UK Government Proposes Catastrophic Cuts To Renewable Energy Incentives
The UK’s Department of Energy and Climate Change has proposed to make calamitous cuts to the country’s renewable energy Feed-in Tariff scheme.
Dark Days for UK Renewable Energy
Ever since the re-election of the country’s Conservative Government and the appointment of MP Amber Rudd to the position of Energy and Climate Change Secretary, the UK’s renewable energy industry has been on tenterhooks, as proposal after rumor after proposal placed the industry in ever more increasing jeopardy.
In June, the Department of Energy and Climate Change (DECC) announced that it would be ceasing allowing onshore wind farms access to the country’s main renewable energy subsidy scheme, the Renewables Obligation Scheme (RO). A month later, the DECC revealed that it had not only included more renewable energies into the same category of onshore wind, but that it would be initiating consultations on allowing solar PV of 5 MW or under access to the RO. Additionally, the DECC also initiated a consultation on changing the Feed-in Tariff scheme.
And it was only earlier this month that the Scottish and Welsh Governments teamed up to send a letter to the UK Government, pleading with it to open discussion on small-scale renewable support.
On Tuesday of this week, a coalition of 100 organizations wrote to the UK Prime Minister in an effort to convey their support for small-scale renewable energy electricity ahead of the Feed-in Tariff review. “We are writing to express our strongest support for the continuation of the Feed-in Tariffs (FiT) for renewable energy and ask you to ensure the forthcoming FiT Review supports an ambitious level of local deployment,” the signatories wrote (PDF).
“We are looking to the Prime Minister to take control of energy policy after a summer of hugely damaging policy decisions,” added Leonie Greene, Head of External Affairs at the Solar Trade Association. “There was nothing in his manifesto about rolling back solar power which Government’s own polling shows is supported by over 80% of the British public.”
Government Turns a Deaf Ear
However, all of this seems to have fallen on deaf ears, as the DECC has now proposed a cut to the Feed-in Tariff scheme in a review of the system that is set to end on October 23. According to the “Consultation on a review of the Feed-in Tariffs scheme” published by the DECC Thursday, the proposals include “measures to place policy costs on bills on a sustainable footing, improve bill payer value for money, and limit the effects on consumers who ultimately pay for renewable energy subsidies.”
The cuts to the FiT will affect solar PV, wind, and hydropower projects, and attempt to cap government spending on FiTs to £75 million to £100 million from 2016 to 2018/19. Most noticeably, domestic solar support could be cut by 87%, commercial rooftops by 82%, as well as devastating cuts to onshore wind.
From the report, the proposed generation tariffs are as follows:
However, the DECC was clear to state that it would close down the scheme entirely in four months’ time if it believes it cannot keep the FiT spending under cap. Specifically:
If cost control measures are not implemented or effective in ensuring that expenditure under the scheme is affordable and sustainable, Government proposes that the only alternative would be to end generation tariffs for new applicants as soon as legislatively possible, which we expect to be January 2016, while keeping the export tariff as a route to market for the renewable electricity they generate.
Any changes that are approved are set to be fast-tracked, “likely to take effect as soon as legislatively possible, which we expect to be January 2016.”
Among the many recommendations made in the review is the decision to close the FiT to any new technologies, as well as closing the generation tariff to new installations from January 2016 onward. Extensions to existing installations will similarly not be able to access the FiT scheme, as well as a revision to generation tariffs.
Immediate Industry Reaction
“What we needed in this Review was a clear vision for how we get to a point where cost effective, small-scale renewables are common-place, with all homes and businesses able to be part of a productive, vibrant low carbon economy,” said RenewableUK’s Deputy Chief Executive, Maf Smith. “This Review is not about how we build that prosperous future but simply about short term politics and accounting.”
“The proposals in the Comprehensive Feed-in Tariff Review are, quite simply, terrible news for homeowners, businesses, communities and those local authorities which have plans in place to develop renewable energy schemes,” said Joss Blamire, Senior Policy Manager at Scottish Renewables. “The levels of reduction in support announced today will severely curtail development of small-scale onshore wind and solar projects and endanger jobs and investments across the country.”
