Green Easing – Save the planet while saving the economy

So we are now 4 years in to the worst recession since the 1980s, 1970s, 1930s, records began? and it seems like we are going to be stuck this way for a long time. Governments, individuals and companies around the world have racked up massive debts during the boom years, but they are now struggling to pay them back. For years central banks have targeted price stability (low inflation), but there is a growing realisation that stable prices can also mean stubborn debts, and so the previously unthinkable is now becoming a reality – that central banks pursue a higher rate of inflation in order to reduce the real value of old debts. Although the BoE have continued to state publicly that their inflation target is 2%, the reality in the UK is that we have had nearly 5% inflation (RPI) since early 2010.

The Bank of England have already created £275bn of new money through their quantitative easing programme, which they used to buy Government bonds from private banks (asset purchases). The theory is that the banks will then have more cash to lend to small businesses. The reality appears to be that banks don’t really want to lend to the sort of companies that want to borrow. If a higher rate of inflation is now palatable, could there be a more effective route to injecting cash into the economy and encourage nominal GDP growth?

If we are going to print money, I feel it should be used to purchase assets that will bring long term positive benefits to the country. I think residential solar power plants are particularly well suited to this idea, and a green quantitative easing programme could replace the existing Feed In Tariff scheme (which has nearly run out of money).

Green Quantitative Easing

£200Bn Green Easing Target: Install 10GW of residential solar plants per year, for the 8 years to 2020. 

  • Use printed money to fund the installation of solar panels on the roof / open space of any household or community who wishes to participate.
  • Money goes directly to businesses who install the panels, avoids the relying on the banks.
  • Tangible assets with tangible benefits – homeowners would feel positive they are receiving something good (free electricity) as a result of the policy (can the same be said of normal QE?).
  • Easily administered through the MCS scheme – upon successful registration of an installation, the supplier could be paid by bank transfer by the BoE.
  • No additional debt for government, companies or individuals. Ownership of the panels could be retained by the BoE (with a long term lease on the roofs), giving them a real asset for their balance sheet. Free electricity would go to the household, export revenue could be collected by the BoE. Effectively the Bank would own a distributed network of green power plants, which generate an income through selling power to the grid. These could later be bundled off and sold to the private sector if that was deemed necessary.
  • Helps alleviate Fuel poverty. The poorest households would get free electricity during the day to run their appliances.
  • In rough terms, £200 billion would be enough to put solar panels on every house in the country (or in open spaces for shared community projects), and would give us a total installed capacity of 80GW (@ £2500 per KW). This would produce more electricity than total UK demand in the middle of the day during peak months of summer – so we would need to also invest in suitable storage techniques (batteries or running hydro power stations in reverse). The panels could be installed at a rate of 10 GW per year, which is achievable and would cost only £25 billion each year.
  • We would easily meet our 2020 targets of generating 15% of power from renewable sources.
  • Overall energy costs would be reduced as the huge supply of solar electricity comes online.
  • The scheme would easily support around 55,000 jobs (Capacity per employee: assuming 230 working man days per year / 1.25 man days per KW installed  = 184,000 W installed per person per year. Number of jobs = 10,000,000,000 W/ 184,000 W = 54,348)
The idea is still pretty rough around the edges, but I think in principle it could work really well to generate growth whilst hitting our climate goals. The solar sector has shown they already have the ability to hit this level of installations, by installing nearly 126MW in the week before the Feed In Tarrifs were cut. This is an annualised rate of 6.5GW, and not far from the 10GW which would be needed. What are your views on this? Disclosure: I have put my money where my mouth is, as I have recently invested in a Solar Panel business through my company, Fubra Limited.

Further Reading

UK Gov launches Clean Energy Cash Back scheme

Last month, the government launched a new “feed-in tariff” subsidy scheme for renewable energy installations that will see them pay up to 36.5p per KWh of energy produced.

At current prices, an installed 2 KW PV system costs around £12,000 (£6 per installed watt), and it’s estimated you would save / earn around £830 a year with the new subsidy (15 year pay back, 6.9% return). There is also currently a £2,500 grant available (expiring April 2010) which would bring the overall cost down to £9,500 (12 year pay back, 8.7% return).

This estimates are based on electricity costs of 13.95p / KWh (which is also roughly what I am currently paying with EON on their online saver tariff once you’ve averaged out the various rates and daily fees).

It’s very likely that over time electricity prices will rise, especially in the UK where we have not built enough capacity to replace our Nuclear plants as they shut down. As prices rise, the effective ROI will increase, but for this to become really popular I think we need to see returns of closer to 20%.

