Green energy firms fear new feed-in tariffs will be too low

Campaigners fear government's cashback offer for microgeneration will not be enough to stimulate renewables industry

Ashley Seager
The Observer, Sunday 31 January 2010

The government will tomorrow publish the long-awaited levels of remuneration it will offer for renewable energy generated by households and communities and fed back into the national grid.
It hopes the new tariff will boost the growth of "micro-generation" by small-scale wind turbines, solar panels or hydro power. But there are fears in the renewable energy industry that the Department of Energy and Climate Change will make little or no upward adjustment to the tariff levels for clean electricity it proposed last year.
The DECC has been heavily lobbied by the big energy firms, and tomorrow's announcement has been delayed several times. The Clean Energy Cashback, or feed-in tariff, will reward households, businesses or communities by paying above-market rates for the electricity they produce and feed into the grid.
When the tariffs were unveiled last year, they were criticised for offering rates of return too low to encourage people to install micro-generation plants. Germany introduced feed-in tariffs a decade ago offering double-digit rates of return and sparked a green revolution.
But Alan Simpson, special adviser to energy and climate change secretary Ed Miliband, fears the battle to get higher tariffs has been lost and believes the DECC will stick to its aim of getting just 2% of the UK's electricity from smaller scale renewables by 2020. He says three times that would be easily achievable at an additional cost per household energy bill of £1.20 a year.
"Germany needed starting rates that gave a 10% return on investment to kickstart their leap to the top of the renewables league. Britain needs to do the same," he wrote in a letter to Gordon Brown last week. "At the moment, we don't have a renewables industry. We have survivors; firms that exist despite government policy rather than because of it.
"A coalition of groups – from farmers to the fuel-poor, environmental NGOs to eco-builders, ethical bankers to engineers and installers – has been lobbying DECC officials for all they are worth. But little seems to be working."
Andrew Melchior, head of the EIC Partnership, which is setting up the Horizon energy co-operative in Manchester, said his business was only viable because of an EU grant. The feed-in tariff would not be enough, he warned.
"The Germans created an efficient industry that is able to provide solar installations at competitive prices. The UK does not have this industry, more a collection of enthusiasts experimenting with new technologies or proponents well versed in the pragmatics and dark arts of exploiting pots of grant funding.
"We must provide a decent incentive so that the public begin to accept the concept of economically viable solar energy in the UK."