“The cuts could also spell the end for much of the hydro industry, which has enjoyed a recent renaissance but relies more heavily on Government support because of the length of time taken to develop projects and the sector’s high capital costs.”
“Rooftop solar has to been seen as one of the key technologies for a decarbonised future, with consumers and businesses also gaining control over the centralised energy market, this is a phenomenally damaging and short sighted decision which sets back this goal significantly and will lead to higher costs in the medium to long term,” explained James Court, Head of Policy and External Affairs for the Renewable Energy Association.
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Disappointing, but not unexpected given the Tories rhetoric in this area.
Massive subsidies for fracking and nuclear though.
Corruption runs rife in the UK.
Aye, we have been seriously ‘Abbotised’
Most people would not understand ‘Abbotised’ so Google what the moronic Australian Prime Minister has been up to (aka Mr Coal)…
It’s almost as if Amber Rudd’s brother works for the fracking industry…
LINK: Something she was meant to disclose but didn’t.
The best government money can buy.
About time too; imagine thinking you could trickle charge the grid of a developed, industrialised country with a few PV cells in the first place.
In Great Britain; renowned the world over for it’s brilliant sunshine…
Judging by your comments, you’re a GW denier and therefore incapable of also understanding how solar PV works.
Go away, educate yourself and then come back when you learn some facts. This is not a site for climate change deniers.
Judging by your comments, you’re the sort of chap who
a). believes you can convince people to see your point of view by indignantly calling names, and
b). is surprised that putting your opinion out on the public domain can solicit opinion which is contrary to your own blinkered view.
I have satisfactorily educated myself and conclude that attempting to trickle charge the grid in a developed, industrialised country is folly.
Fortunately Britain has finally elected a government that disagrees with you and is no longer prepared to throw good (tax payer’s) money after bad subsidising such pipe-dreams.
“I have satisfactorily educated myself”
Both teacher and pupil earn a solid “F”.
And here’s the proof –
“attempting to trickle charge the grid in a developed, industrialised country is folly”
Germany is now over 25% renewable. And an industrialized country.
If you wish to post crap I’d suggest you go to a site without standards.
“Germany is now over 25% renewable…”
…of which about half is reliable, predictable, switchable hydro-electric, biomass (habitat destruction in the interest of ‘saving the environment’, good result) and trash-incinerator capacity.
Less than 7% of Germany’s energy supply results from trickle charging by PV.
Furthermore, how’s that energiewende working out for industrialized Germany ?
An average household pays about 260 Euro a year more for electricty, the grid regulator warns that power supply is less secure and operators have to intervene more frequently to stabilize the grid due to the strain of intermittent renewable generation, energy intensive industries have to shut down when the sun and wind aren’t cooperative and for all the renewable energy name-plate capacity, coal generation and carbon dioxide emissions are only affected in Germany by economic recession.
It’s fair to observe that Germany’s Energiewende, your chosen example of how successful solar energy can be, is today’s best case-study for how not to produce energy or attempt to reduce CO2 emissions.
Remind me about your standards, ‘top commenter’.
Well let’s see if we can catch Erny up with reality. (I’m not hopeful. He seems to have a closed mind.)
The wholesale price of electricity in Germany has been falling since Germany began installing wind and solar. (below)
Industrial electricity rates in Germany are lower than the EU27, which makes Germany industry very happy.
http://ec.europa.eu/eurostat/help/new-eurostat-website
German retail electricity purchasers pay quite a bit of tax on top of the cost of electricity production and distribution. Most of that tax has nothing to do with the cost of electricity but goes into the general tax fund much like state sales taxes in the US.
I can give you a breakdown if you like.
Germans are very supportive of Energiewende. 92% stated that it was “extremely important”, “very important” and “important”. Only 8% said “less important” or “not important at all”.
https://www.cleanenergywire.org/factsheets/polls-reveal-citizens-support-energiewende
“carbon dioxide emissions are only affected in Germany by economic recession”
No, coal use and CO2 went up a bit following Fukushima and the decision to speed up the closure of nuclear reactors. By 2014 Germany was over that hump and set a new ‘recent year’ record for low fossil fuel use. (below 2)
Now, those are facts you need to take onboard. Toss out the crap that you’ve picked up from disinformation sites and you’ll be a lot better off.