The government is also considering green mortgages, where you would be lent up to £10,000 to make energy efficiency improvements to your house (such as double glazing, energy efficient white goods, insulation), and then this would be paid back via your electricity bills – the cost of which should be covered by the savings you make. The charge would be against the property rather than the owner, and so would be transferrable if you move house in the future.

Replacing fluorescent lamps with LED T8 lights

Our office currently runs standard fluorescent strip lights (1500mm T8 tubes) throughout, with over 60 bulbs across 3 floors. We are considering upgrading all the lights to LED bulbs, in order to save power and to make them compatible with an office automation system (to turn them on and off automatically).

Energy savings

So, how much energy will they save? Well a standard fluorescent bulb consumes about 58w, whereas the new LED bulbs consume around 20W. Therefore over the course of a year I would anticipate the energy savings to be as follows:

  Standard Fluorescent Bulb LED Bulb
Power Consumption 58 Watts 20 Watts
Hours in use 10 hours per day, 5 days a week, 52 per year
Hours per year 2,600
Kilowatt hours per year (watts / 1000 * hours) 150.80 kWh 52 kWh
Cost per year (at 10p per kWh) £15.08 £5.20

Thus the saving is about £10 per year per bulb.

We are currently asking suppliers to quote us for 60 bulbs, and the prices we have received so far range between £25 to £60 per bulb.

The bulbs are rated for about 50,000 hours of constant usage, which should mean they would last nearly 20 years at the rate of usage we have forecast.

Standard bulbs last about 5,000 hours (2 years) and cost around £2 each.

It looks like the energy saving bulbs should pay for themselves after 3 – 5 years, and return a yield of around 20% thereafter.

Things I haven’t factored in:

  • Cost of installation / replacing bulbs (slighty more difficult to initially install, but they last 10 times as long and therefore need less labour to replace).
  • Reduced heat from operation – might require less air conditioning in summer months)

Organic Eggs? You need a Hen Home

Over the past few weeks I’ve been watching Hugh Fearnley Whittingstall’s Chicken Out campaign on Channel 4 with interest and it certainly has opened my eyes to the appalling conditions in which we raise our feathered friends. I guess I’ve always known that battery hens were kept in cramped conditions, but not to such an extend.

So what can I do? Well the most obvious change I can make is to ensure that I always buy free range or organic eggs, but actually I can go one better than that. My friend Stuart has just designed and built a wooden hen home so that he can have his own pet chickens in his garden.

The Hen Home

Each chicken should produce about an egg a day. You can’t get fresher than that!

2008… the year of the Electric Car?

Let’s face it, cars aren’t going to go away. As a means of private transport they are extremely popular for their convenience, comfort and the personal freedom they offer their owners, so anyone who suggests that we should all give them up and use public transport instead is mad. However, there is no denying that they do pose a problem. And that is that, collectively, cars account for 12% of all CO2 emissions in the EU and thus they are one of our biggest sources of carbon pollution.

So how can we keep our beloved cars, without contributing to global warming? For me the answer lies with Electric Vehicles that are recharged from a renewable energy source. You may think that this vision is still 10 years or so away, but you’d be wrong.

Electric cars are here now, albeit for fringe users, but within the few years the mix of economics and technology might just be right for the average motorist to join in too. In this post I’ll be examining what is current available, plus what’ll be around in the near future and how the cost of running an electric vehicle compares to it’s gas guzzling cousins.

Cost Comparison

Car Capacity Range EPM

eMPG Cost per Mile
Reva G Wiz 9.6 KWh 48 miles 0.2 KWh/m 218.5 0.99p
Mitsubishi i-ev 20 KWh 100 miles 0.2 KWh/m 218.5 0.99p
Phoenix Motors SUV 35 KWh 100 miles 0.35 KWh/m 124.9 1.73p
Tesla Roadster 53 KWh 250 miles 0.212 KWh/m 206 1.05p
Lightning Car ? ? ? ? ?

  • A UK imperial gallon of petrol contains about 43.7 kWh of energy
  • A litre of petrol contains 9.6 KWh of energy @ 100% conversion efficiency
  • Equivalent Miles per Gallon (eMPG) = 43.7 (kwh/gallon) / energy per mile
  • Energy per mile (EPM) in kwh/mile = Capacity (kwh) / Range (miles)
  • Cost per mile = EPM * price per kilowatt hour
  • Price per Kilowatt hour = 4.95 pence (off peak, green energy)

Reva G Wiz
Reva G Wiz
Mitsubishi i-EV
Mitsubishi i-EV
Phoenix Motors SUV
Phoenix Motors SUV
Tesla Roadster
Tesla Roadster
Lightning Sports Car
Lightning Sports Car