Disabling the green transition?
“Certainty on Government action,” was rightly the key theme of the Coalition’s green strategy, Enabling the Transition, published in August. What to make, then, of the mixed messages now emerging from a new government consultation on wind and solar projects?
Proposed cuts in support for the onshore wind industry will have a negative impact on deployment. Offshore wind support would reduce in April 2015, and again in April 2016 making offshore wind projects “more marginal,” according to RenewableUK. Onshore wind deployment would fall from 12 gigawatts (GW) to 10.4 GW by 2017. Wave and tidal project should receive much higher support. But, meanwhile, possible cuts to the emerging domestic solar power seem to be spooking the industry.
From the consultation now under way, cuts in support for major projects would cost between £400 million and £1.3 billion less than if they were retaining the current levels of support. By 2016 they account for £50 on the average domestic electricity bill, compared with £52 per household under the existing scheme.
The Government is also considering cuts to the domestic feed-in tariff (FIT) for household solar panels. FITs have made a major contribution to the green economy, with 25,000 jobs now in the sector. If the tariff is cut significantly, then only the wealthiest households will be able to afford the capital cost. The FT reported (20 October 2011) that fears of cuts were denting investor confidence in community scale solar schemes. The current subsidy is set at 43p per kilowatt hour of electricity generated, but it could be cut to 9p.
DECC is reported as saying that the tariffs will remain until 2012, “unless the review indicates the need for greater urgency”. This looks very much the Treasury intervening to cap public support for emerging green industries, at a time when the economy is stagnating.
But wave and tidal projects will receive a significant boost – though from a much smaller budget. Renewable UK welcomed the Government’s commitment to boost financial support for wave and tidal projects – but is urging caution over the Government’s plans to downgrade the level of financial support it provides for onshore wind from 2013 onwards, and offshore wind from 2015.
As one commentator noted: Critics complain that the rest of us are paying a green tax to fund these investments through increased gas and electricity bills. Figures of £200 a household have been bandied about by the Daily Mail – money, it says, we can’t afford at a time of rising bills and national austerity. Last week, the regulator Ofgem revealed that the actual cost is about £70 a year per household.