“of which about half is reliable, predictable”
Now you are BSting. When Germany produces for hours more than 60% of its electricity demand with REs then most of those are wind and PV, this with no problem.
E.g. sunday eight days ago almost 85% of the domestic demand (42 GW out of 60 GW) was PV and wind, the gross generation, which includes exports was, 75 GW.
Shutting down industry happens more often in the UK than in Germany. Due to sudden outages of thermal plants btw.
Renewables are inherently more reliable…distributed solar with 99% availability factor even more so.
Trickle charge the grid? 50% of energy is lost in transfer from grid to point o use. Solar is used at point (no transfer loss) there is no drive necessarily to support the grid at all!!!! Jesus, you are backwards and dangerous.
50%?
Whoa, Simon. Someone fed you some bad beans.
Try about 6% in the US and 8% in the UK lost during transmission and distribution. Most of it during distribution.
http://data.worldbank.org/indicator/EG.ELC.LOSS.ZS
Goodbye UK renewables industry you will be missed.
Vested interests win the day again it seems.
It won’t kill it completely, but it certainly will put the industry back 2 years.
Wind and solar will survive (in a reduced form), but small-scale hydro will die.
At least Tony Abbott now has allies in attacking renewables sector, and promoting FF industries.
Was there a lot of small hydro development even before the reform?
I gathered it was only significant in the Scottish Isles, and that the few developments proposed elsewhere (i.e. in Wales) were often killed off by NIMBY’s.
Not sure – it was only very small, which is why subsidy cuts for these schemes are crazy.
They were hit by the stopping of the community finance initiatives that were destroyed by the coalition govt a couple of years ago.
Up until July 2015 there were 665 schemes accounting for a not insignificant 74.2MW of capacity, with the most recent annual growth rate being 22%.
The most recent annual cut in support was 20% with a further 20% due to the number of installations this hear. On that basis, the cuts announced today are relatively minor when compared to the big cuts seen by solar and wind which were far in excess of anything planned under the current process.
I am not sure if it is enough to “kill” off small scale hydro, but I doubt it. What is more likely to kill of small scale hydro is the limited number of sites which are suitable for such schemes and not in highly protected areas such as national parks.
There are more sites suitable than not.
What kills small hydro is the long term investment. Nobody wants to wait 30-40years to profit. That’s why small hydro needs subsidies. Then it will deliver as long as there is water and someone to do a little maintenance.
Have you seen this one?http://www.zotloeterer.com/welcome/gravitation-water-vortex-power-plants/
Small hydro can work almost anywhere, but that doesn’t mean it should be built almost everywhere.
It is less profitable then alternatives like wind, big hydro or PV (as evidenced by the need for higher subsidies) and offers no particular advantages that might warrent its higher cost – it does not come with storage or frequency regulation abilities and is not dispatchable.
The one advantage it used to have was that it offered a low-tech, low maintenance solution to remote communities, often in the developing world. However, that advantage has become less salient as biogas and PV overtook it in price – both are just as low-maintenance as hydro.
There are companies in the UK which are developing wind farms to be developed in a couple of years with no need for subsidy – I see no reason why basic economics will not allow the same to happen with solar sooner or later.
Alongside the visual impact, one of the biggest “problems” with renewable energy according to the objectors is the cost – many objectors concentrate on the subsidy argument as they the general populace are more likely to respond to something that impacts their finances than a view in an area they may never visit. With subsidies being reduced or completely removed, the economic case against renewable energy disappears, so support for the technology is likely to increase and thus making it easier for planning, although I accept the government have changed the rules to make it harder.
I also read today there is a strong likelihood the government may be forced to actually include onshore wind and large-scale solar in the next round of CFD auction, as excluding them would be against competition law – although this will again be set up to minimise the subsidy or even be “subsidy free” support.
