DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
There is wide variability in the attractiveness of individual microgeneration technologies and subsidy support schemes 2
Solar photovoltaic shows very low levels of uptake in the absence of strong capital or energy-based support subsidies 2
Solar thermal accounts for the majority of all microgeneration kits now installed in Europe, but micro-CHP is a new challenger 3
In a supportive policy environment, heat pumps are poised to grow rapidly and deliver meaningful energy and CO2 savings 4
The wide-scale uptake of micro-biomass is unlikely and could only ever be driven by subsidy policy or very high retail power prices 5
Without a generous 'deemed' feed-in tariff, micro-wind can actually be detrimental to the environment 6
Gas-fired micro-CHP is the most acceptable alternative to conventional heating systems, especially for mains gas users 7
International support for microgeneration shows wide variation in the costs and effectiveness of implementation 9
The fate of microgeneration rests on the interplay between technology development, policy support and consumer priorities 9
Across Europe, no single country or policy has successfully driven the uptake of all microgeneration technologies 11
Best practice support systems in Europe are built on 'deemed' feed-in tariffs that deliver more capacity at a lower cost 11
The review of successful policies highlights the need to tailor them according to different technologies and market conditions 12
In the UK, lower carbon emission and energy security ambitions are better served using the national grid than home-based microgeneration solutions 13
UK policy is too fragmented and of insufficient scale to deliver a cogent solution promoting mass market uptake of microgeneration 13
In the absence of effective carbon pricing, UK FITs are a necessary but insufficient condition to drive a mass market transition 13
The mass market uptake of microgeneration technologies in the UK would require a considerable level of taxpayer subsidy 15
As it currently stands, decentralized energy is not best placed to answer the UK's concerns relating to carbon emissions 16
Microgeneration will not resolve security of supply concerns and must be able to adapt to the dynamics of the UK energy market 17
UK case study: Datamonitor has modeled the annual likely end-user cost of microgeneration and examines several best practice areas for utilities operating in the microgeneration sector 17
Datamonitor has modeled the likely cost of microgeneration tariffs in the UK using data from the seven leading utilities 17
SSE consistently offers the best value micro-wind tariffs, followed by npower 19
SSE also consistently offers the best value solar PV tariffs, again followed closely by npower 20
In four out of five scenarios, SSE offers the most attractive hydro tariff, followed by Good Energy and Ecotricity 21
In four out of five scenarios, SSE offers the most attractive fuel cell CHP tariff, followed by Good Energy and npower 22
Datamonitor has identified several microgeneration 'best practice' areas that so far most utilities have failed 23
APPENDIX 24
Ask the analyst 24
Datamonitor consulting 24
Disclaimer 24
List of Figures
Figure 1: Solar PV and micro-wind receive the bulk of European subsidies, yet they generate much less energy than other microgeneration technologies (such as micro-CHP and heat pumps). 3
Figure 2: Of the roof-based microgeneration technologies, solar water heating is usually the most effective and the most widespread across Europe. 4
Figure 3: Heat pumps: electrical energy is used to pump renewable heat energy from the environment, generally for the purpose of supplying space heating. Systems use a refrigeration cycle in reverse. The two main alternatives are ground source heat pumps and air source heat pumps. 5
Figure 4: Micro-biomass microgeneration is unique as it has a low carbon dioxide emission level whatever the grid intensity. 6
Figure 5: Micro-wind turbines are not usually cost effective for grid-connected houses. They are more suited to rural areas due to siting and planning issues, as well as the higher available wind speeds that maximize the turbine's low generation capabilities. 7
Figure 6: The most supportive subsidy of micro-CHP technologies would involve a 'deemed' feed-in tariff for renewable electricity and heat. 8
Figure 7: The greatest CO2-saving potential comes from immature microgeneration technologies, mainly fuel cell CHP, which is not yet commercially available. 9
Figure 8: Policy support is the main driving force behind microgeneration 10
Figure 9: Certain countries and policies have faired better than others at successfully stimulating specific types of microgeneration uptake 11
Figure 10: The success of individual Member States' support policies is conditional on country-specific issues that relate to particular technologies, prevailing energy market conditions, and the way in which policies are implemented 12
Figure 11: The UK FIT should be supported by financial and non-financial measures 14
Figure 12: The mass market uptake of microgeneration technologies in the UK would require a considerable level of taxpayer subsidy 15
Figure 13: As it currently stands, decentralized energy is not best placed to answer the UK's concerns relating to carbon emissions 16
Figure 14: As it currently stands, decentralized energy is not best placed to answer the UK's concerns relating to carbon emissions 16
Figure 15: Microgeneration will not resolve security of supply concerns and must be able to adapt to the dynamics of the UK energy market 17
Figure 16: The maximum theoretical saving (before initial capital expenditure costs) for a micro-turbine currently ranges around the £910 mark 19
Figure 17: Utilities favor solar PV installations by offering some of the most attractive export and ROC rates and by offering a total of 10 tariffs 20
Figure 18: Of the seven utilities, British gas, EDF and npower offer the smallest export tariff for hydro at 5p/kWh 21
Figure 19: There are fewer tariffs available for CHP installations than for the other three types of microgeneration technologies 22
Figure 20: Five problem areas must be resolved now to optimize the incoming 5MW FIT 23