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Tag Archives: feed-in tariffs

UK energy policy – grinding to a halt?

By Dave Elliott

At a meeting of the House of Commons Liaison Committee, which brings together the chairs of select committees, PM David Cameron in effect provided an overview of his take on key aspects of UK energy policy. It was quite revealing, with justifications being offered for the extensive cut-backs in support for most low-carbon projects, in order ‘to deliver low carbon at the lowest cost’. Very little seems to have survived unscathed. (more…)

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Goodbye to FiTs

By Dave Elliott

A shift away from Feed-in Tariffs (FiTs) to project auctions as a way to support renewable energy seems to be underway across the EU. The UK government certainly has cut FiT levels and recently warned that the FiT system might be wound up entirely – and soon. Although it seems to have won a last minute partial reprieve, with the level of cuts being reduced from 87% to 64%, after something of an outcry, it is just a matter of time before it goes. Is this a good idea?

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More changes in Germany

By Dave Elliott

Germany  is pushing rapidly ahead with renewables, aiming to get 80% of its electricity from them by 2050.  The nation briefly obtained 78% of its electricity from renewables in the summer. But that was obviously a one-off event. Even so, averaged annually, it’s over 30%: http://energytransition.de/2015/07/renewables-covered-78percent-of-german-electricity/

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UK renewables: will anything survive?

By Dave Elliott

The UK Department of Energy and Climate Change (DECC) seems to be on a mission to cut back support for renewables across the board – so as to save money. The scale and pace of change is stunning. Will anything be left? (more…)

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The end of the FiT

By Dave Elliott

DECC’s consultation document on the Feed In Tariff (FiT) says: The future and size of the scheme will be determined by affordability criteria’, with the Levy Control Framework limits clearly being central. It goes on: ‘If following the consultation we consider that the scheme is unaffordable in light of these criteria, we propose ending generation tariffs for new applicants from January 2016 or, alternatively, further reducing the size of the scheme’s remaining budget available for the cap. This consultation seeks views on the impacts of scheme closure, whether implemented in the immediate term or as a phased closure over several years’. This seems not so much a consultation as an ultimatum: accept interim cuts or the whole thing goes now, but it will end anyway with, they say, their proposed ‘more stringent degression mechanism and deployment caps leading to the phased closure of the scheme in 2018-19’.

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UK Solar boom leads to cuts

By Dave Elliott

PV solar is expanding fast in the UK, with over half a million buildings already using PV, and heading for 3GW in total. In addition to roof-top domestic units, over 120 utility-scale projects recently receiving planning approval, many of which are targeting completion within the next 12 months, according to the new NPD Solarbuzz UK Deal Tracker report. More than 325 solar farms in the MW class were scheduled to be completed mid year, over 60 with installed capacity above 10 MW. And an additional 444 large-scale ground-mounted solar PV farms are currently at various stages of planning: www.renewableenergyworld.com/rea/news/article/2014/05/uk-set-to-lead-utility-scale-solar-market-in-2014?cmpid=WNL-Friday-May2-2014

However, there are worries about visual intrusion, with Energy Minister Greg Barber saying ‘I do not want solar farms to become the new onshore wind. I do not want to see unrestricted growth of solar farms in the British countryside’ and that ‘We don’t want the whole solar sector damaged by a few solar farms that communities don’t want’. Instead, backing a new DECC Solar strategy, he announced plans to turn the Government-owned buildings, as well as factories, supermarkets and car parks, into ‘solar hubs’. He said: ‘There is massive potential to turn our large buildings into power stations and we must seize the opportunity this offers to boost our economy as part of our long term economic plan’. It was estimated that there were 250,000 hectares of south facing commercial rooftops.

In a further initiative, the Dept. for Education is working on ways to improve energy efficiency across the 22,000 schools in England and solar is one option. Education Secretary Michael Gove said: ‘Solar panels are a sensible choice for schools, particularly in terms of the financial benefits they can bring. It is also a great way  for pupils to engage with environmental issues and think about where energy comes from.’

Overall, the Government aims to install 1GW solar PV generating capacity on the Government estate through a major programme led by DECC and Cabinet Office. As part of this, the Government will lead an initiative specifically targeted at England and Wales’ 24,000 schools. It will identify the first 500MW of deployment this year and seek private finance partners to incentivise installation.