I can understand that if the industry can survive this and continue cutting costs then they will be unstoppable, sure a few Tories won’t like that. But 87% cuts doesn’t show good policy IMO especially on top of all the other recent attacks against the renewable industry.
All this will achieve as far as i’ve read is saving for consumers of £1.70 per yr, which i’m sure the Big 6 will swallow up.
Then there will be continued Tax Breaks “subsidies” for FF and getting rid of even more rules and regs for Fracking industry.
Can’t have poor Amber Rudd’s brother not benefitting from the Govt “All out for Shale”
Even if it’s not economically feasible
http://wolfstreet.com/2015/08/23/just-how-ugly-can-britains-fracking-revolution-get/
http://wolfstreet.com/2015/07/21/its-happening-debt-is-tearing-up-the-fracking-revolution/
The more subsidies for renewable are cut, the harder it becomes for the government to justify subsidies for the alternatives. For example, when the government first announced the subsidies for Hinkley C, they said on a per unit basis it was comparable to onshore wind subsidies and much less than offshore wind and solar. All of the recent cuts show that this is no longer the case. Therefore it will be hearder to justify to the public at large, who overwhelmingly prefer renewable energy over fossil fuels or nuclear. It will also make it impossible to get such deals past the competition authorities and/or Europe.
I hope you’re right, i can see the govt still trying to force though Hinkley C.
Hopefully the costs / legal challenges will stop it.
I think Hinkley C could go either way. However, I can’t see the government managing to get any further projects through.
Well if they cut the RE sector subsidies, cut the ones to other sectors as well and let the market sort it all out.
But wait that would be fair and governments apparently have a problem with that the world over ( I live in Canada).
Christmas has just come early for the battery storage sector.
When the FiT tariff paid for your excess solar power is peanuts, you have to consume all of it yourself to make a profit. The only realistic way to do that for a home user is to get yourself a battery pack.
Doesn’t work like that.
Payback time for solar PV in the UK was about 6-8 years with the FiT.
The cutting of the subsidy will push that back up to 8-10years.
Adding battery storage and the *current* cost of the storage will not change the payback time -just increase the initial capital outlay (which is beyond a lot of homeowners for solar PV anyway).
If solar PV drops from about £6-7k for a 4kW system to £4k, and there is a corresponding drop in battery tech, then maybe.
Won’t help the Solar utilities or Wind utilities generators though – which in the end is what is key – we have to get rid of FF generation completely. No matter how we sugar-coat it, home PV+battery isn’t going to kill off the centralised generation from FF power stations.
Oh sure, there will be a sad, massive short term decline in rooftop solar installations (except maybe for medium sized commercial installations, which seem to take a smaller cut).
However, for those that still want PV despite the longer payback time, batteries will now be far more attractive. That’ll allow PV + storage to capture a far bigger market share than it otherwise would.
As for your last paragraph: couldn’t agree more. But utility scale renewable energy is far cheaper than rooftop PV – so much so that it is close to being competitive without any subsidies. Even a total end to subsidies won’t seriously harm the renewable industry for long.
It’d be much worse if there was an end to support for renewable technologies that are still less mature such as offshore wind or landfill gas,
Landfill gas is actually very competitive as is, and I doubt how “renewable” that is anyway.
Other than that I completely agree with what you say – costs for renewable energy continue to fall whilst over the long term the alternatives increase.
Large scale landfills are indeed highly competitive and receive no further support. There is, however, a significant capacity for microturbines on smaller landfills that needs continued support (micro scale gas upgrading facilities are still rather expensive). That category still gets some support IIRC.
As for it being renewable or not: if you end landfilling, it ceases to be renewable. But there can be no doubt that landfill gas is by far the greenest form of energy: it is carbon negative rather than carbon neutral.
Since it converts methane in the far less potent GHG carbon dioxide, it provides electricity while simultaneously reducing carbon emissions.
I think that Solar and Wind have been more successful than anyone expected and as a result, we are seeing FiTs being set at a level which we would have expected in about 2-3 years.
The FiT scheme was always going to finish in a few years anyway, the government has just speeded it up so it doesn’t cost them too much.
Next stop – Review FF subsidies.
