A golden era for decentralized energy in Europe?

Europe is about to enter a ‘golden era’ for decentralized energy, or at least mostly golden, with some patches of grey. That was the vision put presented bt Jon Slowe of the Delta Energy & Environment consultancy on the first day of the DECX Europe 2008 conference on decentralized energy held in Amsterdam this week.

Slowe looked at four European countries: Finland, Spain, Germany and UK to illustrate his point. Finland has recently set an overall cap on electricity supply growth to 2020, meaning that consumers needing to consume more power than the cap allows will have to generate this themselves, on-site. Spain has a strong and effective support system for CHP and is currently experiencing a boom in PV installations. Germany has adopted a new powerful CHP law this year, has excellent feed-in tariffs for biogas and biomass CHP plants, is a similar ‘PV heaven’ to Spain and treats CHP favourably in the EU Emissions trading Scheme. Finally, in the UK, not often noted for its encouragement for CHP, a newly-proposed feed-in tariff for small-scale renewables and CHP should add to the microgeneration strategy adopted earlier.

National regulatory environments aside, Slowe pointed to the ambitions of several large corporations to adopt on-site power generation: in the UK BT plans to generate a significant proportion of its enormous electricity demand from on-site wind, Google (though in the US) has announced a major programme of on-site renewable, and supermarket companies across Europe are attempting to out-green each other’s buildings with on-site renewables and energy efficiency measures. And the efforts of these companies are being boosted by a few utilities which have decided to take an innovative approach to hanging on to their market share – by assisting the development and operation of on-site energy plants for their customers.

So are we entering a golden era? Probably yes, said Slowe, although it’s still possible that a fascination with large-scale clean energy projects may starve decentralized energy of the support to bring this golden era into being. Nuclear power, large-scale wind farms and carbon capture and storage are all capturing headlines. So, maybe a golden era with grey patches.

Slowe’s colleague at Delta Simon Minett, previously head of COGEN Europe, kicked-off what was to become the main debate of the day ” on feed-in tariffs (FiTs) for CHP. According to Minett, we are seeing more and more governments in Europe switching to ‘market-based’ support mechanisms for CHP and decentralized energy, even though technology-based mechanisms (such as FiTs) have delivered better results in the past.

Market-based mechanisms, such as the UK’s Renewable Obligation, send no reliable long-term signals to investors as to the future value of traded credits, whereas technology-based mechanisms, like Spain’s support for PV, give confidence and have caused good growth ” said Minett. The main problem with technology-based mechanisms is that governments and regulators have to choose which technologies to support ” to pick technology winners, in effect ” which is none of their business, really.

Dirk Hendricks of the World Future Council elaborated on FiTs, which guarantee both access to the electricity grid and a price sufficient to cover a generator’s costs. This mechanism basically sets a price for generated power, leaving the market to determine capacity, said Hendricks. Look at the evidence: Germany has created 250,000 green energy jobs in the last six years and now generates nearly 12% of its electricity from CHP ” thanks to FiTs, he claimed.

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