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Let’s connect it all together

Our vision for a new energy system

Our vision for a new energy system

Our new short film shows Triodos Bank’s vision for a new energy system. And below, we explain how we have to work together in a community of  action to make it happen.

 

The new energy system

We could be standing on the cusp of an entirely new energy system. It will be a system based on clean renewable energy; with reduced demand through energy efficiency and more stability and flexibility through new grid and storage systems. The technology is falling into place but it is now a matter of organising the stakeholders’ responsibilities in order to connect it all together.

While society has become used to the constraints of the energy system we have had for the past hundred years or so, there’s a risk of becoming imprisoned in our mental picture of what is really possible. We want to bring a fresh systems-thinking approach to co-design a new energy future with others who want bring this about too. While we can’t know everything about the future, we can start to plot a flexible course towards an end point that we all agree upon – and make decisions about whether each action we take is really a step towards that goal.

The challenge ahead of us isn’t just about connecting bits of infrastructure – we want to connect people together as well; how we build this new system can be as important as what we build.

It means working with our existing and new customers and partners in new ways: exploring how we can finance parts of the system in the most effective way; sharing what we learn, and inspiring others who also want to help build this new system. That’s a natural role for us to play. As a bank, we’ve been putting money and ideas together responsibly and transparently since 1980. This has had a significant impact on the development of renewable energy in Europe – and we’re now ready to take this to the next level.

The challenge ahead of us isn’t just about connecting bits of infrastructure – we want to connect people together as well; how we build this new system can be as important as what we build. We want to ensure that the social dimensions of our energy system are fully integrated into this picture.

new energy  - lets connect

The science and economics

We needn’t rehearse the arguments for taking action. Everyone knows about climate change and we’re already beginning to see the effects. World leaders no longer only talk about the ‘threats’ but are admitting that the recent extreme weather events are attributable to climate change. The IPCC reports have moved on from the consensus around the science that predicts the onset of climate change to the likely socio-economic and environmental impacts and the potential mitigation and adaptation strategies. The conclusion is that there is still time to avert the worst effects of climate change if we act now.

This is not the only concern relating to energy. Global demand for energy is rising with total energy demand likely to double in the next

Pie chart showing increasing world energy consumption

The US Energy Information Administration projects that world energy consumption will increase 56% by 2040. Most of this increased demand will be from developing economies.

forty years. Most of that increase comes from emerging markets (outside the OECD) where energy is a precondition for economic development and the elimination of poverty. But this puts pressure on our finite stock of existing fuel supplies which are becoming less efficient and more expensive to extract. The net result of this is that energy bills are increasing for many homes and business, and they are set to continue rising. Even new discoveries of fossil fuel stocks and methods of extraction – such as shale gas – are only likely to have a temporary effect on prices and at the same time contribute to an acceleration of CO2 emissions.

The Existing Solutions

Renewable energy solutions are making a significant impact. Since 2008, around half of all new energy installed has been renewable energy . And the costs of installation for mature technologies has also fallen rapidly. But there is not yet enough international coordination of efforts. Some government announcements in recent years (such as the retrospective reductions of the feed-in tariff in Spain and parts of Eastern Europe have undermined investor confidence in renewable energy, despite the fundamentals of the technology remaining sound.

European and governmental targets on renewable energy, energy efficiency and carbon reductions can be an important policy driver, but to date haven’t been enough to drive change at the required rate. Also, incremental targets can sometimes stimulate policies that only encourage the easiest-to-reach measures without necessarily addressing the design of the overall system. We need change that looks at the bigger picture if we are going to be able to reach much more ambitious goals in the future.

“It is critical that governments…move with a sense of urgency. We don’t have a moment to lose, and if we want to solve the enormous range of problems we are going to be confronted with as a result of climate change, then we’d better start moving fast…”

Rajendra Pachauri, IPCC

The new collective approach

What we don’t really need in the world right now is more people saying ‘we need to do something’. That’s been clear for long enough. Some businesses are increasingly calling upon governments to set the rules of the game so that they can be forced into acting in new ways. But is this the most effective strategy for change?

