There is a lot of discussion about carbon reduction and global warming. Some people believe it - some don't.
The reality is that the debate is going on about how we produce electricity and heat - both at home and through national grids.
Other than global warming - there are factors to consider:
Capital cost (if any)
Running costs
Pollution
Access to the supply chain
In 2008 The Energy Savings Trust commissioned a report that investigated both the carbon emissions, costs and performance of over 50 different heating systems in a variety of settings. The carbon emissions will have stayed the same. For fuel these were:
kgCO2/kWh
Natural gas 0.191
LPG 0.234
Oil 0.264
Bio-kerosene 0.212
Wood (pellets, bulk supply) 0.025
Electricity - standard tariff 0.539
Electricity - 7-hour tariff (on-peak) 0.539
Electricity - 7-hour tariff (off-peak) 0.539
Electricity - sold to grid 0.539
Community heating (from biomass boilers) 0.025
Clearly Electricity uses a lot of carbon for heating and hot water - it is not very good - in Sweden and Denmark it has been limited. Most "tests" e.g. SAP propose that electricity uses a lot of carbon.
From a cost perspective electric heating is quite cheap to install - and you can use off peak metering. However a quoted price per kWh is about 13p including off peak tariffs.
Compare this to Gas at 4p or wood pellets at 3.5p or oil at 4.5p - even with large rises in cost - electricity is about three or four times as expensive.
Why focus on Electricity?
In the UK the Green Investment bank commission has issued a report titled "Unlocking investment to secure Britain's low carbon future". In it they have proposed that we move to electricity as the primary form of heating in the UK. See the annex1 for graphs.
Even with reductions in CO2 emissions through increases in nuclear power and wind power generation - our CO2 emissions may be cut - which is a good thing - but they won't be cut by the ratio above ie electricity generation costs 0.539 kgCO2/kWh which is more than 20 times the emissions of biomass. Are they going to reduce carbon emissions by 20 times?
The UK consumer will be left with no option but to purchase significantly more expensive heat that generates more carbon emissions than alternatives.
If I was a venture capitalist - I would consider this to be a pretty poor pitch!
Whilst I can support better generation of electricity through off shore wind power - it does not transfer to heating. (If carbon reduction is the goal)
The average heating bill in the UK is said to be £800 for gas. Looking forward electric heating would be £3200. Over 15 years this would be £48000 rather than £12000 to run. Whilst gas prices may well rise - are there any guarantees that electricity will fall? Is this a winning strategy?
The present government wants to make market forces work - I am not sure that this demonstrates market forces - more bully boy tactics from large companies that are used to making lots of cash. (Have you met a RWE N-Power salesman (or woman)?! I can imagine that it is corporate culture - and rife throughout the organisation.
As a consumer there are choices for the government. If they vote for "electric heating" then some of our bills will rise by a factor of 3 or 4 in the coming years.
The Renewable Heat Incentive has been costed at £104 per person by 2020 - this is a fraction of the electricity cost of £3200. Is there really any alternative?
Unfortunately we have elected a government that believes in markets - even if they deliver a four fold price increase - rather than pay out a penny extra in tax. As a consumer I want the lowest cost alternative.
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Wednesday, June 30, 2010
Friday, June 18, 2010
Creative destruction - project management
Getting a project going for a small company often involves a visit to a potential client or a meeting. Your team inspect the problem, issues, or potential objectives and a discussion ensues.
How do you get started?
In larger companies they start with "top down" estimates that are then confirmed with "bottom up" estimates of the work to do. In a smaller company you may not have the skills or the breadth of team to do this.
Top down approaches are made from experience, intuition, and are broad brush in nature. Builders use rules of thumb to help them, as do many people in the construction field, yet in some way this is flawed in its approach.
To what extent do you solve problems on the broad brush approach?
My observation is that the problem identification is often done, however rather than solve the problem in the most effective way companies put in safety buffers - so that when they do the work - there is room to complete the job and still make profit.
