Cutting solar subsidies
Is solar the right technology for Britain right now? And what is a government subsidy for?
Those are the real questions provoked by the government’s desire to cut payments (Feed in Tariffs) for people who put solar photovoltaic panels on their roofs to generate electricity. The solar industry in Britain is furious - saying jobs will be lost and businesses will go bust. But should public money be used to subsidise businesses or is it better spent on other measures to green the economy? These are tough choices.
The Feed in Tariff is a win-win for the solar industry and consumer. You get cheaper electricity bills and the government pays you a tariff on top. It is such a good deal that businesses have been set up to pay roof-owners the capital costs of installation in return for some of the subsidy. People have been making good returns from effectively renting out their roofs. And with solar technology costs coming down rapidly as the Chinese invest in production things were only looking up.
Unsurprisingly the take up of the scheme has been very high. Too high for the government, which finds the money it allocated for the scheme about to run out. So ministers intend to cut the amount being paid in Feed in Tariffs. You will still make money, just less of it, they say. And you will also have to make sure your home is energy efficient before you qualify. This will stop people wasting energy through not being insulated but making money from renting out their roof.
But Britain is not a very sunny country, and the kind of solar technology being fitted right now is not generally producing lots of electricity all year round. In winter the yields plummet. That means those households still need lots of electricity from the grid – the peak load has not been cut. And it is the peak load the government has to plan for. In essence every roof in Britain could have a solar panel fitted but it still wouldn’t make a big difference to whether the country needs new power stations. Solar panels look green, sound green and are green when they work – but if they don’t stop Britain needing new gas or nuclear power stations to cope with peak demand are they as green as they seem? Should Britain wait until the technology works all year round before paying people to install panels on their roofs?
Britain is a windy country. So there is an argument that we should be piling money into offshore wind power. And the only way to make gas and coal fired power stations sustainable is to invest in carbon capture and storage technology. You might well argue that all these things should have money – solar, wind and CCS. But if the government has limited resources is it right to prioritise? Or should it continue to support higher Feed in Tariffs because cutting them will cost jobs in businesses that reckoned on the public money rolling in?
When George Osborne is saying things like “we’re not going to save the planet by putting our economy out of business” I’m not sure which side of the debate he’d be on. But right now the government is under attack from people in both the business and the green lobbies.
There are 31 comments on this post
What is not mentioned above is that the cost of the premium in electricity price paid to DIY generators is borne by all consumers through higher prices! This scheme taxes hard pressed consumers most of whom do not own their own property to give some pocket money to the middle classes and profits to those entrepreneus who spotted this licence to print money on a larger scale early enough. It may have been a great job creation scheme but the benefits were very concentrated while the costs were regressively diffuse.
I beg to differ. As I understand it most people in this country do own their own property. People who have invested their own money – as I did – in solar panels to heat water & to provide electricity have done so to do their bit to reduce the UK’s dependence on carbon fuels & nuclear power. I don’t know what profits the companies installing the panels make – what I do know is that even with the Government subsidy & the feed in tariffs, I won’t recover my costs until after I’m dead – at least not unless the price of electricity rockets over the next 20 years. If we don’t give people incentives to go green, withour stretching climate change targets, the only alternative is to use tax and/or price to achieve them.
Philip. How do you get the information that most people own their own property? The number of rented properties far out-strips the number of privately owned properties and it will get bigger and bigger with each successive job loss caused by Governmental spending cuts.
I am all for the finding and using alternative ways of generating energy to alleviate some of the burden that is being heaped of the old power stations. The NIMBY brigade causes the biggest problem to this. Moreover, many of those folk are outsiders in their community, they are recent additions who are trying to take over rural communities by getting on the councils and causing problems that would not have happened if they had stayed in their original backyard.
Taxing energy is a no win situation for everybody.
According to the ONS Social Trends publication 2010 Chapter 10, there are 16 million households owener occupied, while rented (private and social) equal around 4 million each. Where do you het your information from Gary?
And how many of those 16 million are sub let?
The data does not include that fact that about 30% of the owner occupied are second homes or that they are used as rented accommodation.
My data is in response to the number of council houses on estates that are still maintained by local housing authotites that is far more than 4 million homes. My own local housing authority maintains nearly a million homes and that is only in one county, there being over 60 counties in the British Isles there are more than just 4 million homes that are rented.
