The UK Feed-in-Tariff

Last week the UK government announced it was to reduce the Feed-in-Tariff subsidy as part of a comprehensive review of the scheme which has been in operation in the UK since 2010 and covers small and medium scale renewable energy projects.

These reductions will see at least a 60% cut from wind power and up to 86% for solar. The cuts could also bring an end to Scotland’s hydro-sector and will potentially close the scheme to all new projects from 2016.

Joss Blamire, Senior Policy Manager at Scottish Renewables, which represents more than 300 green energy businesses, said: “The proposals in the Comprehensive Feed-in Tariff Review are, quite simply, terrible news for homeowners, businesses, communities and those local authorities which have plans in place to develop renewable energy schemes.

“The levels of reduction in support announced today will severely curtail development of small-scale onshore wind and solar projects and endanger jobs and investments across the country.

“The cuts could also spell the end for much of the hydro industry, which has enjoyed a recent renaissance but relies more heavily on Government support because of the length of time taken to develop projects and the sector’s high capital costs.

“Support for small-scale renewable energy has enabled the public to share in the recent success of the green energy industry, saving on their energy bills and doing their bit to mitigate carbon emissions from our power sector.

“FiT-scale renewables have allowed both rural and urban businesses to grow by taking control of their own energy use and insulating them from the volatile, uncertain costs of imported fossil fuels. Reducing that support so far, and so quickly, could be hugely damaging.”

Juliet Davenport, chief executive of Good Energy, one of the largest feed-in-tariff administrators in the country said: “The proposed cuts mean that installing solar panels at home will no longer be attractive to British families.”

“The Feed in Tariff has transformed the way the UK generates its power over the last 3 years, with over 22% of the UK’s power coming from renewables in the early part of 2015, and over 700,000 homes generating their own power. It’s helped to take us away from the old-fashioned fossil fuel companies to a cleaner, local, more democratic system.”

“We hope the Government will re-think the value that renewables bring to the market, if you do the calculations you’ll see that solar actually brings down wholesale prices of energy. China and Germany are leading the way in investing in renewables, and we hope that the recent announcements by Government don’t see the UK fall behind again.”

“It’s also going to put the brakes on innovation in the battery storage market, a game-changing technology which would enable households to store their own electricity.”

The proposals from the UK government reduce support across the industry and set a cap on the amount of projects that can benefit from it each year. However these limits will be hard to judge in advance increasing the risk that funding may not be achieved and in turn making investors wary of getting involved.

RenewableUK for example is warning that complex rules would in the long term scare away many of the people who could most benefit from this scheme, and in the short term create market chaos.

Also the wind power market is mainly supplied by UK turbine manufacturers who also export to Europe and beyond. For each turbine sold in the UK, one is sold abroad. A strong domestic market is vital for these manufacturers however a reduction in this market will hurt UK   manufacturing and encourage relocation overseas.

RenewableUK’s Deputy Chief Executive, Maf Smith, said: “It’s important that we all work to manage costs, but it looks as if the long term vision has been lost.

“The small and medium wind sectors are at one with Government in their desire to cut carbon at lowest cost to the consumer. But they can’t do this when Government makes sudden and damaging changes which undermine investment.

“What we needed in this Review was a clear vision for how we get to a point where cost effective, small-scale renewables are common-place, with all homes and businesses able to be part of a productive, vibrant low carbon economy. This Review is not about how we build that prosperous future but simply about short term politics and accounting.”

RenewableUK is also expressing concern about the speed at which Government is making these changes. Maf Smith continued: “We’re also concerned about the timing of this review. Only last month Government consulted on ending pre-accreditation.

“Now they are consulting on reducing tariff rates, and capping deployment. But such significant changes can’t be introduced within the proposed January 2016 deadline without hurting many businesses and individuals who have been investing in new projects. The next four months will turn the British energy market into a wild-west market with energy consumers stuck in the middle.”

Over the past five years the UK Feed-in-Tariff has help developed numerous instillations throughout the UKbringing much needed revenue to a struggling farm industry as well as benefitting the local communities via additional contributions.  It has brought investment into the country in general and the renewable energy industry in particular, creating jobs and aiding in the development of new more efficient technology.

And over those five years as the technology has progressed, the tariff has reduced accordingly. Up until now the system has worked well and if it was to carry on in a similar pattern would continue to do so. The industry would have remained on track to go subsidy free whilst benefitting both the local and national economies.

Although the announcement from the government is not surprising it is still disappointing.  The UK has legally binding carbon emission reductions to be met by 2020 and currently we are not on target to do so. However it is about more than just meeting targets. It is about creating a safe clean environment to live in and an efficient secure energy future for all. Our hope is that future governments will see the value in all forms of renewable energy and make its growth and sustainability a priority.

 

 

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