Recently I have seen quotes from "the other side". It is interesting to consider why some companies quote despite being double the price of others.
In today's competitive world - how much of a skill in demand is it to be able to solve problems - and therefore to do the job required - and still make a profit?
How do you get started?
In larger companies they start with "top down" estimates that are then confirmed with "bottom up" estimates of the work to do. In a smaller company you may not have the skills or the breadth of team to do this.
Top down approaches are made from experience, intuition, and are broad brush in nature. Builders use rules of thumb to help them, as do many people in the construction field, yet in some way this is flawed in its approach.
To what extent do you solve problems on the broad brush approach?
My observation is that the problem identification is often done, however rather than solve the problem in the most effective way companies put in safety buffers - so that when they do the work - there is room to complete the job and still make profit.
Recently I have seen quotes from "the other side". It is interesting to consider why some companies quote despite being double the price of others.
In today's competitive world - how much of a skill in demand is it to be able to solve problems - and therefore to do the job required - and still make a profit?
Monday, June 07, 2010
Creative destruction - now that's useful!
Aren't flat screens great! PC screens have been replaced, as have a lot of TV's by businesses and consumers alike. It is the simple process of renewal - with one thing being replaced by something that offers more value.
In the same way internet purchasing offers the consumer more facilities, more choice, and often keener on price. As a method it is replacing how we shop.
If you consider a shrinking economy it could have any number of renewal processes going through at any one time. Some of them will represent job losses as old inefficient ways are replaced with better new ones.
In a growing economy you may find supply chains developing as a new process or technology adds to our lives in a significant way. Consider the mobile phone and the infrastructure that surrounded it. Companies spring up all over the place and grew very quickly. In terms of jobs and growth of the economy this was a good thing.
In the UK at the moment there has been a lack of new ideas. If the government cut taxes what would people spend the extra cash on?
They could spend it on Apple products - however the cash would go straight out of the economy. There are very few people employed by Apple in the UK, or any of the spin off industries. You do have to hand it to Apple - they do manage to make products that cost pennies and sell them for lots of money - and make people feel good (well apart from the people who have to make them).
Most of us have fairly flat spending habits without realising it. We have our essentials, we have our luxuries, and we have our mistakes. Extra income is often saved if you have everything you need.
Creative destruction does bring about growth, but only if the renewal process gathers pace and the supply chain is constructed in such a way as the cash is circulated around the economy. Cheekily I think it is also about faster renewal in even a wasteful way. How could you make someone throw away a perfectly functioning PC or Monitor - and we are back to the flat screen argument. Unfortunately for industry flat screens are now very common and a commodity. So what's next?
In the same way internet purchasing offers the consumer more facilities, more choice, and often keener on price. As a method it is replacing how we shop.
If you consider a shrinking economy it could have any number of renewal processes going through at any one time. Some of them will represent job losses as old inefficient ways are replaced with better new ones.
In a growing economy you may find supply chains developing as a new process or technology adds to our lives in a significant way. Consider the mobile phone and the infrastructure that surrounded it. Companies spring up all over the place and grew very quickly. In terms of jobs and growth of the economy this was a good thing.
In the UK at the moment there has been a lack of new ideas. If the government cut taxes what would people spend the extra cash on?
They could spend it on Apple products - however the cash would go straight out of the economy. There are very few people employed by Apple in the UK, or any of the spin off industries. You do have to hand it to Apple - they do manage to make products that cost pennies and sell them for lots of money - and make people feel good (well apart from the people who have to make them).
Most of us have fairly flat spending habits without realising it. We have our essentials, we have our luxuries, and we have our mistakes. Extra income is often saved if you have everything you need.
Creative destruction does bring about growth, but only if the renewal process gathers pace and the supply chain is constructed in such a way as the cash is circulated around the economy. Cheekily I think it is also about faster renewal in even a wasteful way. How could you make someone throw away a perfectly functioning PC or Monitor - and we are back to the flat screen argument. Unfortunately for industry flat screens are now very common and a commodity. So what's next?
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