Tuesday, July 28, 2009

Can Britain follow Germany with feed-in tariffs?

The government plans to implement feed-in tariffs by April 2010 to incentivise renewable electricity installations up to a maximum capacity of 5 MW. The consultation document looks at how it could work and best practices from other countries.

It does a good job of setting out the options, but stops short of specific proposals. The following variables are considered:

A fixed tariff pays an overall amount per unit of electricity generated, independent of market price. A premium tariff is an amount paid on top of the market price. In a stepped tariff the amount varies according to type of technology, scale, and local conditions. A flat tariff takes no account of this.

Proposals by the working groups for the Renewable Energy Association, mentioned in the last issue, suggested that all renewable energy generators would be paid a fixed renewable tariff for all energy produced (a “generation tariff”), and an additional price for that exported to the grid, set at a level established between the supply company and the beneficiary and subject to market competition. This is Taken up in one of these consultation documents but not others, which argue on the whole for fixed, stepped tariffs.

At a domestic scale most individuals will use much of their generated electricity themselves, and their use may be unpredictable so they may still be cautious about investing in these technologies because the payback period will, even with these subsidies, be considerable without other grants for installation. The main document says that a generation tariff will be a fixed price, set at different levels for different technologies and installation sizes. "We expect to lower the tariff levels for new projects over the years, but any individual installation, once starting to receive a tariff at a certain level, will continue to receive the same generation tariff level throughout its entire support period under the FITs".

To give long-term certainty to investors, the consultation process to "require suppliers to purchase exports from FITs generators at a guaranteed minimum price". The tariff level will have to be sufficiently high to attract the level of uptake needed to meet targets. The report notes that "due to the fact that small generators provide only small amounts of electricity to the grid, they may have difficulty in securing the same wholesale price for exports that a large-scale generator can access, and may receive a much lower price".

Criticism has been made that the proposals are not being examined at the same time as those for renewable heat, which is to be introduced a year later. This is especially bizarre since the report does look at the electricity-only component of combined heat and power technologies.

FITs or RO?

The consultation proposes that from 1 April 2010 installations of 50kW and below eligible for FITs will only get the option of receiving FITs. However, those from 50kW to 5MW will be able to choose between the RO and FITs.

Deadline for responses: 15 October 2009. See the DECC consultation page

How it might work in practice

A house (it could be an office building) generates 2,500 kilowatt hours (kWh) per annum (e.g. from a solar PV panel). They use 1,500kWh of the electricity they generate. 1,000kWh is exported, because it is generated at times when the household does not use it. The household uses a total of 4,500kWh per annum. Therefore, it needs to import 3,000kWh from an electricity supplier.

If the tariff for generation is, for example, 30p/kWh, the householders will receive a FITs payment of £750 per annum (2500kWh x 30p) for the electricity they generate. They will also receive a payment for the electricity they export; assuming a price of 5p/kWh this would be £50 (1000kWh x 5p). They also derive a benefit from the 1,500kWh they generate and use on-site as that will offset 1,500kWh they would otherwise have had to buy from their electricity supplier. Assuming an import price of 10p/KWh this would be a saving of £150 (1500kWh x 10p).

If FITs were delivered by a "generation only" tariff, and generators were required to pay import rates for all electricity used (including that generated on-site) the household would receive much more: £950 per annum (2500kWh x 38p).

Wednesday, July 01, 2009

Breakthough ideas for this century

At the SDC Breakthroughs event.

There were 19 brilliant ideas for how to save the planet - or at least the UK. It's a shame to single out just a few, but apart from Cap and Share (www.capandshare.org), there were biochar and algae - with a working model - ways of financing eco-refurb and educating kids about SD, and ideas for building communities and gardening.

Ed Miliband made a speech supporting CCS and growth. Boo, hiss.

HRH Charles made a speech which I've forgotten.

Porritt, in his swan song speech (he's retiring this month), criticised this and really laid into the Treasury. I mean REALLY - what has he got to lose now?

The new head of the SDC, Will Day, made a speech that didn't yet give a flavour of what his tenure will be like.

I nobbled Hilary Benn (to whom I got an intro from Welsh Evironment Minister Jane Davidson), and spieled him on Cap n Share, which he'd never heard of! He seemed to take it in and went off with the Feasta brochure.

Jane Davidson made an inspiring speech (I wish she had Benn's position and worked for Westminser instead of Cardiff). However, although Wales now has loads of inspiring targets like getting to a ecological fotprint of on plaet from he curret 2.77 in 20 years, the Welsh Assembly Gov's latest document on open cast coal mining basically has so many holes in it, it is not going to stop anyone open cast mining.

So, lots of hopeful and inspiring ideas and fabulously creative wannabe policies. All we need is joined-up government and strong leadership. Is that all?