Governments of all persuasions have been trying to encourage individuals, public bodies and businesses to generate their own energy and save power.
Rachel Salmon investigates some of the current initiatives and the controversies surrounding them.
There are two main schemes for energy generation, Feed in Tariffs (FITs) and the Renewable Heat Initiative (RHI)
Feed in Tariffs were launched in April 2010.
They allow individuals and organisations to generate their own electricity using wind turbines, solar panels, river hydro and anaerobic digesters, which burn organic waste.
Under the scheme the generator receives a ‘tariff’ for each kilowatt-hour (KWh) of power produced, this is usually paid as a rebate on the electricity bill.
The level of tariff depends on the amount of electricity generated.
A typical householder, generating two-and-a-half kilowatts, currently receives 36.1p for each KWh produced.
This is considerably higher than the 10-13 pence the companies normally charge domestic customers for electricity.
The government makes up the balance and larger generators receive a lower tariff.
FITs have been very popular, with over 27,000 installations approved in the first year, 92 per cent of which are for singe households.
But the government cut funding for FITs by £40m in the 2010 Comprehensive Spending Review.
On March 18, Gregory Barker, minister of state at the Department for Energy and Climate Change, launched a “fast track review” of FITs, and is proposing to cut tariffs for larger generators from July.
The consultation closed on May 6 but, if the proposals are implemented, those generating between 50 and 100 KW will see their tariffs fall from 31.4 pence to 19 pence per KWh.
Those generating between 250 KW and 5 megawatts (MW) will see their tariff fall from 29.3 pence per KWh now to eight-and-a-half pence.
The government insists these changes have been brought about by the larger than expected number of applications for commercial solar farms.
The lower tariffs will only apply to installations completed after July 2011.
The government originally estimated that 40MW of solar power would be generated in the UK
But the solar industry now estimates that as much as 1,470MW of solar power could be generated by then.
The government said it is implementing the higher charges for larger generators to ensure enough funding is available to support smaller generators, particularly householders.
The move has provoked anger from councils, housing organisations and commercial solar energy companies.
On April 18, eleven companies filed a claim in the High Court seeking a judicial review against energy secretary Chris Hulme for “reneging on previous commitments not to cut Feed in Tariffs until 2012 and failing to adhere to its previously stated processes for reviewing the incentives”.
In April, the BusinessGreen website reported that the government had “quietly dropped” plans to fit solar panels on buildings across its estate because of the new tariffs.
A spokeswoman for government procurement agency Buying Solutions said that they had undertaken an exploratory exercise, but early indications suggested it was not viable so the plans were put on hold.
Cornwall Council is planning to develop a large-scale solar farm outside Newquay airport.
It has also received numerous applications for solar farms from commercial developers.
Tim German, renewable energy and partnerships manager at Cornwall Council, said: “When Chris Hulme bought in the new act last August, which allowed local authorities to sell renewable energy and generate income from it, we went full steam ahead.”
It was informed of the 10 per cent spending cut at meetings with energy minister Gregg Barker earlier this year.
Mr German said the government wanted communities, rather than councils and large companies, to take the lead in solar power generation.
“We think communities would benefit more from large-scale solar parks,,we want to get community gain from these large scale projects,” he said.
The council established a special planning team to assess applications for large-scale renewable installations which also include wind, wave and geo-thermal projects.
The team has developed supplementary planning guidance for solar farms.
Developers pay an average £5,000 a year into a community fund for each megawatt generated.
“The community can re-invest the money in putting solar panels on schools or do whatever they want to do, it’s all part of the big society,” said Mr German.
A 5MW solar farm has the potential to generate as much as £1m for community projects over its lifetime.
According to Mr German, a recent meeting to establish a Renewable Energy Network in Waybridge attracted 600 people.
A number of communities were looking to develop similar bodies and the council was talking to the government about replicating the model nationally.
Mr German said the planned tariff changes had left them stranded, although some developers were racing to complete their solar farms by July.
He insisted that the council would continue working with government, but expressed frustration at the constant change in policy.
“It is a problem for local government when legislation keeps changing, how can you set up consistent delivery plans to support renewable energy,” he said.
In a separate move, the Homes and Communities Agency announced in March that the Affordable Homes Programme would not fund the installation of renewable power generators if they can generate income from FITs.
Andrew McNeil, energy efficiency manager at Derby Homes, said: “Derby City Council has a 90KW system that it was proposing to put in place.
“If these figures do go through we may have to re-tailor it to ensure it is under 50KW. 50KW is not big enough it would only power 25 homes.”.
Whilst the cost of solar panels had come down the cost of installation had not.
It still took the same amount of time to put them up and whilst they were getting some savings they were ‘nowhere near enough to support the figures that the government has proposed,” added Mr McNeil.
Leone Greene, head of external affairs at the Renewable Energy Association, which represents renewable energy producers, said: “We are very worried about proposed reductions for solar power which was extremely popular.”
She said there were particular concerns for urban authorities, which have less option to use other renewable sources such as wind and hydro.
“50KW is quite small. Anyone doing a leisure centre, council offices, any interesting community scheme is in trouble.
“Solar power is not something that should be marginalised to the domestic sector.
“Authorities like Cornwall, Sheffield and Birmingham have integrated plans for solar power into their regional economic development strategies,” she said.
But a spokesman for Birmingham City Council, which plans to install solar panels on the homes of 100,000 residents, said the new tariffs would have no impact as households would register for FITs individually and would therefore benefit from the higher tariffs.
A spokeswoman for the Department for Energy and Climate Change, said: “The fast-track consultation will conclude on May 6, 2011 and we will be taking views expressed as part of the consultation into account in finalising the policy.”
In March the government launched the Renewable Heat Initiative (RHI), under which local authorities and businesses will be able to bid into a £860m fund from July to help install renewable heat pumps, biomass (wood burning) boilers and solar panels for heat generation.
It is hoped the scheme will increase renewable fuel investment to £4.4bn by 2020, safeguarding 150,000 jobs
RHI tariffs for industry, commercial and public sector generators will be agreed soon and the government hopes these will stimulate up to 13,000 industrial scale heat installations by 2020.
It expects tariffs for new installations to fall over time as costs decline.
A quarter of the first year’s budget will be used to make “premium payments” to 25,000 households to fund the installation of equipment for renewable heat and encourage take up. Tariff payments will start from 2012.
Mr German said: “We want to tap into RHI in the same way as we tapped into FITs. We hope we do not have the same problems with this as we have with FITs.”
Jaryn Bradford, senior technical manager at the Energy Saving Trust (EST), which advises businesses and consumers on renewable energy, said: “Local Authorities have been particularly interested in generating solar power for heating rather than electricity.
“The main interest has been to power swimming pools and local recreation centres.”
He said he thought the tariffs for RHI would be more adequate than the previous Low Carbon Building Programme and should allow a payback of ten years or less with a revenue stream thereafter.
He expected the tariffs would be announced this October.
Mr Bradford admitted that the number of low carbon schemes was confusing, particularly to householders.
He said the EST was working with government to simplify procedures.
Part of the remit of the EST is to promote low carbon schemes to the right audiences.
This article appeared in the May 2011 edition of Local Government News magazine.
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