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18 July 2014
Trust me, I'm in renewables...

Trust me, I'm in renewables...

When wholesale energy prices fell this month to their lowest level for four years, the regulator Ofgem had a warning for the ‘Big Six’.

It said suppliers risked “undermining public confidence” in the market if they failed to respond to wholesale prices and needed to explain to customers why falling prices had not been translated into household bills.

Trust in the energy industry is at a low in the UK. According to Edelman’s annual Trust Barometer released earlier this year, its rating has slipped since last year to level bottom with the banking sector.

The reason for this, overwhelmingly, is the increasing cost in fuel charges, with 82 per cent blaming this for a loss of trust – but also cited are the industry’s profit levels, as well as other factors like a limited range of tariffs or poor customer service.

This mistrust is not industry-wide, however. Edelman’s research showed that energy from renewable sources was bucking the trend. The Trust Barometer showed 61 per cent trusted solar energy operators “to do what is right” and 57 per cent said the same about wind. The level of mistrust of industries like nuclear and shale gas was far higher – 33 per cent distrusting the nuclear industry and 41 per cent with a distrust of shale.

Of the different sectors, energy had by far the most people saying they wanted greater regulation by government – with 73 per cent saying there was currently not enough – in addition, 56 per cent said they would trust the energy industry much more if it was under state control.

Rishi Bhattacharya, managing director energy and industrials Europe and CIS Edelman, who has been presenting the company’s global research on trust recently in Norway and Russia, said: “When it comes to energy, renewables lead the way and solar energy in particular.

“However, there is of course a debate about the energy mix which is needed to provide our energy needs and secure our energy supply.

“For all of the energy sector, it is the neutrals who are just as important as positives or the negatives. It is among the ‘persuadable middle’ where there is an opportunity to explain, inform and educate and this applies as much to renewables as it does to the shale gas industry, even though the challenge is clearly greater for the latter.”

The UK Department of Energy and Climate Change’s (DECC) own research has shown support for renewable energy is growing. DECC has been carrying out regular surveys on attitudes to energy and climate change since March 2012; support for onshore wind is now at its highest level since those surveys began, with 70 per cent in favour and only 12 per cent opposing.

Support for offshore wind and solar PV also rose to 77 per cent and 85 per cent respectively and the percentage of people supporting renewables in their home area is at 59 per cent, while those against is 17 per cent.

Speaking at All Energy earlier this year, Angela Knight, chief executive of Energy UK, said renewables have been “a fantastic success”.“We have grown up, taking gas and electricity for granted, now people are thinking about it.

“If we look into the deep polling, we find there is huge support for green power, but people don’t see that they should pay for it. They want jobs and investments but they see that is paid for by the industry or investors and they want energy security but they don’t quite know what that means.”

She added that an “iron will” was going to be needed over energy policy and said that private polling of MPs in Westminster showed that top priorities were affordability and energy security, with carbon targets “a very poor third”. So she said it was not surprising that the political agreement to date looked as if it was falling apart.

For Esbjorn Wilmar, managing director of Infinergy, a Dutch onshore wind developer with a strong presence in Scotland, the fact that renewables comes out on top in terms of public trust is not a surprise.

“In the whole planning process but also through operation, we have to give an awful lot of information to the general public through our environmental impact assessments, through all the studies that we do.

“We are accused quite often that we are not honest with the things that we do; we are completely up to scrutiny – not only through the environmental impacts process but quite often, we have a public inquiry where very well-paid QCs are paid to take us apart.

“We, as an industry, have really had to step up to the mark and provide evidence that can stand up to scrutiny.

“If that is being recognised by the wider general public that is a very good thing and it is a recognition of the good practice that the industry has shown over the last couple of years.”

Renewable energy is an attractive choice for businesses, particularly those who want to present a modern, environmentally-friendly image to their customers. SmartestEnergy is the leading purchaser of energy generated by the independent sector, with about 45 per cent of its energy mix coming from renewables. Its customers include John Lewis and Marks & Spencer, which through its Plan A project, aims to be carbon neutral by 2020.

Head of direct sales James Graham said there had been a rise in the number of people looking for renewable energy. He said: “Actually, more and more, we’re seeing customers request that their power supply can be backed by an equivalent volume of REGOs (Renewable Energy Guarantee of Origin); they want to be able to audit the fact that their supplier has purchased a volume of renewable power backed by auditable sources. It’s going that step beyond than taking their suppliers word for it.

“You tend to find it’s consumer-facing brands that see a value in purchasing power from renewable sources. These are companies that are producing lifecycle carbon footprints for their products – they want to be able to show all the way down the supply chain that they are thinking about sourcing sustainably.”

However, there is a cloud on the horizon – with academics and industry experts warning that the trust which has been built up could be damaged by government policies.

The Renewable Energy Country Attractiveness Index, published by Ernst and Young earlier this month, showed in the last three months the “attractiveness of the UK renewables market has decreased dramatically in the eyes of investors and developers, falling to its lowest level since November 2012, below the US, China, Japan and Canada.

While Scotland is generally considered to be a country more amenable to renewable energy than elsewhere in the UK, this too is being threatened.

An article for The Conversation by Professors Peter Strachan and Alex Russell of Robert Gordon University, warned that the Coalition Government’s attitude to renewables and Scotland was potentially damaging.

It warned: “Recent decisions by leading UK and international utility companies to restructure their portfolios and cancel projects, illustrates clearly the lack of market confidence.”

The article said: “Westminster’s intention to curb solar power subsidies and to possibly abandon future UK onshore wind subsidies completely has heightened the risk of power shortages. If more developers and investors withdraw, it also risks increasing electricity prices in the face of supply shortages.

“The irony is that both solar and onshore wind have established themselves as mature, clean and relatively cost-effective power options. Unlike the adverse public perception of fracking and nuclear power, opinion polls consistently show very high levels of public support for renewables.”

Wilmar adds that the industry has such a long lead time – of the 30 or so projects it is working on at the moment, many have been at least seven years in the making. At the same time, both the changes to subsidies through Electricity Market Reform, and the debate over Scotland’s independence, have created even more uncertainty.

“I can see a real problem starting to build up that will only become apparent in three to four years from now because we are not starting any new projects.

“We build what we have so we are busy today but there are markets in the rest of the world that are appearing to be more and more interesting compared with the UK. That is a real issue.”

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