UK renewable industry welcomes feed-in tariff
Feb 1, 2010 - Renewable Energy Focus
The UK renewable energy industry welcomes today’s announcement of the feed-in tariff for renewable and low carbon electricity, and the plans for low carbon heating incentives.
We have collected the views of some representatives from the UK renewable energy industry for you:
Sharp Solar UK
Andrew Lee, General Manager at Sharp Solar UK, a manufacturer of solar photovoltaic (PV) solutions, says: “Finally, the government has reacted to the notion that, in order to hit our green EU directive, solar power, supported by a feed-in tariff that is fit for purpose needs to be an integral part of the UK’s carbon reduction package.
“The tariffs represent the single biggest initiative in the UK to promote the rollout of renewables and could contribute 8% of the UK’s total energy supply by 2020.This is a technology and an incentive system that has worked successfully in Europe and we expect it to have a similar impact here. With the feed-in tariff in place, the UK PV sector is capable of delivering over 300,000 jobs so it is ideally placed to kick-start the UK’s flagging green economy in the UK.”
Juliet Davenport, Founder and CEO of the 100% renewable energy provider Good Energy, says: "It’s great this has now arrived! Good Energy has shown for many years that financial incentives work on a commercial scale, benefiting generators at minimal cost to the energy consumer when delivered effectively.
“The rates that will be paid to renewable generators should provide the incentive that a lot of homeowners, landowners and businesses have been waiting for to generate their own energy, allowing them to follow the pioneering individuals that have put their own generation in already.
"However, the work is not yet over. Barriers caused by under-resourced and under-trained planning services still need to be addressed - expecting the current planning regime to deliver on the future energy policy of the UK is a tall order and more needs to be done to support planners in their work.”
Good Energy says it is also pleased that the government is following its lead and has announced plans for a Renewable Heat Incentive in 2011. Since 2008, the company has been paying solar thermal generators a reward for the heat energy they generate with its own RHI which is funded by revenues from Gas+, Good Energy’s gas product.
The Renewable Enercy Association’s (REA), says the schemes guarantee payments for renewable energy generated over a period of 10-25 years. Furthermore, with low interest rates in UK banks, R-E-A points out that the 5-8% returns under the feed-in tariffs “offer a better investment than leaving the money in the bank.”
The fact that the renewable energy feed-in tariffs cover systems up to 5 MW, means community renewable energy initiatives are also eligible for the scheme.
The REA says it is still awaiting further details to complete its analysis, for example on tax treatment for commercial schemes, the export bonus of £0.05 and details on index-linking.
However, REA is surprised that tariffs for biomass power and combined heat and power (CHP) have been removed.
The renewable heating scheme, which is due to start in April 2011, could lead to a rapid increase in the number of homes and offices heated by woodfuel, biogas, solar thermal, heat pumps and waste-to-energy technologies, REA says.
Demand for heat dominates energy use in the UK and is responsible for 47% of the UK’s Carbon Emissions.
REA Policy Director Gaynor Hartnell says: “Renewable heat is the sleeping giant of renewable energy in the UK with a major contribution to make. The sooner we invest and build capacity in the renewable heat industry, the better value and energy security this will bring the UK - and the more jobs will be created.”
The British Wind Energy Association (BWEA), says it “hails introduction of financial incentives for small scale renewables.”
BWEA has calculated that the renewable energy feed-in tariff could pay up to £10,000 per annum to an owner of an 11 kW small wind turbine in a location with good wind speeds.
Alex Murley, BWEA Head of Small Systems, says: “The Department of Energy and Climate Change (DECC) has unveiled a tremendous policy agenda that will stimulate UK small scale wind manufacturing, create thousands of UK jobs, and transform national attitudes towards energy generation and use.
“To expedite this green energy bonanza we now need the introduction of Permitted Development Orders, to ensure that installing your own turbine is a routine and streamlined process."
Global analyst IMS Research says the decision to pay up to £0.413/kWh for renewable energy systems up to 5 MW is anticipated to quickly stimulate demand for solar PV and establish a significant new market for solar PV suppliers.
Ash Sharma, Renewable Energy Research Director, comments: “The announcement presents an even higher feed-in rate than was originally proposed. This is likely to generate a significant PV market in the UK, though it will take some time to get traction due to the need for all installers to be registered under the scheme. … the introduction of this FIT could lead to 250 MW of new PV capacity being installed in 2011”.
Stephen Hill, Partner at the international law firm Eversheds, welcomes both the renewable energy feed-in tariff and the renewable heat incentive, but says the schemes leave larger projects wanting.
“It is encouraging to see micro-generation being at the heart of public policy, however it is unfortunate that at the same time DECC is creating uncertainty for larger projects,” Hill says.
“The subsidy system for such projects, by way of the Renewables Obligation (or 'Green Certificates'), is currently subject to uncertainty due to an announcement by DECC in December last year.
"The biomass industry has raised concerns that projects which originally were going to receive a set number of Green Certificates for the life of the projects, could now be subject to significant decreases in the number of Green Certificates. In a credit market that is still fragile, this lack of certainty could have a detrimental impact on the number of projects being built.”
Renewable energy lawyer Alan John at solicitors Osborne Clarke, gives a cautious welcome to the renewable energy feed-in tariff, saying that the success of the scheme could depend on the availability of market finance for micro-generation projects.
"Householders may still regard the initial outlay required to purchase a low carbon energy generation system as being prohibitive: installing a typical 2 kW PV domestic system, for instance, currently costs in the region of £10,000.
"The success of the FIT in promoting the take up of low carbon generation may well largely depend on the market developing financial packages that fund up front capital expenditure in return for a charge on FIT payments generated by the installed system," he adds.