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Are feed-in tariffs to generous?
Set up to encourage homes and small businesses to install solar panels or wind turbines, the feed in’ tariff scheme is expected to become popular, especially as energy prices continue to rise.
Scotland-based, M&C Energy Group, which purchases £6.25 billion of energy annually for its clients, however, has cautioned against ‘feed in’ tariffs that are too generous – and go directly to the coffers of big business.
The Groups energy analyst David Hunter explains: “The government announced that it was reviewing the level of subsidy provided for new renewable projects as it has been surprised by larger scale commercial ventures – particularly new solar ‘farms’ – ‘soaking up’ the support intended for homes and small businesses.
“Feed-in tariffs are new to the UK, but have potentially massive cost consequences long-term. Germany has had them for a decade and has successfully increased the share of power production coming from wind and solar power, however its energy prices are among the highest in the EU and Angela Merkel is now concerned about energy costs and business competitiveness.
“Spain made their ‘feed in’ tariffs so generous for solar that the government had to renege on the price guarantees. The implied subsidy – paid for indirectly by every customer – is many multiples the wholesale market price. When 19,000 are taking advantage as in the UK, no problem, but as Germany shows, the costs can really add up. Germany expects to have spent €46 billion in solar subsidies alone by 2030 – and the cost of feed-in tariffs there are expected to rise by 72% in 2011 alone.
“While M&C encourage green sources of energy generation, we are calling for the government to be extremely careful when agreeing tariffs, especially since once agreed, they are guaranteed and index-linked for 25 years.”
The government announced today that it is acting to stop a proliferation of solar power farms.
Hunter adds: “The government will have to be careful to strike the right balance – be generous enough to encourage homes and small businesses to take part, but not too generous so that it can be results in even higher, uncompetitive energy prices.
“We welcome the “comprehensive” review announced by Greg Barker, the Minister for Energy and Climate Change, and hope that the £400m allocated to the FITs scheme delivers on the objective – to help homes and small businesses save on their energy bills, not become a money maker for big business.”
More information: www.mcenergygroup.co.uk
One Response to “Are feed-in tariffs to generous?”
ecoadmin says:
Feed-in tariffs are by no means cut-and-dried! They are, indeed, always being scrutinised closely and need to addressed regularly to make sure they do exactly what they are meant to do!