What is the real purpose of drastic feed in tariff reductions?
Most of us expect government to govern to improve the lives of the whole population. When governments are not doing so, they must still issue statements to look as if they are. And so it was when Amber Rudd, the minister for Energy and Climate Change said in justification of a proposed dramatic reduction in renewable electricity feed in tariffs (FITs), “We need to keep bills as low as possible for hardworking families and businesses while reducing our emissions in the most cost-effective way.” Whereas the reality is that our government are intent on preventing the renewables industry from competing with a new subsidised Hinckley nuclear power station, a new subsidised fracking industry and the remaining – hard to extract (and supported by recently announced generous tax breaks) – off-shore oil and gas fields. Whose interests is government protecting I wonder.
I can’t believe it is the interests of the whole UK population. Renewable electricity, once the generation equipment is installed, is almost free. Wind, sun and moving water cost nothing and the cost of equipment maintenance is minimal. Yes there is the ongoing cost of feed in tariff to encourage householders and businesses to install currently adding £45 a year to each household bill but most of the bill is fossil fuel costs. A coal or gas fired power station always pays for fuel whereas with renewables the cost of subsidy comes down to eventually reach zero. The impression is given by government ministers that FITs are coming out of government spending so allowing them to link slashing FITs to the need for austerity. Also that renewables are adding large amounts to consumer bills. Neither is true. The 3% of household energy bills that pay for the feed in tariff is actually an excellent investment in reducing future bills. The subsidy for Hinkley C ties consumers to high electricity prices for the next 30 years.
Since the introduction of the feed in tariff in 2009, renewables – particularly photovoltaics – have grown quickly to provide 22.3% of UK electricity in Q1 of 2015, 2700 installation companies and 112 thousand jobs. The proposed rapid FITs cuts of 40% for wind and hydro and 90% for PV puts the industry, those jobs and future recovery in serious jeopardy. Householders will not feel it worthwhile to install PV until prices drop by £800 for a 4 kW system (which will not happen for a few years yet). New small hydro and wind schemes will not seem worthwhile, especially given the difficulty and expense of getting planning and environmental permissions. Businesses will go to the wall and thousands will lose their jobs. Are the Conservatives the party supporting small businesses? The renewables industry is as keen as the government to get to a subsidy free future but sudden unpredictable changes are extremely damaging and unfair.
Amber Rudd has previously expressed understanding and enthusiasm for renewables and community owned renewables in particular. There is no preferential treatment for community renewables in the current proposals and it is evident that George Osborne has overruled Amber. His enthusiasm for fracking is obvious. When announcing encouragement for fracking he stated, “This new tax regime, which I want to make the most generous for shale in the world, will contribute to that. I want Britain to be a leader of the shale gas revolution – because it has the potential to create thousands of new jobs and keep energy bills low for millions of people.” But renewables have a greater capacity to deliver geographically distributed jobs, climate change mitigation and eventual lower electricity prices.
The inevitable future is a multiplicity of small widely distributed clean renewable generators with less demand on the inefficient high voltage national grid. PV will be attached to most buildings and wind turbines of all sizes will be far more common. Demand will be smoothed with battery storage and base load will be covered from tidal lagoons around our coast. Crucially, this will achieve lower prices and no carbon emissions. Given the Climate Change imperative, we should be getting there ASAP. So why on earth our government slowing this down and guaranteeing high electricity prices for longer?
This piece is penned by Keith Wheaton Green a supporter of renewable energy and first published in the Landsman.