pct’, 9th May 2014, http://in.reuters.com/article/2014/05/09/enbw-energie-results-idINL6N0NV1N820140509

14 The Big Six On The Run

models of large utilities [are] no longer an option.”44 EnBW forecasts that its earnings from generating electricity will fall by an extraordinary 80% between 2012 and 2020, and that to make up for this loss, it must concentrate on obtaining “higher earnings from energy services and renewables.”45

Its corporate reports now read – at least on the surface – like cheerleading for the Energiewende. EnBW’s 2013 financial report, for example, states: “We will safeguard our role as one of Germany’s largest supply companies while actively promoting the Energiewende… We are in the process of redesigning our energy fleet and grids to become the ‘engine room of the Energiewende’”.46

Part of this has been due to the leadership of EnBW’s new CEO, Frank Mastiaux, who envangelises: “The Energiewende is irreversible. There is no time to lose… The Energiewende is causing the value chain to shift, away from large conventional power plants towards local power generation and a smart world at home”.47 Elsewhere, Mastiaux has stated: “We have to rethink what is our role, and our place in the energy sector.”48 Whether this becomes more than mere words, only time will tell.

The USUS utilities have not yet had to cope with the same level of market penetration from renewables as their German counterparts. Even so, in May 2014, Barclays Bank dramatically downgraded the credit ratings of the entire US utility sector, asserting: “We believe that a confluence of declining cost trends in distributed solar photovoltaic power generation and residential-scale power storage is likely to disrupt the status quo.”49 That’s less surprising when you look

44 EnBW factbook 2013, https://www.enbw.com/media/downloadcenter-konzern/factbook/enbw-factbook-2013.pdf

45 The Economist, ‘How to lose half a trillion dollars’, October 2013, http://www.economist.com/news/briefing/21587782-europes-electricity-providers-face-existential-threat-how-lose-half-trillion-euros

46 EnBW, Report 2013, http://report2013.enbw.com/fileadmin/ONGB13/Downloadcenter/EN/EnBW-Report-2013-Complete.pdf

47 EnBW, ‘Turning Point’ magazine, 2013, http://report2013.enbw.com/fileadmin/ONGB13/Downloadcenter/EN/EnBW-Report-2013-Magazine-TurningPoint.pdf

48 The Economist, ‘How to lose half a trillion dollars’, October 2013, http://www.economist.com/news/briefing/21587782-europes-electricity-providers-face-existential-threat-how-lose-half-trillion-euros

49 Elias Hinckley, ‘Barclays Just Threw Gasoline on the Fire that is the Battle Between Utilities and the Solar Industry’, Energy Trends Insider, 28th May 2014, http://www.energytrendsinsider.com/2014/05/28/barclays-just-threw-gasoline-on-the-fire-that-is-the-battle-between-utilities-and-the-solar-industry/

at how solar is performing in some states – and not even just in the sunniest ones. Recently, a Judge in Minnesota ruled in an enquiry that solar was now the cheapest form of electricity in the state – the first time solar had officially out-competed natural gas in the US without incentives.50

Though the US has far fewer nationwide regulations for combating climate change than European countries, it’s still developed support mechanisms for renewables at state level – such as state targets for solar, tax breaks for renewable companies, and ‘net metering’, the practice of allowing customers to sell excess renewable energy generated back to the utility (though usually only for market rates).

In response, many of the older energy firms have lashed out, funding lobbying groups to oppose legal supports for solar, and making common cause with names that will ring bells for anyone familiar with American climate sceptic organisations. The notorious Koch Brothers, low-tax campaigner Grover Norquist, and a variety of large utilities have all recently begun campaigning against state targets for solar and net metering.51 The Energy & Policy Institute has documented in detail this onslaught, revealing how fossil fuel interests are attacking the development of disruptive renewables through numerous front groups.52

The Edison Electric Institute (EEI), the trade association of electric utilities, released a report in January 2013, Disruptive Challenges, which warned its clients: “Today, a variety of disruptive technologies are emerging that may compete with utility-provided services. Such technologies include solar photovoltaics (PV), battery storage, fuel cells, geothermal energy systems, wind, micro turbines, and electric vehicle (EV) enhanced storage. As the cost curve for these technologies improves, they could directly threaten the centralized utility model… a scenario where efficient energy storage combined with distributed generation could create

