The Coalition Axe on feed-in tariffs is a terrible mistake
In the two weeks since the Coalition announced it was going to slash feed-in tariffs (or FITs) in half there has been real consternation and anger. Feed-in tariffs exist to encourage the installation on new small-scale, low-carbon electricity technologies helping the UK move towards a new model of energy generation.
Climate change minister Greg Barker claims to be “a champion of decentralised energy” but in one stroke the scrapping of FITs has set us back years.
When challenged on the government’s position at a Friends of the Earth event last week he astonished onlookers by describing the tariff as “morally wrong” because the rate of return was higher than some other forms of investment.
It’s a funny kind of champion who finds it immoral to give incentives to behaviour you want and need to happen.
Barker claimed that the fast track review was necessary in order to prevent a “gold rush” of investors throwing everything into renewable energies. That doesn’t really sound like something a “champion” of such technologies would be against does it? Perish the thought that people might take up decentralised energy with unseemly haste.
The government announced new tariff rates at the same time as opening up a six week ‘consultation’ that ends eleven days *after* the new rates come into force. This does not indicate a government that is willing to listen to the industry, suppliers or consumers.
There are currently 4,000 solar businesses in the UK employing roughly 25,000 people. Over the last eighteen months the UK’s solar capacity grew six fold with the help of these tariffs but Barker is treating this welcome growth as a problem to be fixed. As Caroline Lucas argued “The truth is that solar has been too successful for the government’s liking – and this will certainly not be the last attempt to cut off its subsidies.”
This announcement has been conducted in the worst possible way. By making a snap reversal of FITs the hundreds of contracts and plans that have been worked on across the country have suddenly been thrown into flux. Across the country numerous projects have been jeopordised or scrapped in the last two weeks including extremely significant schemes.
In the London borough of Haringey an ambitious Labour project to roll out solar power across the poorest parts of the borough was due to be signed off the week of the announcement. At one stroke it would have doubled London’s solar capacity and is now in the wind because the council can no longer plan for a return on the energy produced. This is a real blow.
Adrian Ramsay, the Green Party’s deputy leader, said that “As always it is those on the lowest incomes who will suffer the most. This cut will jeopardise free solar schemes for people unable to afford the upfront costs of solar panels and is forcing councils to review schemes to install solar panels for council tenants and on other council buildings – schemes which, under the current FIT rate, were enabling local councils to generate a profit that can be invested in services that are under threat from government cuts.”
The knock on effect of damaging the reputation of renewable projects could be long lasting, effecting schemes like the Renewable Heat Incentive and damage the ability to borrow against future income renewable technologies provide.
Although Barker cites fuel poverty as one of the reasons for cutting the tariff the government admitted last month that the average cost to consumers of FITs amounts to just thirty pence each annually. This cut in a very small budget amounts to a false economy undermining energy security as well as moves towards a more environmentally sustainable economy.
Labour’s shadow climate change Minister Luciana Berger attacked the move saying that “Deposits have been lost on schemes that now they won’t be able to get back and there are people who will be out of work by Christmas because of this decision.”
It is of course worth going further than this. If this government wants to be seen as the greenest government ever then sinking ambitious community energy projects seems to be a strange way of going about it.