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Feed-in tariffs and the Lib Dem fight to ensure the Coalition really is ‘the greenest government ever

November 8, 2011 10:53 AM
By Lucy Care in Liberal Democrat Voice

Feed-in tariffs, a policy mechanism designed to accelerate investment in renewable energy technologies, have been used successfully in many countries to increase the amount of electricity being generated from renewable sources.

The UK has actually been fairly slow off the mark on this. Our aim to be 'the greenest government ever' included support for feed-in tariffs.

Indeed, in the Coalition Agreement the preamble to the section on Energy and Climate Change said: 'We need to use a wide range of levers to cut carbon emissions, decarbonise the economy and support the creation of new green jobs and technologies.' It went on to say 'We will establish a full system of feed-in tariffs in electricity,' and 'We will encourage community-owned renewable energy schemes where local people benefit from the power produced.'

So what is happening to the system of feed-in tariffs? And how are the changes going to encourage community-owned renewable energy systems?

Well, the consultation that Chris Huhne's Department for Energy & Climate Change has just started includes introducing a cut-off date for the current solar power scheme only six weeks into the two month consultation period, and a slashing of the feed-in tariff rates for smaller schemes.

The industry has gone into overdrive to install systems under the current regime. But what then?

The current tariff provides a payback of 10 years or less. The industry knew that this is over-generous and six months ago they were suggesting a cut of about 30% would be appropriate as competition and technology changes were bringing prices down.

But the proposed new rates would provide a payback of nearer 20 years, and only then if one has a near-perfect aspect for the installation. This will dramatically reduce the number of viable sites, and undermine the fledgling industry that has created 20,000, mostly skilled, jobs in the last year or so.

So how does the proposed change, and the way it is being handled, 'support the creation of new green jobs and technologies'?

Community-ownership of renewable energy can come in many shapes and sizes, from a large wind or water turbine in a town or village, to photovoltaic panels on the community centre roof. And should 'community' in the wider sense be included, to mean some of those corporate bodies working for the good of their community, like social housing providers and schools?

If so, Chris Huhne's proposals to slash rates for 'multi-installations' will undermine this element of the Agreement too.

Trying to be positive, the consultation does include a very valid point of encouraging investment in energy efficiency before investing in solar power or photovoltaics (PV). And of course, it IS consultation. When the results are analysed and the changes finalised, it may be better than both the industry and many householders fear…

I am naturally an optimist, but that doesn't mean we shouldn't fight to ensure that Chris Huhne's department sees sense.

* Lucy Care is a member of the Lib Dems' Federal Policy Committee and Federal Conference Committee; was a councillor in Derby from 1993 to 2010; and a general election candidate in 2005 and 2010.


John Charlton writes

"I agree with Lucy that the >50% reduction in FiT's for Solar announced by Chris Heune is shooting himself in the foot. I would far rather have seen him outlaw (or severely regulate) the "rent-a-roof" practice by the big companies. FiT's are meant to encourage individuals, small businesses and community schemes, not to swell the profits of the big energy suppliers. I'm glad we got in in time!