50 Zachary Shahan, ‘Judge Rules Solar Power A Better Deal For Minnesota Than Natural Gas’, Clean Technica, 2nd January 2014, http://cleantechnica.com/2014/01/02/judge-rules-solar-power-better-deal-minnesota-natural-gas/

51 Evan Halper, ‘Koch brothers, big utilities attack solar, green energy policies’, LA Times, 19th April 2014, http://touch.latimes.com/#section/-1/article/p2p-79962747/

52 Gabe Elsner, ‘Attacks on Renewable Energy Policy by Fossil Fuel Interests 2013-2014’, http://www.energyandpolicy.org/renewable-energy-state-policy-attacks-report

The Big Six On The Run 15

the ultimate risk to grid viability.”53 The report even draws comparisons between the plight of the electric utilities, and the decline of past corporate behemoths like Kodak, AT&T and the US Postal Service.

But EEI has not been content simply to chart the challenges it sees facing the utilities; it has also filed comments with the Arizona state docket arguing, amongst other things, that “DG [Distributed Generation] systems should not be compensated directly for reducing market prices”, but instead should be charged for grid services.54 It’s all a far cry, sadly, from the words of Thomas Edison, who once mused: “I’d put my money on the sun and solar energy. What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that.”55

In California, one of the sunniest states of all – and by far and away the one with the most solar

53 Edison Electric Institute, ‘Disruptive Challenges: Financial Implications and Strategic Responses to a Changing Retial Electric Business’, January 2013, http://www.eei.org/ourissues/finance/Documents/disruptivechallenges.pdf

54 Adam Browning, ‘Edison Electric Institute Really Does Not Want You To Go Solar’, GreenTechSolar, Feb 2014, http://www.greentechmedia.com/articles/read/In-Rare-Public-Filing-Edison-Institute-Downplays-Value-of-Solar-For-Arizon

55 Thomas Edison, 1931, as quoted in Uncommon Friends : Life with Thomas Edison, Henry Ford, Harvey Firestone, Alexis Carrel & Charles Lindbergh (1987) by James Newton, p. 31.

installed56 – the old utility Pacific Gas & Electric (PG&E) have taken the issue of net metering to the agency that sets the state’s power prices, the California Public Utilities Commission. PG&E wants solar producers to get smaller payments or to be charged a monthly fee as payment for grid services – despite the fact that having rooftop solar installed means that households don’t need the grid all the time. Edward Fenster, co-founder of San Francisco solar company Sunrun, comments that “the utility anxiety is palpable”, since “PG&E has never had to compete in 140 years”.57 As of March 2014, Californian legislators have extended net metering for existing solar producers, but prospective solar installers will have to get cracking before 2017 if they are to take similar advantage of net metering.58

The UKLike in Germany and the US, the UK’s electricity markets and major players are being disrupted by the transition to low-carbon energy. But so far, the picture here is more nuanced. The UK’s Big Six are

56 Solar Energy Industries Association, ‘2013 Top 10 Solar States’, http://www.seia.org/research-resources/2013-top-10-solar-states

57 Lauren Sommer, ‘Could Rooftop Solar Kill Utilities? California Grapples with Solar’s Success’, KQED Science, 17th May 2013, http://blogs.kqed.org/science/audio/could-rooftop-solar-kill-utilities-california-grapples-with-solars-success-2/

58 David R. Baker, ‘Solar “net metering” extended by California regulators’, SFGate, 27th March 2014, http://blog.sfgate.com/energy/2014/03/27/california-regulators-to-extend-solar-net-metering/

» Houses with solar panels in a village in Germany.

16 The Big Six On The Run

not being uniformly affected by the renewables revolution – partly because of forward-pricing agreements, partly because most of them are large multinationals with their asset portfolios spread across different countries. As the Economist has noted (Oct 2013): “Utilities are not powerless in the face of these problems, and they are not all affected equally. The big six British utilities, for example, have been sheltered by their long-term electricity-price agreement with the regulator, though their profit margins remain thin.”

Even so, renewables are beginning to disrupt the UK electricity market. As EnergyUK, Britain’s trade lobbyists for energy utilities, outline in a Nov 2013 briefing,59 payments for renewables (the Renewables Obligation, Contracts for Difference and Feed-In Tariffs) are expected to bring down wholesale prices, whilst raising retail prices. Meanwhile, emissions controls and carbon taxes placed on fossil fuel plant (such as the Industrial Emissions Directive, Emissions Performance Standard, and Carbon Floor Price) will push wholesale prices up. EnergyUK conclude that the most significant recent development in the UK energy market is that “Intermittent generation will impact the profitability of conventional generation”.

