Death of the Feed-in-Tariff
The Feed-in-Tariff was first introduced in the UK in April 2010 to act as a financial incentive for homes and businesses to take up renewable energy. Succesful applicants receive a payment for the clean energy they produce receiving a guaranteed fixed price, indexed for inflation for 20 years.
The Feed-in-Tariff (FIT) has been extremely successful at encouraging the take up of renewable energy. Most installations in the UK could not have happened without it.
Unfortunately, the FIT subsidy is set to end in April 2019. As set out by the Government in the 2017 Autumn budget, “there will be no new subsidies for renewables until 2025”.
So what does this mean for the future of renewables in the UK? Thankfully, a dramatic fall in costs since 2010 means that access to solar power is much more affordable than it was. As the costs to store energy using battery power technology decline the time is approaching where there will be no need for subsidies after all, though making this happen by April 2019 will be a challenge.
As the Feed-In-Tarff subsidy dimishes over the next year, solar power installers will be looking to use battery storage as a way of making new projects work financially. Being able to charge a battery with solar power means the electricity does not need to be consumed at the point of generation, instead it can be used when it’s needed, day or night. This could prove to be just the catalyst needed for wide-scale clean energy deployment.
Combining battery storage with renewable energy will unlock the door to using clean energy sources around the clock putting the final nail in the coffin for fossil fuels in our energy supply. Furthermore, in the same way that solar and wind power costs have plummeted, we can expect the price of battery storage to fall as production techniques improve and economies of scale take hold.
With falling costs, home storage is seen as increasingly attractive in the UK, particularly to early adopters, being the 850,000 homes with solar panels. The Tesla Powerwall, perhaps the best known energy storage battery, has recently become available in the UK, soon be challenged by a British made Nissan battery. Other British manufacturers are Powervault and Moixa. There have even been suggestions that electric vehicle batteries can be connected to the grid to sell extra power at peak times, adding another incentive to becoming an EV owner.
The energy market is certainly set for some rapid and profound changes in the years to come. In the last part of our Energy Trends blog series, we’ll look at the emerging popularity of heat pumps and how smart meter will change the way we buy power.
Guest Blog, by Jaden Yang of University of California, Berkeley
Distributed generation such as rooftop solar panels creates an economic democracy where every person can generate electricity from their own solar photovoltaic cells. Another benefit is lower transmission losses since the solar energy comes directly from their rooftop. However, one of the biggest challenges of renewable energy is energy intermittency. Solar panels on a rooftop can only generate electricity during daylight hours, and if a solar panel generates more electricity than you can use in the moment or does not generate enough, electricity must be exported or drawn from the grid to compensate. For this reason, solar panels do not always generate electricity when the domestic demand is greatest.
Renewable energy has always faced challenges of consistency of supply and system integration. Some flexibility options to complement renewable energy are flexible peak power plants, grid integration, demand side management and battery storage. In California, a Net Metering policy that credits solar energy system owners for the electricity they add to the grid has given considerable benefits to solar panel owners. Unlike California, the UK has not implemented this policy widely, making battery storage systems a more attractive proposal to encourage the uptake of solar. Battery storage is not a new technology. Up until now, due to its expense, it hasn’t been widely used in the UK. It would allow solar PV owners to generate, convert and save excess electricity for use at a later time, enabling users to make maximum use of the electricity they have generated themselves, as well as providing a solution to intermittency and production/demand mismatch.
In order to make battery storage affordable and feasible, government subsidies on green technologies can enhance both business and environmental performance. First, clean technology businesses can increase their research budget with government subsidies to improve and reduce the cost of battery storage. Secondly, if battery storage becomes popular, less people use electricity from the grid. Thus, once solar panels and battery storage systems become prevalent in a community, people have less dependence on traditional fossil fuel power generation, which will have the effect of reducing greenhouse gas emissions. Therefore, we believe there is enormous potential for battery storage to enhance domestic renewable energy production, which itself encourages the development of better batteries in a virtuous circle.
24 Oct 2013
This week, the Government announced that the taxpayer would be subsidising the construction of a £16 billion, 3.3GW new nuclear power plant at Hinkley Point in Somerset. The deal was stuck with EDF, the French state owned utility. In the wake of the disaster at Fukishima, with dangerous levels of radioactive Strontium entering into their water, any investment in the construction of a new nuclear facility is short-sighted, presenting a formidable threat to the economic health and potentially the physical well being of future generations.
The subsidy presents the threat of a dangerous economic legacy for us now and for future generations. The guaranteed strike price of £92.50 per MWh lasts for 35 years, and is twice the current price of electricity in the market today.
What this means is that every taxpayer, regardless of whether one benefits from it or not, will be financing the generation of this electricity for the next 35 years. Because of the base load nature of nuclear power, there may be times when no one is consuming this electricity yet, the taxpayer will still be paying EDF and the investor consortia for generating it.
Foreign investment could comprise more than 50% of the ownership of the plant, which means our taxpayers’ money is contributing to the wealth of foreign nations instead of being invested at home. It’s a no brainer for the Chinese to take up to a 40% stake in the consortium, because for them it is a guaranteed investment return with very little risk. The move creates distortions in the supplier market and sets a greedy precedent for other suppliers.
This graph, prepared by the EEG to analyse the level of subsidy to be provided for Hinckley Point demostrates that even when the taxpayer subsidy for decommissioning the plant and the long term storage of the nuclear waste is excluded, the subsidy for nuclear power far exceeds any subsidies for solar PV or Wind (either on or offshore).
It doesn’t make any sense to continue to invest good money into an expensive and dangerous source of electricity. The lion’s share of the budget for the Department of Energy and Climate Change is allocated to the Nuclear Decommissioning Authority to manage our legacy of radioactive nuclear waste.
The UK has the highest stockpile in the world of radioactive Plutonium buried in a temporary storage facility in Cumbria. The cost of managing our nuclear legacy is estimated to be about £100 billion, the equivalent of the entire investment required to upgrade our electricity network.
We must reject this plan to expand the facility at Hinkley and support investment in clean, renewable energy generation and energy efficiency investment. We must invest in a smart grid that would transform our network into a low carbon, clean energy generation, transmission and distribution network. Please contact your MP and let them know you do not support any subsidy for nuclear power.