Labour MP and advisor to the Department of Energy and Climate Change (DECC) Alan Simpson has warned of the presence of an cartel acting against the interests of renewable energy in the UK. At an event organised by Solar Century to promote the government’s proposal of a feed-in tariff system, Simpson announced that there is currently a lobby opposing the renewable campaign headed by the big utility companies keen to protect their own commercial interests at the expense of the development of green energy in the UK.
With the government’s announcement regarding the introduction of the Clean Energy Cash Back system (essentially a feed-in tariff system) in April 2010 much debate has raged regarding the tariff rate which will be required in order to optimise investment in the fledgling UK renewable energy industry.
The feed-in tariff works on the principle that small, renewable energy producers are guaranteed a fixed, premium rate for all units of energy they feed back into the national grid. The renewable energy units are purchased by the utility companies, something which they are obliged to do by the tariff legislation. In actual fact, the government has set a rate of 5p/unit with a subsidy of 36.5p for units of energy generated by small scale solar and wind installations, something which Simpson has controversially asserted will not be sufficient to spark the must needed investment in the industry.
Simpson claims that with the current rate set at 5p, the ROI for solar investors will only be around 5-7 per cent, yields which would possibly not be generous enough to turn the heads of investors who would potentially be attracted by more generous tariff rates elsewhere in the world. With a tariff rate of 10p, Simpson believes that returns could be a more healthy 10 per cent, rendering the UK as a highly competitive market in the world for attracting renewable investment in the long term.
For the UK to finally become one of the major players in the world of solar drastic changes will need to occur within the coming years to catch up with established markets such as Spain and Germany who are currently generating 2,511 MW and 1,500 MW of renewable energy annually respectively compared to the UK’s peak 6MW. Simpson certainly believes that this shortfall can only be remedied with the introduction of comprehensive tariff systems. Speaking at the Solar Century event, Simpson announced,
“Current energy policy in the UK is dominated by the vested interests of “Big Power”. The national grid is monumentally inefficient as an energy system. It was a half-decent idea for the middle of the last century, but 70%-80% of energy put into the grid disappears before you or I even switch the light on. We need not an energy, but a power revolution that takes control from the centre and literally puts power back into the hands of the people”.
Those within the industry back the words of Alan Simpson and are well aware that the future of the UK renewable energy industry is completely reliant on a strong tariff rate. Come April, it will be there to be seen if the government’s rhetoric on tackling climate change can be matched by a determination to take on the big utility companies and drive through a system which will see the UK become a leading light in the green energy revolution.