We think a new approach is needed. By acting together, collectively, in the context of a shared vision of the future, it is more likely that government policy will follow – and when it does it can provide the effective leadership framework that we want to see. This is not just what we believe but what we have observed from our own journey.Pie chart showing 69% increase in renewables by 2030

When we started the ‘Green Fund’ in the early 1990s, the Dutch government were intrigued. As a very small bank back then, we could not contemplate being able to meet the needs of all the green energy projects in the Netherlands. But through acting, working with developers, showing what was possible, collaborating with others and sharing our learning, our “community of action” had managed to build momentum. The government, recognising the possibility to give this way of working more encouragement, created the ‘Green Fiscal Scheme’ – a tax credit to support individual investors who put their money into accredited funds for green projects. In doing so, it kick-started a movement which included all the major financial institutions in the country leading to over €15bn of individuals investments to be directed into clean energy projects. We think that the relationship with governments can still best work like that today. Rather than complaining, criticising or continually calling upon them, we want to focus on building “communities of action”, united in a common vision who will work together to learn, build something, collaborate and share. In so doing they are more likely to inspire governments into taking action by creating the confidence that when they do, it is likely to be a successful policy.

Our origins and impact in renewable energy

Triodos Bank was active in the mid 1980s when renewable energy (wind and small-scale hydro, and later solar energy) were emerging. We played a role in ‘drawing the map’ for how to manage the financing process for renewable energy projects – developing standards for contracts and processes along with the entrepreneurs, lawyers, and engineers. We played a part in catalysing the development of a renewable energy market that is now fairly mature. We’ve financed hundreds of projects all over Europe producing enough for around 1.5 million homes.

new energy - let's connect

It’s become a healthy part of our business, through the bank and through our investment funds. We have worked with a huge range of technologies, in different countries, with different ownership structures. We’ve worked with community-owned projects, with businesses and with farmers; we’ve provided loans, and equity; we’ve invested on behalf of individuals and institutions. While we’re still not a large bank, we’ve seen and completed more renewable energy projects than most other banks in the world.

This diversity of experience means that we have the capacity and the responsibility to do more. Having developed the skills of catalysing the early renewable energy industry, we want to harness these competencies to help catalyse the next phase. We need more renewable energy installed at a faster rate so we will continue to work with existing and new clients on renewable energy projects. The focus may be different in each country and the financing mechanisms may differ depending on the technology. Over the next 10 years, we want to be able to develop financing solutions for all of the following types of renewable energy projects:

Infographic showing Triodos Bank's impact in energy

  • ONSHORE WIND
  • OFFSHORE WIND
  • SOLAR
  • HYDRO
  • BIOMASS
  • GEOTHERMAL
  • WAVE
  • TIDAL
  • ENERGY FROM WASTE

Connected effectively – the new grid

In order to build a new energy system with renewable energy means a new way of operating an energy grid. This means the development of a grid which is designed to connect more distributed and localised heat and energy generation, more flexible energy storage solutions, and smarter grids to help balance supply and demand. Some communities, such as the City of Hamburg in Germany are starting to take greater control and ownership of their local grids – we want to support those initiatives. Having a resilient system in the future relies upon us investing in the supporting infrastructure now. By doing so, we will create the environment in which renewable energy sources can flourish.

We shouldn’t forget that the energy system is not just about technology. It’s fundamentally about people. Having communities participating in local generation projects and distribution networks and empowered to implement efficiency measures is essential to a healthy future.

Energy Efficiency

Energy efficiency measures save energy and therefore save money. When you consider that only 11% of global energy production is actually effectively used, the potential benefits for greater efficiency are enormous. Whether it is fitting new energy efficient appliances, thermal insulation, control systems to regulate a building’s temperature, or installing heat pumps, the technologies are all in place. However the management system of making energy efficiency work in practice is more complex than, say, fitting solar panels on a roof. And because it is a complex system, it requires more investment in time to understand how best to optimise the efficiency of a building. Until there is contractual alignment and a clear system of management responsibilities there can be a barrier to finance. But there are many product providers, Energy Service Companies (ESCOs) and consultants working with individuals and companies to navigate through these challenges. We have financed energy efficiency measures in hotels, offices and schools. We want to be able to develop relationships to unlock the full potential for energy efficiency in the future.

energy systems  - lets connect 4

A socially inclusive energy system

We shouldn’t forget that the energy system is not just about technology. It’s fundamentally about people. If we try to design an energy system that ignores how people live, work, and travel or separates people from an engagement and understanding of the energy they use, then it is likely to fail. Having communities participating in local generation projects and distribution networks and empowered to implement efficiency measures is essential to a healthy future.

