The European Commission is redesigning its renewable energy policy – at the expense of small co-ops, citizens and consumers. Alan Simpson compares the situation to football – and hopes that we can still turn around the game.
As the World Cup in Brazil swings into gear, politicians of all shades queue up to display their football prowess and loyalties. Some will also take the opportunity to denounce FIFA’s ‘Mafia family’ decision-making that threatens to bring the whole game into disrepute.
What politicians are missing is another ‘world stage’ event that is threatened to be trashed by corruption. Something closer to home is being sneaked through the political system to kill off an even more beautiful game; the clean energy game.
The elements of the sabotage are clear. First, there is a late tackle from the EU’s Competition Commission. Then there is the shed loads of cash promised to the boardrooms of Old Energy. And the killer penalty will be new ‘energy market competition rules’ rigged against the underdogs. All three are lining up to kill off Europe’s renewable energy revolution.
Once you understand the details, the EU’s ‘bought’ proposal to kill off renewable energy makes FIFA’s decision to hold the 2022 World Cup in Qatar look scrupulously honest. Only a ‘refusal to play’ can stop their hatchet job.
Gaming the game
The European Commission wants to outlaw Feed-in-Tarrif payments that have been at the core of the clean energy revolution. Making it possible for households, schools, farmers and businesses to be paid for the clean energy they generate for themselves has been the energy equivalent of the Holland’s conversion to ‘total football’.
Suddenly, energy generation became a game that was no longer dominated by the big bruisers. Kids with skills (and technologies) that were lighter, smarter and quicker, began to pass the energy ball around, in ways that both mesmerised and confused the big guys.
In less than a decade, Germany installed almost 80GW of renewable electricity generating capacity. This helped drive European wholesale electricity prices to be 50% lower than in the UK and produced a tumbling of worldwide solar PV prices.
More significantly, however, 95% of this generating capacity was owned by people, not corporations.
Feed-in-Tariffs have been the key to this change in the German game. As a householder, a business or a school, you don’t have to become an energy trader. Becoming a ‘player’ is simple. You just have to record and submit details of the electricity you generate. What you consume yourself comes free and the payment for generation and export arrives later.
Big Energy in Germany owns just 5% of renewable energy generating capacity. The big guys haven’t been able to get the ball back.
Now, German citizens realise that they can also cut their bills (and increase energy security) by taking distribution grids into local ownership. Old Energy is increasingly looking like Old England football teams; slow, tired and obsessed with the long ball.
In the modern game, a whole array of smart technologies has begun to change the way we think about energy systems; from one dominated by an energy cartel to one moving steadily closer to an energy democracy.
Tiki-Taki versus the big hack
Old Energy was taken aback by the speed, popularity and market-disrupting qualities of the clean energy revolution. They needed a plan to get back into the game. If they had been watching the World Cup finals, they might have called it the Honduras Plan: forget about the mesmerising skills, just kick lumps out of the opposition and get the referee to look the other way. That is effectively what the European Commission has come up with.
What the Commission proposes is that, from 2017, passing the ball (Feed-in-Tariffs) will be illegal (as a breach of State Aid rules). These will be replaced by a framework of competitive bidding or auctions in which market power will be handed back to the biggest players.
The EU’s claim is that this will make the energy market more competitive, transparent and non-discriminatory. This is pure ‘Horlicks’. It will sound the death-knell for community-owned and decentralised energy, and is designed to do so.
All past evidence shows that the Commission’s approach actually stifles innovation, inhibits competition, is massively expensive and requires everlasting state/consumer subsidies. This is the antithesis of total football; an anything-but-beautiful game.
Some 99% of the UK energy market is dominated by the Big 6. The competitive space for clean energy, at the margins of this market, has always been squeezed and disadvantaged. Anyone trying to negotiate a Power Purchase Agreement (PPA) -supplying energy to the big producers – knows two things for certain: the price they will be offered is pitiful, and the Big Guys will insist on transferring all the risks and costs onto the small guys.
In this sort of game, brute power wins every time. The more uplifting game gets trampled on, and spectators end up paying a high price for a whole load of crap. Even FIFA would not get away with what the EU now proposes.
Big Energy’s ‘life after death’ lifeline
The logic behind the EU’s anti-competitive lifeline is, however, frighteningly clear. Europe’s big Utilities face an existential crisis. For the last decade, most have found that financial markets no longer believe their companies are worth investing in. Most of the big Utilities have turned to nation states for increasing levels of public subsidy and tax allowances. Britain’s Coalition government leads the pack of biddable suckers, willing to throw insane amounts of money at an unsustainable past in preference to a more sustainable future.
An NHS for Big Energy has emerged. Huge amounts of cash transfusions are pumped in daily to keep the old buffers alive. The public is asked to do so, not to facilitate a dignified death but in response to a deeper (but manufactured) fear. It is the claim by Big Energy that “If our lights go out, yours will too”.
Old energy may not work any more. It may be killing the planet. But the life support (cash) machines must be kept running… if only to keep the shareholders happy.
Rediscovering the beautiful game
Renewable energy threatens the very lifeblood of this corporate welfare state.
If energy market rules were changed – in favour of passing the ball, supporting each other and investing in a new generation of creative talent – people might turn their backs on the kick-and-run generation of power producers.
We might want to sell ‘less’ consumption rather than more, by not throwing the (avoidable energy losses) ball away so often. We might want to do a Brazil, Italy, Germany or Spain and learn the skills of short passing (in local Grids) to save energy. We might want to play the game for the team (and the public) rather than for distant shareholders.
We might also grasp that (in a warming climate) saving energy, managing its use more intelligently and being able to quickly come to each other’s support, may be the key to what the beautiful game is really about. Some will call this football. Some will see it as a metaphor for the planet.
For me, it begins – right now – with a political movement willing to show the Competition Commission the Red Card. We need rules that the future can live by rather than the past live off. And we need Leaders who do not pose for newspapers as the next Ronaldo, Messi or Suarez.
Politics needs a Pirlo, someone with vision; someone who can weave today’s emerging talents/technologies into a more intricate web; someone who understands that most of tomorrow’s answers will be found within the effortless grace of passing the ball, rather than just hoofing it.
Without this, the game is lost.
Alan Simpson is a freelance writer, campaigner and consultant on Energy and Climate policies. For 18 years Alan was the MP for Nottingham South, with a track record of work on fuel poverty and the shift into a renewable energy generation. He was the architect of ‘feed-in-tariff’ amendments in the Energy Act 2008. In 2010, he left parliament to concentrate on bringing some version of Germany’s Energiewende programme in as the bedrock of UK energy thinking, and on linking this into a broader European/international vision of a sustainable future.