Indeed, it appears that some of the Big Six are having to rethink their business models. In May 2014, Centrica issued a profit warning for the year ahead and announced that it would sell off “three power plants at Langage, Killingholme and Humber, worth around £500 million… and accounting for the majority of the utility’s conventional generation capacity at 2.7 gigawatts.” Instead, “The company plans to focus on small-scale gas plants that can operate more flexibly to respond to sudden changes in supply and demand caused by renewable energy generation.”60

RWE Npower, whose parent company in Germany has been so challenged by the growth of solar, has started to voice concerns about its British assets too. In an oral evidence session before the Energy and Climate Change Committee in October 2013,

59 Energy UK, ‘Policy interactions in the UK electricity market: A guide to the impacts of policies’, November 2013, p.28, http://www.energy-uk.org.uk/publication.html?task=file.download&id=3258

60 Karolin Schaps, ‘Centrica warns on 2014 earnings, puts UK gas plants up for sale’, Reuters, 8th May 2014, http://uk.reuters.com/article/2014/05/08/uk-centrica-outlook-idUKKBN0DO0E320140508

NPower’s External Affairs Director Guy Johnson stated: “The reality is that there are some power stations, for example in Germany, that are being mothballed. That has not yet happened in the UK, at least as far as our portfolio is concerned, but the fact remains that with Pembroke [gas power station]... we have concerns about its profitability into 2014.”61 Pembroke CCGT was only completed in 2012, at a cost of £800 million. Some Big Six CEOs have seen the writing on the wall: on August 2014, Volker Beckers, former RWE Npower chief executive, gave a revealing interview in which he declared that “the centralised, fossil fuel system will soon reach its end”.62

In response to such challenges to their assets and profit margins, the Big Six have begun to warn of the dire consequences if Britain attempts its own Energiewende. “Other European markets such as Germany have provided examples of the unintended consequences policies can have on overall market operation when they are not carefully designed with a system view”, argue EnergyUK, in a none-too-subtle dig at Germany’s massive expansion of solar and wind. Instead, the utilities have lobbied hard for the recent Energy Act to create a ‘capacity market’,

61 Guy Johnson, RWE NPower, oral evidence to the Energy and Climate Change Select Committee inquiry into energy prices, October 2013, http://data.parliament.uk/writtenevidence/WrittenEvidence.svc/EvidencePdf/3242

62 Hugh Bowring, ‘Fossil fuel energy system “has reached its natural end”, says ex-npower boss’, Forum for the Future blog, 29th August 2014, http://www.forumforthefuture.org/blog/fossil-fuel-energy-system-has-reached-its-natural-end-says-ex-npower-boss

» Industrial scale photovoltaic solar field installation, Rosamond, Kern County, California.

The Big Six On The Run 17

which pays suppliers to bring forward mothballed or new thermal plant – mostly gas power stations. The ‘expert group’ that drew up the designs for the capacity market comprised mostly members of the Big Six – representatives from Centrica, SSE, Scottish Power, RWE, plus Drax, who between them own 17GW of gas plant. The group contained just one representative from a firm focused on ways of balancing variable supply and demand that doesn’t involve back-up fossil fuel power stations.

Decentralised renewables are not yet so well-established in the UK as in Germany; Britain has just reached around 5GW of solar PV, compared to 35GW in Germany. Less than 1% of Britain’s renewables are owned by households and communities, against 50% in Germany. Yet the UK has seen massive growth in solar in recent years, going from a base of essentially zero domestic solar installations in 2010 to half a million by the start of 2014. That growth has been driven by the plummeting cost of solar PV and the introduction of the UK’s first Feed-In Tariff in 2010.

When discussions about introducing a British FIT began, the Big Six opposed it. Centrica, for example, stated during a Parliamentary inquiry in 2008: “The lack of [renewables] development in the UK is often compared to a high take-up in Germany where a system of feed in tariffs is seen to have been effective in bringing on significant renewable investment against a failing RO in the UK… We do not believe that a feed in tariff would have been

any more effective than the RO in bringing forward renewable capacity in the UK.”63 If nothing else, such statements confirm the short-sightedness of the big energy firms, stuck in their old financing and development models.

