Uncharted Territory

February 25, 2008

Here comes the feed-in tariffs fiasco…

Filed under: Economics, Energy policy, Feed-in tariffs, Global warming — Tim Joslin @ 2:25 pm

…for micro-generation of solar power, geddit? Here comes the sun… oh, forget it!

Is the Guardian trying to piss me off deliberately? Not content with trying to convince me that it makes good sense for the taxpayer to pay a premium rate to savers, they’ve started a dawn chorus (which occurs as we start to be warmed by solar power every morning – oh, never mind!) in praise of feed-in tariffs.

I remember that for reasons I can’t quite recollect I became much vexed about this a little while ago. Searching my hard drive, I find I actually went so far as to write to a letter to the Guardian editor on the matter. They didn’t publish it, so I will:

“Your Leader “Windy words” (December 11) supports David Cameron’s suggestion that using “feed-in tariffs” to encourage micro-generation of electricity would be the best way for the UK to boost its production of renewable energy (Tories see 1m households selling electricity back to the suppliers, December 6). In fact, feed-in tariffs for micro-generators would be an extremely expensive way to increase renewable energy production.

The most popular micro-generation technology would probably be roof‑top photovoltaic solar panels, since it now seems that domestic wind-turbines have the slight drawback of generating only miniscule amounts of electricity.

But feed-in tariffs for solar panels would be an inequitable subsidy, since, if they are to succeed in stimulating investment, the rate paid to micro-generators per unit of electricity would have to be several times the retail electricity price, as it is in Germany. The result would be to increase everyone’s electricity bill in order to provide a guaranteed income to those with large roofs and the financial resources to invest in solar panels, a demographic one might term “the Camerons”.

There is certainly a case for obliging suppliers to buy micro-generated electricity at or just below the retail price, as this would force them to overcome the barriers of organisational cultures and legacy infrastructure geared to purchasing from a small number of large-scale power generators. But forcing them to pay far more for micro-generated electricity than they can sell it for, for many years, through guaranteed feed-in tariffs, in order to make expensive micro-generation technologies financially viable for wealthy home-owners, would not only distort the market but also lock us all into paying a higher price than necessary for all our electricity, including that from other renewable sources. Since electricity carries no information about its source, there would also be considerable scope for fraud, especially if electricity prices fall in the future.

Yvette Cooper outlined (Letters, December 7) how the Government intends to use the planning process, rather than feed-in tariffs, to encourage micro-generation of electricity. This has the advantage of merely raising housing costs for everyone, rather than forcing the poor to subsidise the rich. But if the “zero-carbon” homes to be built from 2016 do still require electricity, albeit less than existing houses, why pay more to generate it locally just for the sake of it? Given the huge costs involved, we will ultimately be compelled to generate renewable energy in the most efficient way possible. This is much more likely to be by building offshore wind turbines than by paying David Cameron to put solar panels on his roof. Pretending otherwise makes it even more difficult to reduce our carbon emissions.

In contrast with David Cameron’s and Yvette Cooper’s expensive initiatives to encourage local power generation, the existing Renewables Obligation provides an effective incentive for electricity suppliers to provide us with an increasing proportion of renewable energy in the most cost-effective way.”

Let the poor subsidise the rich!

I should note that ideally the Renewables Obligation (RO) would be technologically blind, so that old ladies trying to stave off hypothermia invest their pennies in the most cost-effective renewable energy at any given point in time. In fact, though, some technologies are more equal than others under the RO.

Pleased to find it’s not just me – once again another Tim agrees.



  1. […] operators, community developments, affordable housing schemes and farmers”????  Let alone microgenerators.  We’d be giving them a guaranteed return on any investment.  If we want to do that why […]

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  2. […] than to sound scientific (or economic) reasoning. And of course the article concludes by advocating the dreaded feed-in tariffs. What better way of transferring money to those with big roofs from those, um, without big […]

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  4. […] idea was to subsidise solar PV on peoples’ roofs, for reasons that anyway make no sense, as I’ve noted several times […]

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  5. […] schemes that would apply for the subsidy, which first became evident late last year, although my warnings about the scheme in general date back over three years. They therefore propose to drastically lower the tariffs for the largest […]

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  6. […] As has been totally predictable from the outset, the current FIT arrangements are unfit for purpose. But we can fix FITs! […]

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  7. […] I see that my blog category on the topic of FITs now has no fewer than 10 posts (11 with this one), dating back to February 2008 – and that first entry included a letter sent to the Guardian in December 2007. So I’ve […]

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