The new Strategy follows the “Roadmap to a Brighter Future” which was published last October. Like that, it is very positive, talking of the possibility of getting up to 10GW of PV in place by 2020, and maybe 20GW. It showcases ‘how the UK is at the forefront of innovation in solar PV and its importance in driving further cost reduction, meeting the challenges of balancing the electricity system, securing carbon lifecycle benefits, and identifying new financial models to help households invest’. But as the Roadmap had noted ‘new solar installations will need to be appropriately sited, give proper weight to environmental considerations such as landscape, heritage and local amenity, and provide opportunities for communities to influence decisions that affect them’. https://www.gov.uk/government/publications/uk-solar-pv-strategy-part-1-roadmap-to-a-brighter-future

Issues like this obviously worry the likes of the Daily Telegraph, which pointed out that solar farm deployment had expanded from 46 large-scale solar farm projects at the end of March 2012 to 184 at the end of February this year. It noted that further 48 were due to start operating in March and an additional 194 projects have planning permission and are awaiting construction. And, as noted above, many more were envisaged. Its clearly an issue, although the  RSPB and the National Trust have come out in support, saying that, if well planned, solar farms can be better for wildlife than traditional farming and have lent their support to new guidance from the industry.  Even so, DECC has seen fit to propose cutting  Renewables Obligation support levels for large solar farms, its ostensible justification being that, with the cost of solar panels falling, growth had been ‘much stronger than anticipated in government modeling.’

DECC said that, left as it was, large scale PV might reach 5GW by 2017, well above the 4GW maximum by 2020 they thought could be afforded, given the cap on spending on low carbon options designed to protect consumers from undue price rises. So DECC proposed that the Renewables Obligation (RO) for new solar PV capacity above 5MW be closed entirely from 1st April 2015, across England, Wales and Scotland, although with a grace period to protect developers who have already made significant financial commitments. The RO is in any case to close down completely for all new renewable projects from 2017, with the new Contracts for a Difference system taking over, and DECC say this is likely to be a more cost effective path for larger PV.

That may be true, but it’s as yet uncertain and quite complex, and understandably the Solar Trade Association was not pleased with the news of a new review : ‘We are disappointed that DECC is launching another review on the solar industry. Investor confidence and market stability is absolutely essential in order to deliver sustained cost reductions for consumers and a healthy solar industry for UK plc. We are also concerned that any excessively hasty push for cheap solar will come at the cost of achieving quality in the solar farm industry, which is essential to retain public support.

More aggressively, PV installer Solar Century said  ‘Large-scale solar is already significantly cheaper than offshore wind and will be competitive with onshore wind by 2017. In deliberately setting out to strangle the growth of cheaper solar from 2015, Secretary of State Davey can no longer claim that government policy will deliver the most cost-effective mix of technologies by 2020.’

The RO cut reflects the wider issue of overall allocations to renewables. They are constrained by the low carbon  project budget limit, and DECC says that rapid acceleration of solar farm deployment had ‘the potential to affect the financial incentives budget under the Levy Control Framework’ which caps overall spending on green energy. So other projects could suffer. The issue is that, although PV costs are falling, that may not be sufficient to allow unconstrained growth, although of course it has been growth in PV markets around the world that has helped to cut costs. Much of that expansion has been due the Feed-In Tariffs around the EU (including the FiT for small domestic projects in the UK), but the FiTs have all been cut back and, in much of the EU, may soon be replaced by more market orientated auction systems, a bit like the UKs new Contracts for a Difference (CfD), following a new policy proposed by the European Commission.  A version of that is soon to be adopted in Germany. You can see that either as a disaster or as evidence that PV is becoming economically viable.  Be that as it may, domestic-scale PV is unlikely to get any support from the CfD in the UK, mainly just from the FiT system, if that survives, but as DECC says, larger projects can get support from the CfD, although there were none in the first interim CfD round.

Can large PV get its cost down?  DECC says ‘Solar is anticipated to be the first large-scale renewable technology to be able to deploy without financial support at some point in the mid-to-late 2020s’.   If that is true for large projects too, then even before 2020, it could be that the cost of larger expansion may be much less than feared. Or was it that they just wanted to inhibit large, allegedly intrusive, solar farms? But then what happens if large schemes do succeed under the CfD and come in at low cost?