The new system picture

But it is the integrated picture that we have to keep in view. To us, sustainability means:

  • Low-carbon emissions within the life-cycle of a project, including the fuels and materials used.
  • Resilient in terms of decentralised energy, flexible demand management and storage systems
  • Socially embedded into our cities, businesses and communities including a diverse range of ownership models which encourage participation.
  • Balanced in terms of the mix of technologies that are used, but also in respect of the costs and benefits. For example more distributed local energy schemes which combine heat and power.

The energy system is interconnected and we have to act with this bigger picture in view. The idea of 100% renewable energy used to seem over-ambitious. However the concept of transition to 100% renewable energy has been studied and reported by a whole range of experts who have not only found it to be viable but possible in a shorter timescale than we might imagine. We believe that if a community of action comes together in the right way to show that this is possible then it will catalyse government policy, commercial resolve and individual behaviours far quicker than we have witnessed until now.

Why good finance is worth more than just the money

Over the past three decades of financing renewable energy projects, we have learned something very important: it’s not just the ‘money’ that delivers progress; it is the right type of financing ‘relationship’. Working with developers, owners, companies and communities, we act as a kind of sparring partner, working alongside other experts, suppliers, lawyers and other to try to ensure that all the risks are adequately addressed and that all the contracts are aligned. This is our work – and our responsibility to our savers. But it’s also the ‘magic’ that makes the money flow and that makes the projects work better for everyone. Projects only have value if they are working well, and going through a rigorous process gives that the best chance of happening. Making that rigorous process as streamlined and responsive as possible makes it easier for others to go through and sharing those experiences with others helps more projects get built. We’ve cut the keys for some types of projects – like onshore wind, solar energy and a few others, but there are more keys to work on – and we want to start on these today, just like we worked with the renewable energy pioneers back in the mid 1980s.

renewable energy - lets connect 5

What we have to do next

We have a lot of work to do together. If you share our vision of what the future energy system could look like then we want to engage with you and figure out what is needed to get the finance to work. If there are enough of us working together in a “community of action”, then we think we could reach this vision far more efficiently than relying on incremental targets, or calling on governmental action.

This vision may take many years to realise – and we’re not ready to finance all that we might ever want to at this moment –  but it is our ambition. We’re ready to start connecting – we hope you are too.

Find out more about Triodos Bank’s services for renewable energy and environmental businesses.

 

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robertpalgrave 3 years ago

Please drop the support for ‘Energy from Waste’ and ‘Biomass’. Both of these are high carbon and polluting and should never have been categorised as renewable. UK Big Biomass means coal power stations burning imported wood pellets with CO2 levels at least half as much as gas and may be higher than coal depending on fuel sourcing.

See UKWIN on Energy from Waste and Biofuelwatch & Friends of the Earth on Big Biomass.

The rest of it makes sense!

Reply to robertpalgrave
Hawdd Cwyno 3 years ago

You another kipper…

Our local authority collects all the community’s waste food weekly as part of its local recycling initiative It may not be perfect yet but we’re all making a good fist of it. The food waste is all processed through a bio-mass boiler thus preventing its natural decomposition in home compost heaps or in ground fill sites where it would produce massive volumes of Methane the worst of the Green House gases.

You have to address these issues you can’t just wish them away; stop listening to folks like Farage and Lawson.

Reply to Hawdd Cwyno
Patrick Sudlow 3 years ago

Robert Algrave is talking about incinerating waste and biomass, which as he states in polluting and not CO2 neutral. Biogesters have been around a long time, and this country is only getting around to using it. I did visit Wessex Waters plant at Avonmouth with Triodos Renewables. But there is still an issue with the NOx emissions.

Peter Taylor 3 years ago

It is hard to know whether to try and contribute to this discussion, or just give up in despair! First the alarmist propaganda of the IPCC. Then the assumption that there is a scientific consensus and critics can be glossed over. Then some experts are referred to who think it is feasible to power industrial society 100% from renewable sources. And not a SINGLE word about the impact of renewables (wind, biomass, tidal and hydro, primarily) on the environment – by which I mean, community, landscape, forests, indigenous peoples and biodiversity. All of the focus is upon getting our own needs met – and most of that is on supply options, not demand reduction. And of course, the bank does good business with the former, which generates a return on investment through cash profit (from selling electricity under government subsidy) and hence repays its loans, whereas the latter ‘demand reduction’ is much less amenable to project finance or profit for anyone – which is why so little of it actually happens! And there is very little evidence that ‘energy efficiency’ leads to demand reduction – because money saved in one sector is usually spent elsewhere on things that generate further demand (like western bank deposits funding Chinese industrial expansion!)