Next stop revi….. Oh soryy folks. The bus appears to be broken. We won’t be making it to coal town, north sea shore or hinkley-vill.
Never was in the plans. Would be a step beyond disingenuous for anyone to say there was any possibility of reviewing UK FF subsidies inspired by Rudd’s decisions. EU may make altered analysis when subsequently reviewing Hinkley though.
Exactly. I have seen conflicting reports about the legal challenge to the Hinkley deal, but it is now very hard for the government to claim nuclear is getting similar support to renewable energy now and it is therefore in the consumer interest.
Don’t worry, The RE juggernaut will be along in a little while – It’s just picking up speed. 🙂
Anyone care for a wager on when DECC will be dismantled?
One surreal feature is a five-year table of degressions from the 1.68p/kwh, ending at 0.00 in 2019. Of course, 1.68p is well below the wholesale rate (ca. 5p) and the export tariff which more or less tracks it. Effectively, the proposal is to abolish the solar FIT.
Rudd is acting as Osborme’s lap-dog. The key rationale for the brutal cuts is to cut spensing:
27
3.
Cost control measures
This chapter sets out measures to control the overall cost of deployment
under the FIT
s
scheme
, in
particular through an overall cap on the level of
deployment under the scheme.
This covers
:
the proposed level of deployment caps
;
how an overall cap would be divided between technologies and tariff bands
;
and
how caps would be implemented, pausing the
scheme if necessary.
It also proposes a rule prohibiting extensions to installations under the FIT
s
scheme.
Proposal
71.
We
propose that the FIT
s
scheme is l
imited to a
maximum
overall budget of
£
75
–
100m from
January 2016
to 2018/19.
Really, Cameron? Are you gonna try to be as much of a jerk as Stephen Harper or, worse, Tony Abbott?
MP Amber Rudd and David Cameron are complete fools who are in the pockets of the dirty fossil fuel industry. The Torres are the most ignorant people on earth. They would rather have expensive nuclear with it’s waste issues, and dirty natural gas fracking than have clean wind, wave and solar power, which are falling faqst in price. No wonder Scotland wanted to leave. Scotland is moving to 100% clean renewable energy, and at least as common sense, unlike the corrupt Torre government led by Cameron..
I am all for cutting the renewable energy subsidy to zero, if all direct and indirect subsidies for fossil fuels and nuclear would cease as well. What? That is wishful thinking? We can only cut subsidies for the best forms of power generations and not the harmful ones? Why is that again? Ah, because of your good buddies. Now that makes sense, I guess. just fuck the planet then. Who needs that weird blue thing if you can have money.
Well several years ago my father was taking to some government people in Alberta, Canada. They said we have all the oil and do not need anything else, I said to my father he should have commented, how does oil taste? 😉
Anyone spotting some subtle similarities between the last time the Tories took on an energy producing sector and recent events? Although ironically it was a heavy polluter last time.
http://www.walesonline.co.uk/news/wales-news/margaret-thatcher-lied-miners-jobs-6763503
I wonder if we have reached a target percentage of renewable energy set by the government and this is another reason for the roll back. Germany has had difficulty with too much reliance on solar, having to switch to coal at night fall to take up the sudden drop in power and having to sell off excess energy to other countries below cost, with the buyers sometimes refusing ad the energy is to unreliable. Is the government planning to invest in infrastructure to combat these problems and help the development of renewable long term.. Or is it as some are suggesting just a plan to stop more development in renewables and go for nuclear and fracking?
You give them too much credit. DECC, especially with Rudd at the helm, doesn’t do strategic thinking. They are running out of money (I gave the quote) and Osborne won’t increase the renewables budget because DEFICIT, that’s all.
When in doubt between the conspiracy and the cock-up theory of history, choose cock-up: except when one of the players is called Henry Kissinger.
The Home Secretary Theresa May has been decimating the British Police force and now with them now unable to continue effective policing has obviously turned her attention to other ways to upset people. The term Nazi springs to mind.