Gary – please refer me to documented evidence, not what’s in your head. What is your local authority & where is the evidence that it maintains over a million homes. Subject to any written evidence you can produce, I’ll stick to official documents provided by the ONS.
Oxfordshire. And I said nearly a million homes not over. If you cannot read the words correctly how do you expect to obtain the correct figures and supposed facts from other areas. The ONS only details that their figures are based on selected criteria and that it is a proportional representaion of data collected from people who have responded.
The total cost of the feed-in tariff in levy payments for all technologies from April 2010-July 2011 averaged 30 PENCE per household. The solar sector now employs over 40,000 people according to the department for Business ie 4 times as many as in wind for example. Perspective please.
Gary. I’m waiting for some evidence other than your statement. If there are 1 million rneted homes in Oxford shire, assuming 2 people live in each one, that suggests 2 million people live in Oxfordshire plus those that are owner occupiers.
According to the statistics, there are 650,000 people living in Oxfordshire. Perhaps you could explain where the “nearly” 1 million rented homes figure comes from? Does every one of these 650,000 people (a) live on their own and (b) live in rented accommodation (i.e. no-one in Oxfordshire ownes their own home)? I’m perfectly prepared to be persuaded by hard evidence, but not by what you’ve stated so far.
I have just had PV solar panels installed. I did it because it gives a Return on Capital Employed of around 12% that is index linked and guaranteed for 25 years! A rate that is impossible achieve anywhere else.
Frankly it is to good to be true. which is why I signed up.
So I am far from surprised the government has reduced it. This deal is not free, it is paid for by all the people who can’t afford to have PV panels fitted via their energy bills.
It’s fundamentally unfair. As a beneficiary I’m not complaining, but as the government has said, it’s clearly unsustainable. We pay around 10p a unit for grid electricity, this scheme pays me 43p per unit even if I use it myself.
It’s crazy economics.
I’m in the same situation: loads of subsidy coming off our roof. Around £2,000 pa, inflation protected and all of that paid for by other electricity consumers for 25 years.
So I’m giving most of that cash benefit to charitable causes.
What will you do?
An aspect you overlook is that the government consultation on the change does not close until several weeks after the change is implemented. so how can you have a proper consultation when the result has already been announced and implemented before all comments are in, let alone considered.
Appart from the energy and environmental issues it shows what a complete joke “Consultation Periods” are – because this government treats them as irrelevant (same as happened with dismantling the NHS and their “pause for spin” – sorry, “pause for review”).
It is actually the speed of the reduction – before the consultation has even ended, that is causing the spectacular bust on 12th Dec. That seems to be triggered by the misinformation: “the government, which finds the money it allocated for the scheme about to run out”. It is the energy companies that pay the tariff, and recoup it from their customers, so the only harm of overunning would be to energy companies profits.
More doubletalk has been to scare people who are worried about paying too much for green energy that ‘unchecked they would cost customers £26 a year each. According to DECC figures through the FOE report ‘Dirty Half Dozen’ http://www.foe.co.uk/resource/reports/dirty_half_dozen.pdf we will be paying £500 a year each by that time for investment in new capacity (which is what the FITs are). We’ll be paying much higher sums for investment in gas powered power stations and Nuclear so the £26 is not high at all. Investment is needed and must be paid for. It is investment in fossil fuel power that is too high – and preventing us from missing carbon targets.
However the Green Deal is due in a year, so aligning tariffs with the introduction of that and giving companies time to adjust would be the obvious approach to maximise clean energy and employment. We need those local jobs.
Krishnan,
Tell you what – why not petition for the privatised ripoff utility companies to build a nuclear station at the end of YOUR road.
Go on, I dare you.
Second piece of DOH! from Channel 4 no credibility left..
http://blogs.channel4.com/gurublog/cutting-solar-subsidies/2042
DOH!
“But Britain is not a very sunny country, and the kind of solar technology being fitted right now is not generally producing lots of electricity all year round. In winter the yields plummet. That means those households still need lots of electricity from the grid – the peak load has not been cut. And it is the peak load the government has to plan for.”
So not sunny as Spain yes but Germany (largest installed base of solar systems)….DOH!…
Its about photons…not sunshine…elemental school stuff….DOH!
