Yesterday the Government finally announced its Clean Energy Cashback Scheme – or "feed-in tariff" – for small-scale low-carbon electricity generation, along with its plans to introduce similar incentives for low-carbon heating. Households should get an income and a cash saving. Better late than never or have we been greenwashed, again?
From 1 April householders and communities with renewable energy installations such as solar photovoltaic panels and wind turbines up to 5 MW will be entitled to claim payment for the electricity they generate, even if they only use it themselves. The level of payment depends on the technology and is linked to inflation. A typical 2.5 kW solar PV installation could offer homeowners a reward of up to £900 and save an additional £140 on their electricity bill.
They will get a further payment for any electricity they feed into the grid. The scheme will also apply retroactively to installations commissioned since July 2008 when the policy was first announced.
The tariff levels, which cover hydro, solar, wind and anaerobic digestion aim to provide a 5-8% return on initial investment which is below the level typical in Germany of around 10%. Payments will be made for 25 years on solar installations and between 10 and 20 years for the rest. If generators do not use the energy ..... but rather export it to the grid then the tariff will reduce and tariffs reasonably can be legally assigned which should create opportunities for leasing which has been successful in Europe – home owners lease their solar panels or roof space to a third party, for example.
The Government also published plans to roll-out a scheme to incentivise renewable heat generation technologies such as ground source heat pumps, biomass boilers and air source heat pumps goes ahead.
Under the proposed renewable heat incentive (RHI), which would be the first such scheme in the world, from April 2011 an average semidetached house could receive up to £1000 a year and a £200 saving on bills by switching from oil to a ground source heat pump.
Tariff levels under the scheme would depend on the size and type of installation and the type and will run from 10 to 20 years, depending on the technology.
Energy regulator Ofgem will manage both feed-in tariff schemes and will make payments any heat generated, while suppliers will be responsible for payments for electricity generation.
The move is being largely welcomed by the industry, there is a sense of relief that the UK has got there in the end, although some green organisations suggest higher tariffs are needed to drive demand.
Graham Meeks, Director of the CHPA, commented: "Support under the Feed-In Tariff is vital in the early stages of commercialisation for microCHP. It will help secure the UK's world-leading position in this exciting low-carbon technology, whilst giving householders a cost-effective choice in cutting their carbon footprint."
The renewable-energy industry had pushed hard for a tariff with a potential return on investment of 10 per cent over the 20 to 25-year life of the payment, rather than 5 to 8 per cent proposed by the Government.
Although the more modest figure reduces the overall cost of the scheme – which will be funded by a levy on electricity bills – it might also stunt investment, according to the Renewable Energy Association (REA). "The tariff level is key: if it is set generously enough, then all kinds of financial institutions will come forward with products and plans," Leonie Greene, at the REA, said.
As a supporter of feed-in-tariffs my regret is the time we have taken to bring FITs into policy and the knock on effect on our economy and our renewables industry (compared with a variety of our EU counterparts). Let us hope that these incentives finally assist in increasing the UK's skills set for renewables; increase employment and giving our as yet comparatively fledgling industry, particularly in solar, the kick start it so deserves.
We do now have a fighting chance to move onwards .......cutting out the bling.
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