The end of the British government’s consultancy period on the introduction of a feed-in tariff (FIT) system, to be called the Clean Energy Cash Back System when introduced in April 2010 finished last week, sparking debate on the viability of the proposed system.
The Renewable Energy Association (REA) has raised doubts as to the potential effectiveness of the Cash Back System. The proposed system, essentially a feed-in tariff, works by offering fixed, premium rates for renewable energy fed-in to the grid by small scale (sub 5mW) energy producers, and bought by the utility companies who are obliged by the legislation to purchase the units of energy over a set number of years.
With the key purpose of the tariffs to attract investment in young renewable industries through incentivisation, the REA has expressed doubts about whether the rate offered by the government for clean energy will prove sufficient to spark sufficient investment.
Indeed, while supporters of the scheme have stated that 5% of the UK’s energy could be generated by renewable means by 2020, the UK government has set the meager target of 2% by 2020 triggering worries that the rate will not be high enough to demonstrate attractive returns for those wishing to invest in the new industries.
Speaking on behalf of the REA Leonie Greene stated,
“From the industry’s perspective the scheme is well designed, but the proposed tariff levels are set too low and applied inconsistently across technologies.”
Where feed-in tariffs have been introduced elsewhere, they have proved to be extremely effective mechanisms for generating huge interest in green energy. However, successes have been based upon generous, yet well balanced schemes and this will be a key factor in either the success or failure of the UK renewable industry.
Dave Timms, campaigner for Friends of the Earth expressed his own concerns,
“The Clean Energy Cash Back scheme has huge potential, but it will fail to make an impact unless the government dramatically improves the amount that will be paid to businesses, households and communities that generate renewable electricity.”