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| German house with solar panels. Image source: ecolectic.org. |
As with other great popular causes, such as improving access to public libraries, reducing the use of plastic bags, and the protection of urban hedgehogs, everybody is in favour of ‘feed-in tariffs’ for renewable energy. Widely used in other parts of Europe, these tariffs guarantee a high price for every unit of electricity exported to the grid from very small generating stations. Put some solar panels on your roof in Germany and you get paid 40p for every kilowatt hour that you produce and don’t use yourself.
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The UK micro-renewables industry raised a cheer last week as the cabinet minister newly responsible for climate change gave the thumbs up to the idea of copying our European friends and improving the financial returns for electricity generation on the smallest scale. Ed Miliband appeared to promise to amend the climate change bill to force the electricity companies to buy power at elevated prices from such things as domestic wind turbines and hydro-electric generators capturing the energy in babbling streams. The idea is that this will increase the incentives for people to install small-scale renewable electricity systems.
I have to declare an interest. My battery of photovoltaic cells sends about 500 kilowatt hours (usually known as ‘units’ in Britain) back the wrong way up the wires every year. The rest of their somewhat unimpressive output is gobbled up in the house. Any proposal that increases the price I get from the electricity company will help defray the recent unprecedented jumps in energy prices. So I ought to be in favour. But despite the clear financial incentive, and the risk of being savaged on the street by right-thinking environmentalists, I have to admit that I think that feed-in tariffs are one of the most mistaken ideas ever to worm their way into UK law. Nothing better demonstrates the vacuity of the climate change debate in the UK than the unthinking obeisance to the romantic idea of paying people money to generate tiny quantities of electricity on their back roofs.
The problem is a simple one. Micro-renewables are hugely expensive for every unit of electricity that they produce. The best example is the subsidy that the Germans generously give to solar photovoltaic installations in their cloudy country. Their feed-in tariff for solar power has been highly successful in expanding the number of homes, cowsheds, and office blocks that carry photovoltaic panels. But the cost is horrendous. Last year the Germans paid almost €1.9bn (about £1.5bn) to panel owners for their electricity. This bought about 0.6% of all the electricity that the country needed. The cost per megawatt hour was about six times the price paid for all types of electricity. The German government is gradually reducing the subsidies but their solar feed-in tariffs currently cost each householder about £40 a year. This may not seem a huge amount but as solar energy expands, the cost will get increasingly onerous.
It is true that solar power saves carbon emissions. The German solar tariff cut emissions by over 2m tonnes last year. But the cost was over £600 per tonne of CO2, or thirty times the current international price of carbon. Small-scale solar photovoltaic technologies are a truly terrible way of reducing emissions in sun-starved northern Europe. And micro-wind is unlikely to be much better except on tall buildings at the top of hills near to Scottish or Welsh coastlines.
To make a significant difference to the carbon emissions from electricity production, the UK needs to invest in tens of thousands of commercial-scale wind farms and find a way of cheaply capturing wave and tidal energy in the turbulent waters off our coasts. Done with vigour and good sense, we can hope to generate 20 or 30% of our electricity this way. We have to invest in gigantic projects like the London Array, a 300-turbine wind farm off the Kent coast. Feed-in tariffs are an expensive distraction that will do nothing to reduce UK emissions and its dangerous dependency on Russian gas.
We don’t even know what bribes the government proposes to offer the middle classes to give over some of their south-facing roofs to solar panels. Curiously, even the renewable industry body that has so successfully lobbied Ed Miliband declined to tell me that it thought the feed-in rate should be. Perhaps it is frightened that the Daily Mail will calculate how much electricity prices will have to rise to pay for the solar subsidy. My estimate is that to make photovoltaic panels a good financial investment for a UK householder, the feed-in tariffs probably need to be about 50p per unit, or possibly even more. I will certainly welcome the annual cheque from my electricity supplier but the impact on carbon emissions of even a massive expansion in UK domestic solar or wind installations will be utterly trivial.
The UK has one of the lowest percentages of renewable electricity in Europe. We could spend a billion pounds a year on subsidising solar panels and we would get barely half a percentage of our electricity from them. The UK would then be even further behind other countries. We don’t need feed-in tariffs; we need massive programmes of investment in research and development into low-carbon electricity, huge prizes for successful entrepreneurs, and participation in the global endeavour to find cheap forms of carbon capture at power stations.
Tags: carbon reduction initiatives, domestic, feed-in tariffs, London Array, politics, power generation, renewables
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Your criticism clearly has it´s place. Implementing something like a feed-in tariff has to be well in tune with the effectivness and price of the technology in question.
