In the furore around the future of the Merton Rule, which requires 10% of energy fro new buildings to be from on-site renewables - a fault line has opened up between those seeking to defend the drive for renewables in new build, and those who argue that carbon can be reduced at cheaper costs using other means.
A new report by the Government's Renewables Advisory Board (RAB) suggests that in the context of the plan to make all new homes zero carbon by 2016 this is a false dichotomy. The report demonstrates that there is no way to achieve zero carbon standards without renewable energy no matter how good a building's energy efficiency. New houses built in 2016 are likely to need very little additional energy for space heating because they will be so well insulated, but the demand for hot water and electricity for lighting and appliances means that up to half of the current demand for energy in new homes will remain.
The report produced for RAB by Element Energy indicates that the main challenge in reducing emissions from new housing will be finding renewable equipment and installers to generate sufficient zero carbon energy. This is largely because of the huge wall of demand that the government's zero carbon timescale produces, which has standards rising from a relatively modest 25% reduction in total carbon emissions in 2015 to 100% reductions in 2016. In other words, the government's eight year green homes plan leaves much of the hard work until the very end. It is this last step that ramps demand up for on-site renewables from an annual UK market worth around a £100m to an eye-watering £2bn from 2016.
That level of demand is unprecedented and will outstrip global manufacturing capacity for many of the cheapest technologies, such as medium scale wind turbines and biomass power plants. In RAB's view it means that a supply gap is very likely to open up, which could result in house building being slowed by a shortage of renewable energy equipment.
There will be some policy makers who will argue for a 'virtual' version of zero carbon standards where off-site generation is used to offset a development's emissions. For example a wind farm in Scotland is used to make a housing development in the south of England ' zero carbon'. Our report finds that a small amount of off-site generation will be essential to meet zero carbon standards on urban infill development where there isn't space for sufficient renewable energy. However it also indicates that if its use is unconstrained the zero carbon policy will not stimulate any local energy generation, because developers will chose cheaper off-site generation ahead of on-site generation. Allowing high levels of off-site generation therefore risks undermining the government's objective of using the policy to help reduce the costs of low carbon technology and services for existing householders, who are currently priced out of the market for most green energy technology.
The cost of relying on on-site renewables to meet the majority of a dwelling's energy needs is a relatively small proportion of the overall cost of development. The RAB report uses conservative assumptions about cost reductions by 2016 and estimates that the average cost will be £6,000 per dwelling.
The zero carbon homes target is one of the most powerful and far-sighted policies created by government in the last 10 years. We are confident that it will work if the supply gap is tackled. RAB recommends that the Department of Communities and Local Government changes its current timescale to stimulate earlier demand for on-site renewables, which would bring forward investment and learning. It could do this by either changing the code for sustainable homes to include elements of appliance use at code levels below level six or they could use the planning system to require zero carbon standards in the largest housing developments before 2016. It is the largest housing developments which will be the cheapest places to ensure these standards are met because they have more space, and can benefit from relatively cheap district heat and power solutions.
There is a third option. The government could use regional or national versions of the Merton Rule to set percentage renewables content for the period up to 2016, with the specific intention of ensuring sufficient learning and innovation occurs to make the demands of 100% renewable supply possible by 2016.
Whichever route the government chooses it is clear that zero carbon development requires a massive growth in our ability to generate renewable power and heat close to our new buildings. The paradox is that if we focus only on the cheapest carbon emissions now we won't have the capacity to deliver the big carbon reductions we need by 2016.
Matthew Spencer is chair of the microgeneration working group of the Renewables Advisory Board and chief executive of Regen SW, the renewable energy agency for South West England.
