Solar: Feed-in Tariffs…

Slightly old news now, but here it is none the less… the expected but still harsh cut to the single biggest motivator of renewable solar technology in the UK – Feed In Tariffs.

In my humble opinion, the solar renewable energy industry has not had time to grow and sustain itself – the level of FITs need to be in place for a number of years first (as in the 11 years in Germany). Halving the rate is going to take the free panels schemes out of the residential market, as there will be very little incentive for private companies to provide them.

‘On Thursday, Germany, the world’s biggest solar panel market, said it will also cut subsidies for solar photovoltaic power. Rates will be reduced 15% from January 2012, the Bundesnetzagentur, the federal grid regulator, announced. Power from panels will earn between €0.18 and €0.24 per kWh, depending on size and location.’

‘Deep cuts to the popular tariff have been overseen in recent years, with the German government arguing that economies of scale and improvements in technology are resulting in rapid reductions in the cost of the sector, meaning the industry no longer needs such a high-level of state aid. Since Germany’s Renewable Energy Sources Act (EEG) was introduced 11 years ago, providers are guaranteed fixed prices for the electricity they feed into the grid. Like the UK scheme it is paid for by consumers, adding €0.036 per kWh on energy bills or, according to calculations by the Rheinish-Westphalian Institute for Economic Research (RWI), €85.4bn for the solar built between 2000 and 2010 and ensuing payments.’

‘The Bundesnetzagentur revises the tariff regularly. A 9% reduction every year is given by law, but it can be higher depending on actual new installations.’

Johns told the Guardian that the cuts would be a “disaster”. “If they go ahead with this, the tariff is way too low, and all the social housing and free solar schemes – which make the feed-in tariffs exciting in terms of fuel poverty – will be destroyed.” He added that this was the third government review into solar subsidies this year, saying: “We’ve invested business in PV [solar photovoltaic panels] and had it sliced up three times in a year. They [the government] have no credibility on this any more.”

Germany, as ever, provides the case study to follow here. They have built up a strong dominance in the solar market (certainly in Europe) by providing a stable and incentivised solar market. They didn’t slash their FIT rate after 1 year, rather they steadily reduced it over a period of 11 years, with the full knowledge of all involved.

The cut to the UK tariff is so severe that it will take out a large proportion of the whole market in one blow. Yes the 43.3 pence per KWh tariff is unsustainable, but this is needed to get technologies off the ground and to establish markets. Just as this was starting to happen, it all changes dramatically. Very annoying and a shameful lack of support for our renewables industry.

out

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