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Community owned energy companies thrown into turmoil by feed-in tariff review

Posted by Chris Rowland on 10 February 2011 at 11:17 am

Community-owned energy companies across the UK are shocked and dismayed at yesterday's announcement of an early review of the feed-in tariff by the Secretary of State for Energy and Climate Change, Chris Huhne. A growing number of community-owned companies have been set up to build renewable energy generation schemes using the feed-in tariff, since its introduction in April last year.

The feed-in tariff for PV has been the key enabler for community groups to develop viable business plans for locally-owned renewable energy developments. PV has become the technology of choice for many as it carries less complexities and costs in the planning stage and is consequentially faster to deploy.

Greg Barker said in November last year: "Community energy is a perfect expression of the transformative power of the Big Society. With the right combination of incentives and freedoms, community groups, businesses and organisations can get together to build a cleaner, greener future."

However, this review puts all their plans in jeopardy. The classification of systems above 50kW as large-scale means that well developed business plans will have to be abandoned as potential investors will have no certainty to invest.

OVESCo is a community owned energy company in Lewes, Sussex. We are preparing for our first share issue to raise funds for the project that we have been developing for the last year. The proposed system is 98kW in size – enough to power about 40 homes, but will be put at risk due to this review. Systems are not be eligible for the feed-in tariff payment until they have been completed, and the nature of the undefined timescale on this review process for systems of above 50kW means that it cannot be begun without substantial risk of not getting it completed before tariffs are changed or abandoned.

It is infuriating that just as we are about to launch our first scheme that is in line with Greg Barker's big society ambition, we are hit with this lack of vision at the top which totally scuppers the plans of many community groups across the UK. Perhaps the Minister did not mean to destroy the plans of the groups he also wants to see succeed, but without a stable and viable feed-in tariff, community energy will never happen."

Others community energy groups are in a similar position. The West Oxford Community Renewables group's biggest installation so far is 100kWp of solar PV on its local secondary school.  "It seems very strange indeed to suddenly be considered a large developer of PVs. says chair of the group, Barbara Hammond. "As a small community-owned SME, the income stream coming into our community from our projects will have a huge impact on our ability to address climate change in a deep, long-term way.

"We are only just starting to understand how powerful our model could be and are starting to share our learning with other communities. This momentum will be lost if the structure and size of the feed-in tariff is constantly in question."

Photo by mjmonty

About the author: Chris Rowland is director and project coordinator of OVESCo, the Ouse Valley Energy Services Company Ltd.

If you have a question about anything in the above blog, please ask it in the comments section below.

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Comments

3 comments - read them below or add one

Philip James

Philip JamesComment left on: 14 February 2011 at 6:25 pm

The Feed In Tariffs are a stealth tax that is the reverse of Robin Hood

They take money from the poor - by increasing our electricity bills - to give to the rich - Those with enough money to purchase a PV system.

I for one am glad that the Government are seeing sense and reviewing the use of the FIT as an Investment Opportunity.

The FIT should only be paid on domestic installations - and even then I am paying extra for my electricity so that the Rich people can earn three times their investment over a 25 year period and they aren't even paying Income Tax on it as FIT payments are Tax Free

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Fred1

Fred1Comment left on: 14 February 2011 at 3:51 pm

The "reason" for the early review is to save money as part of the spending review, ie "save £40 million"

However the tarrifs come from Industry not central Govt ( unlike the proposed method for RIH) so no tax payers money will be saved, the Electricity industry will benefit from the £40 million...DOH

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solar-roof-tiles-uk-s652ps

Solar Roof Tiles UKComment left on: 11 February 2011 at 4:59 pm

This is bad news for the industry although i suspect that with more solar roof tiles around new build propertys with roof integrated pv will become a  standard, and once that market becomes more stable then i think we will see re-roofing going down the same path. It will be similar to the transition from single to double glazing!

Also it is my belief that mirco generation is the way forward and that individuals will -and should push renewables and not the larger companies.


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