You can have a solar system on your roof that produces all of the electricty you would consume…DOH…
All modules need photons…the more directly hitting the cells the more electrons produced up to conversion efficiency limits. On a clear full moon they will produce electrons from photons bounced off the moon…
“In essence every roof in Britain could have a solar panel fitted but it still wouldn’t make a big difference to whether the country needs new power stations. Solar panels look green, sound green and are green when they work – but if they don’t stop Britain needing new gas or nuclear power stations to cope with peak demand are they as green as they seem? Should Britain wait until the technology works all year round before paying people to install panels on their roofs?
Yeah wait for solar to work in the dark…DOH!…
No idea on what base load is and that Nuclear isnt cheaper than RE and you cant insure them…we as the public do with unlimited costs..DOH!
“That means those households still need lots of electricity from the grid – the peak load has not been cut. ”
So Germany’s peak load prices plummeted this year due to PV or a freak of nature…DOH!…
“Britain is a windy country. So there is an argument that we should be piling money into offshore wind power.”
YES as in Germany PV will be as cost competitive with off shore in the next 2-years and go down from there…DOH!…
“When George Osborne is saying things like “we’re not going to save the planet by putting our economy out of business” I’m not sure which side of the debate he’d be on.”
The side that made the FiT a tax and gave control to the treasury side….DOH!… and dont forget nearly £300 million this year in taxes from the jobs created in solar in the UK..double DOH!
The winter sun is just as powerful.Jon Snow will agree with Philip about the recovery costs of solar power. Panels look ugly on rooves. There are more modern developmments in solar power units in the pipeline., cheaper, more elegant and more effective…so I am told.
And they’ll probably be a lot more efficient too. But I agree that as they are powered by light rather than specifically by sun, they do generate power during the Winter months – but obviously a lot lesss than in the Summer. (And if you haven’t got south-facing roofs, don’t bother). I also agree they’re not very elegant, but unfortunately most houses we allow to get built in the UK aren’t very elegant either. I’ll put up with them if I can do something towards reducing our dependence on carbon or nuclear.
Rubbish piece Krishnan. i like watching you on TV but your treatment of this issue with no real understanding of how it works is appalling. Solar PV DOES work in the UK, and more importantly can be used to balance the wind generated spikes in teh grid to provide stable renewable energy all year round. The total budget for the FiT over 5 years is £860million. The cost of subsidy for EXISTING not FUTURE Nuclear is close to £4bil for this year alone. More than half of the DECC budget this year and set to rise to 2/3 of the DECC budget by the end of the cyrrent government in 2015.
The jobs comments above are accurate and based on that alone the NI tax take from the people employed by solar is collectively more than the cost of the scheme each year.
The problem is that Cameron and Co are in perennial fear of the big six turning the lights off before the next election. That is why energy companies can now claim £125 of profit per customer as opposed to £25 last year. The big energy companies do not like distributed power generators like solar because it shifts the balance of power to set energy prices away from the cartel of energy companies toward us as individual users.
The main stream media, usually quite liberal, should be signing the praises of solar and other microgeneration technologies rather than casting doubt when they are ill informed or maliciously informed by the lobby and PR power of the Big 6 energy companies.
The solar-panel business looks rather like the double-glazing one did 30 years ago (with the exception of the public bribery bit). The window game was then populated by cowboys, gluing in shoddy product and not being around when it all started to go wrong – I promise I won’t say ‘I told you so’ when your fancy roof-panels and all the electronic wizardry goes wrong and the company’s nowhere to be seen, but it will happen.
And it’s all founded on a falsehood. It should be nothing to do with ‘green’, because none of it is ‘green’ – just look at off-shore windmills. The currently planned units alone will need 45 million tons of concrete just for their bases – now work out the ‘green cost’ of all that concrete – it just doesn’t tick any green boxes at all.
But if the government was honest, then national energy initiatives could be ‘sold’ properly. It’s actually all about reducing our dependency on unstable states for our supplies of source fuels – that’s the only game in town. If we can find enough ways of generating energy ourselves, using all forms of wind, wave, hydro, solar, nuclear and indiginous coal power etc., we could be energy-independent in both baseload and variables, and that is the real goal.