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Supporting renewables

By Dave Elliott

The UK government’s long-awaited revision of support level under the Renewables Obligation (RO) was delayed by, it seems, battles between the Department of Energy and Climate Change (DECC), who wanted a 10% cut in support for on-land wind, and the Treasury, who it was said wanted a 25% cut. But with even the CBI complaining about the cost of what it called the ‘political deadlock’, DECC evidently won out and, just after Scotland unilaterally announced a 10% cut, it also opted for 10% .

So, on-land wind support will be cut to 0.9 ROCs/MWh, guaranteed until at least March 2014, although DECC will review it early in 2013, and change the ROC level in 2014 if costs have fallen significantly.

The wind lobby had said that, while a 10% cut was reasonable, given the improvement in perfomance, cuts beyond 10% would destroy the industry. It was also pointed out that, if costs were the issue, it was odd to attack on-land wind, which was cheaper than offshore wind. Then again, the offshore wind resource is much larger, with much less potential for environmental objections. A DECC public-opinion survey found that, 76% of those asked backed offshore wind projects, while 66% were in favour of onshore wind farms.

In the RO revisions, support for offshore wind has been left at 2 ROCs/MWh for 2014-15, but reduced to 1.9 ROCs in 2015-16 and to 1.8 ROCs 2016-17. DECC says ‘This is consistent with our consultation proposals, and reflects our expectation that the costs of offshore wind will fall as mass deployment takes place and industry innovates’.

DECC was clearly worried about increased fuel bills – consumers pay the extra cost of the RO. The wind cuts, and other smaller cuts in the ROC system, will lower bills by £6 p.a in 2013/14, $5 pa in 2014.15, but DECC says costs will rise after, by about £3 pa., as new projects emerge.

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Wind power: lessons for the future

By Dave Elliott

The development of wind power has provided many examples of divergent views and conflicts. For some it is the best way forward for dealing with climate change, for others it is an environmental disaster. Some wind supporters see objectors as retrogressive NIMBY’s, while some objectors see developers as evil despoilers of scenic views. Aesthetic issues and landscape preservation are important, but perhaps more substantially some objectors claim the wind power cannot make much of a significant contribution to dealing with climate change or energy security.

With wind now at over 230 GW globally, it is good time to take stock and see how (and if) some of these issues have impacted on its development and how wind power might be expected to develop in future. Palgrave’s new book ‘Learning from Wind Power’ edited by Joseph Szarka et al, attempts an overview. It says that the technology seems basically unproblematic, apart from the issue of intermittency, which is really just an operational and economic problem – it costs money to provide balancing services, and as the proportion of wind on the grid expands, more balancing has to be arranged. Less tractable are some of the institutional issues. As this book illustrates, in the UK, the planning permission processes and local objections have led to major delays, and the financial support system has arguably not been effective at creating the right investment climate, compared to that in other countries. Nevertheless wind is moving ahead in the UK, offshore especially, and it is likely to remain the dominant renewable source for some while in the UK and elsewhere.

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PV solar under pressure in Germany

By Dave Elliott

PV Solar has been expanding rapidly, reaching over 40GW globally so far, but to some extent has become the victim of its own success. The expansion was in part a result of the various Feed In Tariffs (FiTs) introduced around the EU, but as the market built and PV cell prices began to fall, demand rose and the built-in FiT price degression mechanisms did not drop prices fast enough. The end result was that large extra costs were passed on to consumers, and in reaction to that, emergency FiT caps or cut-backs in FiT tariff levels were introduced – in Spain, Germany, France, Italy and the UK.

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PV Solar battle continues

By Dave Elliott

The battle over the UK PV solar Feed-In Tariffs (FiTs) continues, following on from the cuts of around 50% proposed by the government. That had led to major protest by PV companies and environmental groups, with a ‘Cut don’t Kill’ campaign emerging, founded by a coalition of 20 major companies from across the solar industry. It kicked off with a Westminister demonstration calling for revision of the plans. While some reductions in the FiT were seen as fair, the scale and timing of the cuts (to be backdated to last December) were not, and would, it was claimed, cripple the industry. Alan Simpson a one time Labour MP, who has helped create the FiT system, noted that PV was ‘the only sector that has delivered 25,000 new and sustainable jobs in the last 18 months’.

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