With the UK government announcing the imminent introduction of a feed-in tariff for renewable energy generation, the UK solar industry is already seeing the development of a grass roots approach to solar energy.

Feed-in tariffs which have been established in other developed countries with the basic motive of attracting investment in fledgling renewable industries will be replicated in Britain with solar installers being offered premium rates (typically 25p/kWh over a project’s lifetime) for the units of energy fed back in to the national grid.

Such incentives are of course absolutely necessary in order to make investment in expensive technologies viable by offering attractive returns on investment to investors.

One of the first projects to take advantage of the feed-in tariff or ‘Clean Energy Cash Back’ scheme is a social housing scheme in Manchester which plans to generate around £900 per household a year by selling renewable energy back in to the national grid.

The Manchester based co-operative called Horizon Energy Corporative is working with landlords in the Manchester area to maximise the potential of solar energy in the Manchester region.

The scheme, put together by EIC has received the full support of the department of Energy and Climate Change (DECC) which hopes that such schemes will help the UK to catch up with other countries where feed-in tariffs have been established now for some time while at the same time offering financial rewards for social housing projects.

Managing Director of EIC, Andrew Melchior stated that,

“Our energy will be used to drive down the costs of electricity and hot water for those in need of relief from fuel poverty, while supplying community-generated energy to householders in North West England.

With sufficient support there is no reason we shouldn’t end up producing energy output equivalent to one quarter of a conventional coal-fired power station.”

In a letter written to the Guardian by Environmental pressure group Friends of the Earth (FOE), they have outlined their belief that the government is not doing enough to promote small-scale renewable energy generation in the UK.

The letter published on Jan 18th in the national daily newspaper asserted that the government’s proposed targets of producing two per cent of all energy by renewable means by 2020 is too low, and that the UK government should drastically increase its ambition if there is to be a realistic hope of fighting climate change through carbon emission reduction.

Initiatives such as the creation of the department of Energy and Climate change, the passing of the Energy Act in 2008 and the more recent announcement of the imminent introduction of a Clean Energy Cash Back Scheme have done little to allay the concerns of FOE. In a statement issued by the influential environmental group Executive Director, Andy Atkins he commented that,

“Businesses generating their own clean electricity will reduce their energy bills, increase their competitiveness and reduce their vulnerability to future fossil energy price rises.

He added, “Setting higher feed-in tariffs for small-scale renewable generators could treble the amount of renewable electricity generation by 2020 compared with the proposed scheme.”

With similar pressure groups such as We Support Solar urging the government to deliver higher targets with regards to 2020 renewable energy generation there is a mounting media pressure for the government to match its rhetoric with results.

If initiatives such as the Clean Energy Cash Back scheme fail to bring about a wholesale change in Energy production within the next five years, we can certainly expect further disquiet from those with a real desire to see the effects of climate change brought to an end.

As the party season ends, more sober thoughts turn back to the great issues that dominated towards the end of 2009. With the Copenhagen conference highlighting massive short-comings in international efforts to fight climate change, it will be hoped that 2010 will see the UK move ahead in the use of renewable energy and herald greater cooperation between the powers in agreeing .

2009 was a year which saw the announcement of the introduction of the Clean Energy Cash Back system, essentially a feed-in tariff designed to attract investment in the UK solar industry. The announcement by the Department of Energy and Climate Change (DECC) was welcomed by those who have seen how successful similar tariff regimes have proved in other countries where they have been introduced.

However, following the consultancy process which followed the announcement, there have been a number of observers who have noted that the tariff rate will need to be sufficient in order the UK to compete with more mature markets in Germany, Spain, China and the US. While this month will see some clarification of the specific rates to be set for the UK tariff, it will be absolutely essential that the numbers are sufficient to boost investment in the new industry.

Critics of government policy have been headed by the flagship group ‘We Support Solar’ claiming that many within the government are acting against the general interests of solar energy, something which they believe will be reflected in a watery feed-in tariff.

However, not all predictions for the UK solar industry in 2010 are so pessimistic. David Kidney, Under Secretary of the DECC stated that any criticism of UK solar policy is nonsense and that the UK are set fair to strive to compete with the big international players this year. Speaking at a low carbon conference last month, Kidney fielded questions from an audience which pulled no punches, claiming that the UK was a leading light in the use and development of renewable energy.

Speaking mostly of the UK’s big offshore wind projects, matters also turned to solar where Kidney was adamant that the UK solar energy is looking healthy. Talking with regards to the introduction of the feed-in tariff system in April, he claimed that,

“April FiTs [feed-in tariffs] arrive in the UK and the solar industry is gearing itself up for what it thinks will be a major increase in demand for its products.”

Everybody within the industry will be hoping that the government under secretary’s optimism is well founded. As we approach the tariff date we will be able to greater gauge the level of investor interest in solar PV products. Certainly, with solar markets still going strong in Germany with investors looking to diversify portfolios with green stocks, the UK industry will be hoping to attract similar capital.

With Ernst & Young offering their annual solar attractiveness indices at the end of 2009, it again highlighted the clear correlation between strong feed-in tariffs and attractive markets for investors. Until the UK can produce a robust tariff (hopefully this will happen in the first quarter of this year), investors will be put off solar investment by the traditional worries that returns to not justify investment.

However, with the government under massive media pressure to fight climate change, 2010 may just be the year which is looked back on as the watershed in solar installation. With growing public awareness of solar combined with viable solar investment products, the UK could be set to become a world player…we hope.

You heard it here first. Sources recently disclosed to me that we can expect an announcement from the UK government concerning the feed-in-tariff in mid-to-late January.

You may well be aware that while the government has committed to launching a feed-in-tariff program to support renewable energy, it has not confirmed the value of the proposed tariff yet. Numbers have been suggested, but we do not know the exact price per kWh of energy that will be paid to producers and this is causing significant problems for the UK PV industry when advising customers.

The long-awaited announcement will be closely scrutinized to see whether the UK government is serious about meeting its renewable energy targets. Given that the UK is the last major European economy to introduce a feed-in-tariff program (by a considerable margin) the industry will be hoping that the price set will be strong enough to allow the UK to gain some of the lost ground.