100% renewables to power a normal society – is cloud-cuckoo land! Germany is currently at about 25% and can’t afford to continue the ‘energy-transition’. And even if it could be financed (at huge cost to the consumer) it would be horrifically destructive of the environment.

I am not suggesting Triodos gets to grips with climate science. But it should know that the track record of UN scientific committees on environmental science and prediction is very poor. Nor can it be said that governments and academic institutions led on any of the major environmental reforms of the past 30 years. The models the UN and governments rely upon have been shown to be inadequate by dozens of recent science papers – but all ‘greens’ are now caught by their ‘prior commitment’ to what was predicted (with little change) in 1990.

Triodos does immensely valuable work in realms that are without question good for people and the environment. It is a shame to add the realm of large-scale energy systems thinking (and financing) to all this good work. Triodos may understand project finance on a small scale, but a whole system? This has enormous social and environmental implications. Many of the renewable energy supply technologies create community conflict (especially onshore wind in the UK and biomass overseas). If there is a role for the bank to lead on a new energy system – then I hope it will be open to grass-roots sentiment and values of environment, to criticism of computer-based models of future climate, and to realising the full meaning of ‘systems’ and ‘people’ being connected.

Reply to Peter Taylor
Hawdd Cwyno 3 years ago

Why don’t you just go and join the kippers you certainly seem to agree with their well rehearsed vision on climate change. We’ll just have to carry on without you I’m sorry to say. You will realise one day like most kippers that you have long way to go and a lot to learn.

Reply to Hawdd Cwyno
AmateurAndrew 3 years ago

Hawdd

Your dismissiveness and name-calling (‘kipper’ – whatever that means) in your reply to Peter Taylor is disappointing. It does nothing to progress the argument, instead probably confirms Peter (and others like him) in the belief that you (and me) have no real argument against his points. If you don’t have any constructive points to make it would be better to keep quiet. Read his first sentence again and ask yourself why he feels like this.

Peter

I agree with you that generally there is not enough emphasis on energy demand reduction, but I don’t think we can blame Triodos for this. I imagine there is limited scope for Triodos to fund people insulating their homes etc., because this is dealt with under the government’s Green Deal in the UK, (and probably similar schemes in other countries) funded via the energy companies. In contrast I expect Triodos are often approached for funding for renewable energy projects, so that is where their emphasis comes from.

I take your point that money saved from energy efficiency may be spent/invested elsewhere, often on things that increase energy demand. Maybe we should be taxing home energy consumption more (as we do with transport/petrol/diesel) – currently VAT on home energy bills is at a lower rate (5% rather than 20%) – so reducing the Government’s deficit at the same time. But from a politician’s point of view this would not be a vote-winner perhaps.

‘Assumption of scientific consensus’ seems to indicate you don’t think there is a consensus. The problem is that there is a wide commercial vested interest in casting doubt on climate change as well as a public reluctance to believe in it because we don’t want to make the lifestyle changes that it would demand. Consequently many newspapers and websites (whose main aim is commercial, so want to provide what their readers would prefer to believe) are keen to supply arguments against climate change. I would suggest that you gather your information from trusted, unbiased sources such as universities and the Met Office.

You say that renewables would be ‘horrifically destructive to the environment’. I beg to differ. Even from an aesthetic point of view (which is what I think you mean, primarily) I find wind and solar farms far more attractive than coal and gas power stations. In any case I don’t think the aesthetic viewpoint has much importance when you consider the consequences of our continuing, increasing consumption of fossil fuels to the environment (cities under water, floods, storms, freezes, heat-waves and droughts of increasing frequency and severity, crops not growing, famines, mass extinctions of wildlife, mass migrations of people to reducing fertile areas, wars to maintain or gain those fertile areas). This is not the future I want for my children/ grandchildren. Whatever ‘community conflict’ you predict from renewable projects bears no relation. You can only consider this alarmist if you bury your head in the sand and hope that the scientists are wrong.

But that’s not to say we can’t do anything about it. I don’t agree with your ‘cloud-cuckoo land’ assertion. Germany’s pause in renewables investment does not mean that we can’t move much, much further towards 100% renewable energy production. The consequences of continuing as we are are just too horrific to allow this to happen.

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