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Gov't confirms feed-in tariffs by 2010

Q: Why does Germany generate 200 times more solar power than the UK?

A: Because the German government ensures that utility companies pay a premium - a so-called feed-in tariff - to households and businesses for electricity generated by solar panels or other renewable technologies.

Such a feed-in tariff is an effective way of boosting small-scale electricity generation using renewables, such as solar photovoltaics and wind turbines. The result in Germany, and in many other European countries, has been a boom in this sector, with benefits not only to the planet but the creation of thousands of new jobs in the green economy. Over a quarter of a million people work in the German renewables industry, compared with around 30,000 in the UK.

A more than five-fold increase in electricity generated from renewables, accounting for 30% of total capacity by 2020 - that is one of the ambitions outlined in the recently published Renewable Energy Strategy from the Department of Energy and Climate Change. It also envisages that 12% of heat will come from renewables, such as biogas, biomass, solar and heat pumps, and 10% of road transport will be powered by renewable energy.

Just how will this happen? One key element is the introduction of feed-in tariffs for small-scale renewable electricity generation, such as solar panels and wind turbines, up to a capacity of 5 megawatts. These are aimed chiefly at households, small businesses, and community groups. Larger-scale projects will continue to benefit from the Renewables Obligation scheme.

Levels of tariffs?

Feed-in tariffs dramatically cut the payback time on installing solar panels, so that householders can see a much faster return on their investment, perhaps within 10 years or less. But this all depends on what level the the tariff is fixed at. The government is consulting over the summer 2009 before announcing levels of support, but says they will be in place by April 2010.

Renewable Heat Incentive

Also on the cards is a Renewable Heat Incentive, which will effectively pay a cash incentive to schemes that deliver heat from renewable sources. It will apply to a broader range of target groups, from domestic installations up to large industrial sites. Again, the final details will be announced after a consultation period, and the intention is to commence the scheme by April 2011.

Both incentive schemes are planned to run until at least 2020, to give some assurance of financial returns for people planning to install renewables. However, it is not yet clear whether existing installations, which have already received grants, will be eligible.

These incentives for small-scale renewables mark a shift away from a centralised electricity-generating system to a more distributed system, where power is generated close to the user. This reduces the power losses incurred by long-distance transmission through the grid.

The Renewable Energy Strategy is a key part of the overall strategy to cut the UK's emissions of greenhouse gases by 34% (from 1990 levels) by 2020. See 'Strategy for climate and energy unveiled'







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