If that truthful message was properly presented to the people, it would gain far more support than all the fake greenery built on fanciful fairy stories and even more dodgy science than a L’Oreal advert. And if we believed it, we might not need any bribery to join the party.
having spent some time revcently in a house that didn’t have double-glazing & the returned to ours which has double-glazing & the thermostats 5 degrees lower, I don’t know what you base your compariuson on. I’m just going on personal experience. I’ve had solar-powered water for nearly 10 years. It’s a German product (as are our solar panels). It is in no way shoddy & continues to work effectively. In the summer we rarely use gas at all to heat our water. The solar panels equally are very well made – the reverse of shoddy – & I can tell from the meter how much energy I’ve been generating. Do you have any evidence for your statements? Any direct personal experience? Otherwise I feel obliged to dismiss your arguments as opinions no better than what politicians try to feed us.
But regardless of what energy source we use it will not be ‘green’ to build it initially. How much concrete do you suppose a nuclear plant or coal fired station requires? And don’t let the govt kid you they will not subsidise the new plants being planned – the energy companies have govts as well as the public exactly where they want them!
Organisations with vested interests like to describe nuclear as clean energy just because is is low-carbon (once up and running, as is solar) but they conveniently ignore the real ‘dirty’ and very long term effects left behind not to mention the dangers posed by accident or terrorist threat. Solar may only provide part of the UK’s energy needs but it is still an important part of a mix which should include wind and other renewables such as energy from waste.
Energy is a long term requirement and ignoring this fact in favour of the cheapest short term answer will not only force us to rely more and more on foreign imports (at what cost?) and to rely on the profiteering big energy companies – many foreign owned so the money isn’t even staying in the UK. Solar is one of the few affordable options for a majority of householders who would benefit from a degree of independence from the big six. Even those who could not make the initial capital outlay had the option with the free panel deals and could have benefitted from lower bills. Instead the changes will target these poorer households worse as free solar is likely to become unviable, forcing the section of society on the lowest incomes ever closer to fuel poverty.
As Sydney mentions, the subsidy money isn’t coming from the govt anyway so one has to wonder if it is merely lobbying from the big six that has brought about this change. Conmanron and his puppetmaster Osborne do like to look after their corporate chums.
Instead of changing planning rules to make life easier for their other mates, the big building companies, to profit from using up our precious green space they should make it a requirement that all new housing have solar panels built into the roof as standard. This would do more to help the ordinary taxpayer to reduce both costs and carbon footprint than blowing with the hot air generated by tax avoiding corporations.
‘Should Britain wait until the technology works all year round …?’
We could wait, or we could decide to be part of it. PV power will be part of the future of UK electricity supply whether Osborne, Barker and co like it or not. Prices are high now but falling fast thanks to improvements in technology and will continue to fall. Britain has the knowledge base to contribute to innovations in materials, manufacturing, and application design. Stimulating a domestic market through incentives such as the FIT would drive such home grown innovations, as it has in Germany. Wind power has its place and complements PV but it’s a mature technology and doesn’t offer the same potential for innovation. We could support all the renewables, promoting both industry and carbon emissions mitigation for a small fraction of what’s been paid to bail out the banks. We could join in or we could just sit back and prepare for Armageddon. Your choice, Mr Osborne.
What you haven’t mentioned is that the tariff paid for each unit of electricity generated and fed back into the grid seem to be more than consumers pay per unit. Can someone explain how this makes good sense in any way?
Solar has one advantage over coal, nuclear, tidal, wave and geothermal, and that is that it is an energy production method that can be relatively efficiently utilised by individual consumers.
The efficiency of solar does nto change much with scale, but micro hydro or wind energy is incredibly inefficient. Double the height of a wind turbine and you quadruple it’s output.
So solar is the one way we can democratise energy production and avoid handing over power to big multinationals. If we want green energy, we can let the subsidies go to individuals, or to big foreign-owned energy companies. I vote for supporting individuals to have solar generation on their roof.
2 factors not considered
Utility scale fossil fueled energy production wastes 60% of the inputted fuel
– a once abundant resource might handle this imbalance, but sustainability is now key objective of 21st century
Price reductions in Solar are due to increased capacity of industry – with accelerating Worldwide demand as it is, solar has the potential to be cheaper than Cod and Chips within 5-10 years.