UK seems to be attempting to meet renewable energy targets with biomass, I don’t know how this affects FiT, etc http://www.eia.gov/todayinenergy/detail.cfm?id=20912
UK’s biomass increases are anything but sustainable/renewable. 58% of their biomass is wood pellets cut down from USA forests and shipped across the ocean on diesel vessels. So we’re losing CO2 sinks (trees) in the US and burning fossil fuel to get them to the UK. NRDC says the wood pellet scam is as bad for climate change as burning fossil fuel for energy. No wonder the Tories seem to support it.
http://www.nrdc.org/land/bioenergy-modelling.asp
http://www.carbonbrief.org/blog/2015/05/investigation-does-the-uks-biomass-burning-help-solve-climate-change/
I think this “renewables” term should be scrapped altogether. Wind, solar, hydro, geothermal, biomass have different and unique characteristics. Since biomass can be used to meet renewable energy targets, how meaningful are they for climate change? If we care about CO2 emissions, focus more about targets on that, as an example, electricity generation should be below 100 grams CO2 emitted per kwh, see page 125 here http://www.renewablesinternational.net/global-electricity-overview-for-2014/150/537/88299/
18g CO2/KWh for biomass is well under 100g.
Natgas is no alternative. There are solar, hydro (wave), wind, OTEC and synfuels left…everything we need.
Biomass varies greatly for CO2 grams emitted/kWh, sometimes could even be 5x worse that coal, according to http://www.carbonbrief.org/blog/2014/10/is-burning-wood-for-energy-worse-for-the-climate-than-coal/ and depends how quickly we need to decarbonize may determine solutions chosen. Images compares energy production 1990 and 2013 (Source BP world energy outlook 2014)
It heavily depends on the forestry system in use. Short rotation plantation systems are carbon neutral even in the very short term. Forestry waste obviously is carbon neutral from the outset.
For the clearing of older trees, the picture is initially negative but quickly changes (see http://www.researchgate.net/profile/Stefan_Hirschberg2/publication/253408795_GREENHOUSE_GAS_EMISSIONS_FROM_ENERGY_SYSTEMS_COMPARISON_AND_OVERVIEW/links/004635372550eb0be9000000.pdf or http://pubs.acs.org/doi/abs/10.1021/es1024004 or http://pubs.acs.org/doi/abs/10.1021/es902555a or http://www.sciencedirect.com/science/article/pii/S0961953406000389 ).
Biomass is clearly an important part of a transition to renewable energy. When an existing coal fired power station is avaible, the near-zero upfront cost of transitioning to biomass makes it the ideal bridge fuel.
Its longer term role is less clear, but that’s more due to cost considerations than any environmental problem.
If I understand correctly, there is very little forestry waste that isn’t already turned into useful products like particle board or plywood. The scale of biomass use in the UK has already gotten way bigger than forestry waste can fuel.
You’re also failing to account for the energy needed to cut lumber, process into pellets, and ship it. Until all that can be done with renewable energy, no form of biomass is carbon neutral. As NRDC says, cutting down trees in the US and shipping to UK is just as bad as burning fossil fuel directly for power.
Sure, solar and wind take non-renewable energy to create initially, but then they last for decades. Biomass is continually using energy for process and transport and cultivation. Someday that energy will come from solar or wind and be stored in batteries, but we’re far from that now.
Biomass might be better for the climate than coal if you have a huge forest around that’s regrowing itself fast enough to fuel the local power plant. Otherwise, it doesn’t make sense.
– True, use of pellets exceeds the supply of non-usable forestry waste. Where did I say otherwise?
– These studies do account for processing and shipping. Neither have a major impact on total carbon emissions. No energy source is carbon neutral.
The IPCC gives average emissions for bio-energy (which is dominated by solid biomass) of 18g CO2/kWh. This is worse than hydropower and wind at 4 and 12g respectively, but better than PV or geothermal at 46 and 45g respectively.
source: http://srren.ipcc-wg3.de/report/IPCC_SRREN_Annex_II.pdf
All of those of course pale in comparison to coal’s 1000g and natural gas’ 500g.
But of course, feel free to believe those two links to random charities over the best available peer reviewed literature. Who are scientists to disagree with your statement that biomass ‘doesn’t make sense’?