Similar concerns are now being raised as the focus turns from domestic renewables to community-scale energy projects. In their response to a consultation on the government’s Community Energy Strategy, Energy UK accepted that “community energy projects are well placed to bring real benefits to individuals and communities”, but warned that “The Government should not look to differentiate between community and commercial projects. Both provide significant social benefit”. They raised concerns about increasing the scale of the FIT to 10MW to allow larger-scale community projects, arguing: “We believe that larger projects are better placed to be delivered by companies that have the expertise, financial backing and ability to hedge risk”.64 In other words, leave the big, important stuff to the Big Six. It’s an attitude that may soon come back to bite them.

63 Memorandum by Centrica to the Economic Affairs Committee inquiry into The Economics of Renewable Energy, 2008: http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeconaf/195/8061703.htm

64 Energy UK, ‘Energy UK response to DECC’s Community Energy Call for Evidence’, 8th August 2013, http://www.energy-uk.org.uk/publication.html?task=file.download&id=2790

» Above left: Wind turbines, Yorkshire, UK.

» Above: A typical secondary school fitted with a good-sized solar PV system could save up to £8,000 a year.

18 The Big Six On The Run

The Big Six – and large energy firms worldwide – can see which way the wind is blowing. They have two choices – try to accommodate the renewable revolution, or fight to maintain their existing profits and business model. Some utilities, such as the German energy giants, have had their profits so badly affected that they now have little choice but to adapt. Others, such as some of the US utilities – who perhaps are more accustomed to lobbying to get their way by any means – have taken to fighting change, allying themselves with climate sceptics and an array of think tanks and front groups.

In the UK, the Big Six are already seeing their profits hit by Britain’s gradual embrace of renewables, but have fought back to safeguard some of their existing assets through the creation of a capacity market. Yet the capacity market alone cannot prevent the rise and rise of solar and wind, as prices continue to fall. A further slashing of Feed-In Tariff rates for solar, or an end to all onshore wind subsidies (as the Conservative Party has suggested), may yet cause the renewables revolution to stutter in the UK.

But any politicians or companies that backed such moves would be putting themselves on the wrong side of history. Moreover, they would be setting themselves against the interests of the British public – by denying more people a share in ownership of the energy system and rejecting the benefits of a fuel-free, carbon-free energy source.

It’s up to us – all of us – to stop them. The rise and rise of solar energy has got the Big Six on the run. Let’s give them a run for their money.

Conclusion: The Big Six on the Run

The Big Six On The Run 19

It’s inevitable that renewables will get cheaper, their deployment more widespread, and their ownership more diverse. Central and local government needs to grease the wheels of this transition, rather than throw obstacles in the way. To speed the renewables revolution, here are some recommendations:

For central government:

n Ditch the Big Six for the Big Sixty Million. Chart a course for Britain’s transition to mass ownership of renewable energy, a clean energy system in which everyone has a stake.

n Stop sheltering the old incumbents. Open up the electricity market by creating a scaled-up 10MW Feed-In Tariff for small and medium-scale installations.

n Unlock barriers so that Britain installs its solar potential: at least 20 GW of solar by 2020, rising to around 60 GW by 2030.

n Stop creating uncertainty for the burgeoning clean energy economy with constant reviews of the Feed-In Tariff. Prices are coming down fast, but cutting support levels even faster is a false economy. Investing properly in innovative technology is the best way to bring down costs later.

n Bring in ‘green’ ISAs that enable everyday savers to become active investors in, and financial beneficiaries of, tomorrow’s clean infrastructure – including community renewables.

n Don’t let the grid operators get in the way. Guarantee grid connection for renewables, so that new solar and wind can be quickly ‘wired up’.

n Champion the right of communities to generate and supply their own clean electricity.

n Allow public bodies like schools the chance to borrow to cover the upfront costs of installing solar power.

For local authorities:

n Usher in a new age of municipal energy, with councils becoming serious investors in renewable energy and suppliers of clean electricity to residents.

n Ensure all public buildings – from schools to council offices – install solar power or other renewable energy technologies.

For everyone, right now:

n Help crowdfund solar on schools by donating to Friends of the Earth’s Run on Sun schools competition: www.foe.co.uk/page/run-on-sun-donate

n Invest some savings in a community renewables project.

n Demand the government make mass ownership of renewables the norm – help us campaign for the changes recommended above.

For the Big Six:

n Evolve or die!

Recommendations

20 The Big Six On The Run

Information about Friends of the Earth’s Run on Sun campaign can be found at www.foe.co.uk/runonsun

Friends of the Earth Limited © Friends of the Earth, November 2014

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