In Finland we have been campaigning for a feed-in tariff for wind energy, as our analysis is that as a method of subsidy it would be effective and of equal support to makers of big wind-farms and smaller (1-10 windmills). So far there has been very little progress in wind energy in Finland, although we have better wind potential than Germany. There is also in place in investment support fund for wind power, but it has not been an effective incentive. I wonder if you see feed-in tariffs as generally bad or that it just requires careful planning.
To the best of my knowlege for example Spain has been more successfull in effective use of an feed-in tariff.A short (very partisan) summary of the spanish system:
http://www.e-parl.net/eparlimages/general/pdf/080603%20Solar%20thermal%20toolkit.pdf -
In France the feed in rate is 57 cents. The solar installer that recently installed my off grid system was going on to install a 10 Kw grid tied system on a South facing roof of a wine makers barn. The owner had signed a 20 year contract with EDF which he calculated would net him 6,500 euro a year making the system pay for itself after 9 years and make a ‘profit’ for the remaining 11. EDF however is now talking about lowering the feed-in tarriff to 53 cents and not signing fixed fee contracts which changes the sums rather dramatically.
Of course we have a little more sun here in the Languedoc than you ahve up North. -
If the tariff is set at a sensible rate, there won’t be a huge up take of poorly placed renewable energy installations. Photo Voltaics should be promoted through feed in tariffs, but only as a means of speeding up research and development as the technology is at an early stage at the moment. Wind power on the other hand would be successfully promoted through feed in tariffs and could play a major role in reducing dependency on gas. Medium sized installations funded by farmers or local co-operatives (as championed in Denmark) make a real difference and are cost effective. They also have the added benefit of changing local attitudes to wind farms as they are pioneered by locals who might otherwise oppose them.
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Germany may have also had a wider view that the feed in tariff was to promote a market for various technologies that German firms could take advantage of. e.g. solar voltaics, and battery technologies. It may not have been focused entirely on carbon reduction. If the £40 per household allows German firms to build their knowledge/technology and capacity by developing a home market, then this would seem to be a good thing for Germany going forward. Government intervention allows a market to develop – and hopefully that market is served by indigenous companies. As an international market develops, German firms are able to export, and generate future wealth for the nation of Germany.
It also has a beneficial effect of making more individuals aware of their energy usage in general.
It is unclear whether a UK feed in tariff would have a knock on effect of building businesses in the UK, and may only have the effect of carbon reduction. If this is the case then I would tend to agree with Chris with regard to more cost effective means of carbon reduction. The UK may have simply missed the boat with regard to leveraging benefits to the UK with a feed in tariff.
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Your comments seem to ignore the much more investment efficient renwables such as wind turbines and hydro. Solar energy payback times are horifically long and generally at least four or five times that of wind turbines. Energy payback times are even longer for solar. So lets not assume everybody will install solar systems, those who want value for money and reasonable pay back times will opt for wind if they have a suitable site and acheive with feed in tariffs payback times of less than 3years as opposed to the current 10-12 with the ROCs scheme.A wind turbines energy payback time is typically less than a year.
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Do you know where I can see a summary of 2009 FiT for the EU? I haven’t had any luck looking online. Thanks!
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I have 2 queries:
1. I note that you say that the German feed-in tariff is costing German consumers around 40 pounds per year. That is much higher than some German renewables supporters have indicated to me when I was there in 2006. Can you possibly provide the statistics behind your calculation?
2. It appears that people who instal solar PV then become more careful about their electricity consumption as they want the solar part to account for as high as possible a percentage of the total. Do you know if that indirect effect has been studied anywhere so that a figure can be put on it? Our own home experience suggests it might be equal to double or triple the direct effect. -
Another supporter of the mega watt solutions only. Of course we need the mega watt producers but Britain needs a widespread popular understanding of sustainable energy solutions. We will need both maxi and mini solutions.
Sweden started installing ground source heating 30 years ago with good subsidies. House by house. Today 90% of the new buildings are Ground source heated and 80% of the entire pool of properties.
Give us the incentives for small scale electricity production and many of us will make our homes energy independent.
And don´t forget – Britain will phase out a good part of its aging power stations within 10 years. I for one, intend to be independent from the grid long before that -
The recent anouncement about feed in tariffs only being available for new systems is a slap in teh face for all those early adopters, those who have effectively created the industry within the UK.
As to scale, yes there is a place for roof mounted systems. They take up otherwise unused space, they save on transmission losses and they help the generator engage with the generation of power. The alternative is to have large arrays on fields that should be growing food or trees or just to be fields! As to PV being a better thing to have on a field than a tree, I wonder which results in the greatest reduction of carbon? I expect the tree, certainly there are no carbon costs in terms of manufacture! You can’t grow trees on the average roof!
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