A potentially quick path to an inexhaustible amount of energy that will cost very little to produce, has to be a path worth pursuing whatever your political make up
The future of energy provision should be based on diversity of generation. Any renewable source studied in isolation will be found wanting, but put them all together and we have a cohesive plan. And we don’t need nuclear for dynamic response – a much better option is pumped storage hydro as at Cruachan and Dinorwig.
Krishnan you said:
“But if the government has limited resources is it right to prioritise?”
Thankyou for correctly phrasing this as a question. Most commentators have simply bought the line from all parties that government financial resources are constrained, and so the cuts are inevitable, when there are plenty of economists who disagree with this.
So please can you pass this message to all your media colleagues, that a UK government “lack of financial resources / money” should be phrased as a question, not a statement of fact.
I have just been made unemployed by this piecemeal cut, your argument is sound, but only if the figures stack up, has anyone actually seen the figures?? Politicians are the great manipulators of truth so I am not so sure I belive that the money is running out for this scheme, I belive that they simply want to recoup the tax that is not coming into the treasury rather than support a growing industry, one that helps everyone involved, and all those 25,000 people that have lost their jobs because of this are claiming benefits rather than paying tax. Stupidity if you ask me.
How is good for the state/country that the tariff paid for by tax payers for each unit of electricity generated by these solar panels, fed back into the national grid is more than (the tax paying) consumers pay per unit when they are buying it back.
I have nothing against Solar panels, it’s initiatives like this that will help take our dependence away from the limited resource with have with fossil fuels. Nuclear power has the huge downside of inherent dangers (Chenobyl et al), renewable sources of clean power have to be the future. Why not geo-thermal?
Solar power is being given a huge pick up and managing to get some economies of scale with this initial kick-start of the subsidies, but it can’t continue in this way as it’s simply not financially viable for the country.
It has made the solar panel providers a lot of money up to this point but now they too will need to revise their businesses to make it so solar is a viable proposition for all.
I am tired of the bellyaching of the P_V (Photo_Voltaic) industry moaning about subsidies being given out in order for them to convince the Public their horrendously expensive thin cell plates are cheap. Well frankly they are not. The proof of the pudding is the development of ultra-thin spray-applied paint style P_V systems we recently read about in the EU (European Union) EurActiv press in the past 18 months. This innovative system can be sprayed onto any surface: such as a bridge (like the Forth Rail Bridge or the Pont Du Nord France etc,) a Dam Wall, a motorway cutting and even crash barriers such as those on the centre of the M25 Surrey, a roof to a reservoir or a sewage works or block of flats or shop an airport or car parks and Government buildings and other structures. So why is it reported that this is possible? The reasoning is that the material is spray-film applied and is capable of being applied with the simplest manner in a low cost way that will take the development in P_V systems to a new level of cost effectiveness. The costs of this style of P_V is suggested to be less than a 20% (a Fifth) of the current system and it opens up a wider market and business use of the system to any corporate or private use. So a reduced FIT (Feed in Tariff) at 25% of the current system is affordable and realistic and still delivers a pay-back of less than 10 years.
It isn’t therefore necessary for the greed we have seen develop from these renewable energy developments being continually applied to developed industries as we as tax payers have been duped to believe should be the case. This duping has now, hopefully, been stopped in its tracks and can now be diverted to other really new developments.
The DECC should now also spend time looking at the other monstrous immoral subsidies given out to Wind Energy and Incineration projects. Wind Energy projects are so lucrative that these plants receive up-front payments 40% grants, 25% Capital Allowances, and Huge ROCs (Renewable Obligations Certificates) that even before they are commissioned the revenue benefits are more than double the capital costs of development! No wonder these can be sold openly before they are even commissioned at huge profits. And who benefits from these? The Companies’ Share-Holders! not the General Public! The same happens with the Incineration (Waste to Energy) plants have such high costs that they can only be bought as PFI schemes. The companies building them get huge up-front subsidies and capital allowances then huge treatment fees, huge ROCs again and they are guaranteed to get these before being built. Then even if a plant uses 30 MW of electricity out of its production of 50 MW it is still paid for this at the subsidised rates. I even read that one plant in the UK consumed more electricity than it made, and they got ROCs just the same! This is wrong and someone needs to stop it. You are right I have departed from the P_V system but you as a reporter must act.