Friday, November 23, 2007

Government says 'yes' to feed-in tarriffs - or does it?

The use of feed-in tariffs as an incentive for microgeneration, which have proved so successful in Germany, "will be investigated", according to a press release from Defra*.

The announcement was buried deep within a release about home energy use advice on 18 November, but is the first time that such a positive statement has been made by the government on the issue.

This will be welcomed by many people - but there's one thing wrong with the announcement - it shouldn't have been made! Someone in Defra dropped a clanger.

Many and loud have been the clamours for such a tarriff over the years, from the industry - eg the Renewable Energy Association - but also recently both the Conservatives and the LibDems have made it their policy. The reason for it is that countries which have such a tarriff have generated robust renewables industries, and it's been highly effective in increasing the amount of renewable electricity generated, combating climate change and helping countries meet EU targets.

The reason the Treasury has rejected it for years and years is, of course, the cost: up to eight times the current subsidy level.

The feed-in model guarantees producers a fixed price - 49 euro cents for a KW/h photovoltaic electricity in Germany and Italy, and 50 cents in Greece - for electricity generated from PVs. It was introduced in Germany in 2000, and revised in 2004 to cover the full costs involved in producing solar electricity, sparking a boom. Germany will have almost 20 times as much PV by the end of 2007 as in 2000 when there was just 44MW, according to the German Solar Industry Association. It has led to around 800,000 properties having the technology installed and 55 percent of the world's photovoltaic power is generated on solar panels set up between the Baltic Sea and the Black Forest.

In the UK we have the Renewables Obligation, which compels suppliers to purchase an increasing proportion of electricity from renewable sources. In 2006/07 it is 6.7% (2.6% in Northern Ireland) and will rise to 10.4% by the period 2011-12, then by 1% annually for the five years following. It has often been criticised for being ineffective, bureaucratic, slow, and in particular excluding small generators such as householders.

However, when I sought clarity for the announcement and more details from Defra, I was referred to BERR, being responsible for energy, as the press office knew nothing about it.

The spokesperson for BERR went away to investigate, and came back to say there was no work, no plans, and certainly no policy at the moment on feed-in tarrifs, and no idea why Defra stuck this in.

I should go back and ask Defra.

Back there, I asked Kate Belson at Defra to dig into it and eventually she came back and announced that the announcement "was just stuck in as an example of all the things we'll be considering" to encourage microgeneration.

It was included merely as an illustration. I wonder why that was picked out in particular.

So, sadly, don't get excited.

Defra is slightly more radical than the Treasury or BERR, so perhaps they're being cheeky. All the same, campaigners for feed-ins should use this as a lever for what it's worth and press the government on exactly what investigations they WILL be pursuing.

[* the announcement is buried as the third bullet point in the second list of bullet points.]

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