What did the industry look like when you first got involved with renewables?
When we first started looking at renewables in 2007, the industry was very much in its infancy; people didn’t really know what you were talking about, and it was very much an industry tailored towards enthusiasts making lifestyle choices, or people who were off grid and had to source alternative energy solutions. It was unusual.
Gareth Williams, Managing Director at Caplor Energy had always been interested in the environment due to his farming background. After a visit to the Gambia seeing first hand examples of environmental impact due to climate change, losing a huge amount due to flooding in July 2007 and the IPCC report that year stating that 97% of Global scientists agree that climate change is real and its people who are causing it, Gareth thought he should do something useful to provide a better future for his young family.
“We started with wind – lots of hot air!”
The first thing they did was install some wind power by installing a windmill at the Caplor Farm in Fownhope, Herefordshire. Gareth explains, “the financial crash had slowed down any building work, and there was a lot of pressure on farming, so I thought ‘we could do something with this’. So, we started installing solar PV systems.”
The first system that Caplor installed was 10KwH, which cost £37,000. Now, a 10KwH solar PV system will only cost around £12k, showing just how much the cost of renewable energy has reduced massively over the last 10 years – largely due to a huge reduction in equipment costs with a global supply chain and international engagement with renewables (particularly solar).
In fact, China is leading the way with solar. Last year they installed more in a couple of months than the UK has installed in the last 5 years. Companies that were not involved in this industry just a few years ago are now producing world beating panels. The Chinese government are investing hundreds of billions into renewable energy, which is leading the charge across the world.
Other countries are also really embracing this industry, such as Germany who were big innovators, Australia and USA. Britain is a leader in offshore wind power.
When did it start getting more mainstream?
When Caplor first started in the industry, they were talking to people who wanted to make lifestyle choices and were attracted by the grants available. Today, there are almost a million solar PV systems installed in the UK, which is still a very small percentage of the total population of residential and commercial properties.
As Gareth continues, “We have seen massive growth in a short period of time, but overall, really it’s still a start up industry with mature industry expectations.”
Feed-in tariffs started in 2010 and solar really started to take off then – the decision making process quickly changed from lifestyle decisions to a commercial process, with people wanting to know what their rate of return would be; how much money could they make from solar energy?
Buyer profiles changed from not just environmental enthusiasts, to technical and engineering based people who were interested in how solar PV works, and then to more financially minded people who wanted to make money and were making investment led decisions – compared to interest rates at the time, the rate of return on a solar PV system was extremely attractive at 10-15%.
That change occurred in parallel to the CSR and carbon reduction drive in commercial settings, with many businesses increasingly demonstrating environmental credentials and building regulations changing to require a level of renewable energy or efficiency included as standard.
Today, energy efficiency and green credentials are now a pre-requisite feature of commercial decision making – part of the day to day fabric of modern businesses. Businesses also now know that if they take a longer term view, they can make more money and become more tax efficient by investing in solar PV than driving more sales!
The Feed-In tariffs stopped at the end of March 2019, but Gareth doesn’t see any slowdown in the growth of solar PV as a cornerstone of the renewable energy industry.
“Building standards and regulations will continue to improve and demand more energy efficiency. There are international agreements on climate change that are increasing pressure to drive continuous improvements, but economic advantages will also support that growth in the industry – why wouldn’t you insulate your house more efficiently and save money, why wouldn’t you want to reduce your electric bills?
Consumers just need to think a little more longer term, and as long as systems are appropriately sized against electricity use, people will make a 10-12% return on investment.”
What’s next in product innovation?
Solar thermal was popular 10 years ago, which was a great way to heat water using the sun’s energy, but it lost its way due to the attractiveness and simplicity of solar PV, which is still the most popular method of generating electricity. Onshore wind power is the cheapest way of making electricity, but there is unfortunately a ‘not in my back yard’ attitude in some areas; 70% of the UK population support the technology, but Government strategies currently don’t allow for this area to grow as fast as it could. However, the UK are world leaders in offshore wind, with statistics showing that it will continue to race ahead over the next 10 years.
Solar will continue to be dominant as it is so easy for generating power, but the difficulty will lie with integrating it with the national grid, which was originally designed to take power from big power stations and distribute it to households, but with people now generating their own electricity it presents challenges.
Now, there is a big trend towards cleaner transportation with major innovations in electric cars. Apart from the obvious benefits of reducing the reliance on fossil fuels, clean energy in this area will help reduce the 40,000 less deaths from dirty air in the UK each year. However, this will inevitably increase the demand for more electricity.
The Government’s nuclear plan has been dealt a blow with delays and added expense at the new Hinckley Power station. Other new power stations have been cancelled, so where is that increased power that we’re all demanding going to come from? These are all issues that drive more demand for alternative power sources, and renewables in particular.
The battery revolution
One of the limitations of solar PV has always been its inability to store energy, meaning that people had to ‘make hay whilst the sun shines.’ However, the need to store electricity is becoming ever more important as a consequence of needing flexibility on the national grid to deliver instant power when needed. Historically, flexibility has been driven by high demand points and the ‘kettle phenomenon’ at the end of popular TV shows, or specific times of day and has been supported by short response generators that can respond in seconds. The evolution of battery technology has been rapid over the last few years, with many technical advances and reduced costs. Batteries can respond to demand in milliseconds, so as the need for flexibility increases, large and small scale battery projects will become more common place.
As Gareth explains, “Lifestyle choices are currently driving the small battery industry now, but is changing very rapidly. Consumers are increasingly wanting to do things themselves and take advantage of cheaper electricity in the middle of the night. People are buying batteries to charge up at night and generate cheap electricity to use during the day so they avoid peak charging and reduce consumption – it’s all about load-shifting.
It’s easy to see that traditional energy prices are increasing all the time and consumers are looking for alternatives to save money – renewable energy simply makes economic sense. And that’s before you consider the international climate treaties and targets that countries have agreed to, major global companies like Google, Amazon and Tesla are disrupting the market with investment and technological innovations and the general trend towards social empowerment and personal concerns for the environment.”
What will this industry look like in the next 10 years?
The fact is that renewables will continue to grow at a pace and become ‘normal’ to everyday life.
You will assume that you’ll have an electric car, which will plug into the grid – the grid will be trading your electricity in and out to suit demand requirements and there’s a good chance you’ll have batteries that will enable you to store the electricity that you generate.
Renewables didn’t really exist in its current form 10 years ago and it’s already moved on so fast, but the product and industry lifecycle will continue at even greater pace over the next ten years as more consumers and industries address their environmental responsibilities. Technology and expectations are moving so fast, it is impossible to be an expert in every area, so collaboration feels like the key to success in this industry now, with businesses specialising in specific areas of expertise.
Effectively, we are still in a start up phase and we haven’t even seen the major growth yet!
Is it possible to sustain this pace of growth?
From an industry that didn’t even really exist 10 years ago, it has now grown at such a pace that renewable energy is fundamental in all walks of life (over 30% of supply in the UK 2018) – with this growth set to continue against the backdrop of climate change and social responsibility, who knows where we will be in 10 or 20 years’ time – maybe we will be living in a completely renewable world – here’s hoping…