Thoughts on the future of the feed-in tariff
Posted by Cathy Debenham on 15 November 2011 at 5:13 am
Proposed cuts to the feed-in tariff for solar PV are too fast and too deep say both industry and consumers affected by the changes. While most people agree that the feed-in tariff rates were too high, and needed to be cut, the speed and severity of the change is a severe blow.
It's hard to understand why is a minister who says he wants to avoid boom and bust in the solar PV industry is introducing a policy that does just that.
The solar feed-in tariff has proved far more popular than expected, and the rate of installations of solar PV has grown much faster than anticipated as a result. But isn't that a good thing? Solar panels on people's roofs are a very visible sign of a move to a lower-carbon economy. While they may not be the most cost-effective way of getting there (yet), there is evidence that panels on roofs get people talking, and begins to normalise a different approach to energy.
They also mean that people engage with energy in a way doesn't happen with a quarterly post-dated bill and the solar panels help them to understand more about how it works. Anecdotal evidence indicates that people are more receptive to taking other energy efficiency measures as a result of installing solar panels.
In fact, the when you examine the aims of the feed-in tariff, solar PV appears to be performing well. On the consumer side it meets all three of the scheme's stated aims:
- To promote take-up of small-scale low-carbon electricity technologies by the public and communities;
- To empower people and give them a direct stake in the transition to a low-carbon economy; and
- To assist in public take-up of carbon reduction measures, particularly measures to improve the energy efficiency of buildings.
The fourth aim is to help develop a supply chain that offers households a wide range of cost-effective measures to lower their energy use and carbon emissions. The solar industry has started well on this. Estimates vary, but between 25,000 and 30,000 jobs have been created since the start of feed-in tariffs. Prices have fallen significantly - anywhere between 30-40% (says the industry), or up to 70% (according to government calculations). Not bad for a new industry, in a recession.
So why the sudden slashing of what many see as a success story? Well, those aims are wrapped up in words like "affordable" and "cost-effective". It's all about the budget. This is the same budget that the Coalition government chose to reduce and cap in the comprehensive spending review. (As the money comes from a levy on energy bills, and not from the Treasury, the cap wasn't strictly necessary. Labour's original scheme did not have one).
Given that the feed-in tariff for solar PV appears to be successful in meeting the stated aims of the scheme, would it not be possible to find more money and increase the budget? Are there other aspects of low carbon spending that are underspent and could be transferred? Or, having chosen to cap the budget, couldn't the self-styled "greenest government ever" choose to uncap it (some might argue that it's a better use of the money than Eric Pickles' U-turn on weekly bin collections).
Once a little bit more money has been found, here are the YouGen suggestions for how the solar feed-in tariff might look going forward:
1. Extend the deadline for cuts, ideally to the 31 March 2011, so planned and contracted installations can go ahead, and to give industry time to adapt to the new tariffs (and minimise redundancies.
2. Introduce a generous tariff for community installations. The emergence of many local energy projects, raising money locally to generate electricity genuinely owned by the community is one of the most encouraging and useful aspects of the feed-in tariff. It is a powerful way of involving and engaging people in new ways of doing things, and, most importantly, getting their buy in.
3. Drop the proposal to limit the feed-in tariff to the small number of homes that meet the Energy Performace Certificate (EPC) level C. According to the English housing survey housing stock summary statistics 2009, just 13.8% of UK dwellings were graded C and above. Delve a little deeper into the stats, and you find that only 9% of houses have EPC of C or above. Flats tend to be more energy efficiency with 33.9% reaching the standard.
For some of the most hard to treat homes, off the gas grid, with no cavity walls, solar PV is a useful way of combatting fuel poverty, and reducing domestic carbon emissions. Prescribing which order people take energy efficiency measures is more likely to kill solar PV stone dead in the UK than either the size or the speed of the cuts.
Measures, such as solid wall insulation, are very disruptive, and quite a hard sell. Whereas solar PV has been demonstrated to be a good way of helping householders and businesses to engage with and understand their energy usage. For hard to treat houses it is an easier first step, and will help people to see the benefit of lowering energy use, and encourage them to go on and do the more disruptive measures.
These points will form the basis of YouGen's response to the consultation, but we are keen to also reflect our readers thoughts. Please leave your comments below.Cathy Debenham
If you have a question about anything in the above blog, please ask it in the comments section below.
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