Ministers must send clear signals that they believe in new forms of green technology if they want companies to invest in them, a think tank has said.

Solarfeedintariff believes that it is important for the government to agree on a clear and comprehensive energy policy that will allow for greater investment into renewable energy with an all-inclusive outlook, rather than a focus on energy companies alone.

The Institute for Public Policy Research (IPPR) said the government had been blowing “hot and cold” on its commitment to cut carbon emissions.

That caution had made the energy sector jittery about investing, it concluded.

The government said its proposed Energy Bill would provide “certainty” for investors in the electricity market.

Energy Secretary Ed Davey said last month climate change goals could be met by banishing coal and gas in the 2030s.

But launching the draft Energy Bill, the government said it wanted to retain flexibility on the target date.

It had previously indicated it could make energy clean within two decades.

‘Mixed-signals’

IPPR research fellow Reg Plant said: “An ambitious decarbonisation policy offers a route to long-term sustainable economic growth, and productive British businesses.

“But businesses need to know the government will provide consistent support for their investments.

“And at the moment ministers blow hot and cold on their commitment to a green future.”

The IPPR said there were “mixed signals” because the government initially promised ambitious targets before seeming to waver about their effect on the economy.

It also said the Treasury should ditch plans to introduce a “carbon floor price” – a green energy tax setting a minimum price for greenhouse gases.

Mr Davey has said the scheme would encourage companies to develop more green technologies, but critics argue the tax would be passed on to consumers.

‘Best deal’

A Department of Energy and Climate Change spokesman said: “The government is proposing to reform the electricity market and give certainty to investors with the Energy Bill and revolutionise the energy efficiency of millions of homes and business across the UK through the Green Deal.

“This approach will deliver the best deal for Britain and for consumers, cutting energy waste and helping get us off the hook of relying on imported oil and gas by creating a greener, cleaner and ultimately cheaper mix of electricity sources right here in the UK.”

The IPPR report comes amid lobbying from environmental campaigners to cut subsidies to onshore wind farms further.

They argue their spread across the UK has been a blight on the countryside.

Mr Davey has already indicated the government wants to cut wind farm subsidies by about 10%.

Prime Minister David Cameron has said the growth of renewable energy is vital for the British economy.

He has promised to lead the “greenest government ever”.

Originally published on the BBC website

The Government has today announced plans to ensure the future of the Feed-in Tariffs scheme to make it more predictable. Transparency, longevity and certainty are at the heart of the new improved scheme.

The reforms will provide greater confidence to consumers and industry investing in exciting renewable technologies such as solar power, anaerobic digestion, micro-CHP, wind and hydro power.

The Feed-in Tariffs (FITs) scheme provides a subsidy, paid for by all consumers through their energy bills, enabling small scale renewable and low carbon technologies to  compete against  higher carbon forms of electricity generation.

The surge of solar PV installations in the latter part of last year, due to a 45% reduction in estimated installation costs since 2009, has placed a huge strain on the FITs budget.

Climate Change Minister Greg Barker said: “Today we are announcing plans to improve the Feed-in Tariffs scheme. Instead of a scheme for the few the new improved scheme will deliver for the many. Our new plans will see almost two and a half times more installations than originally projected by 2015 which is good news for the sustainable growth of the industry.  We are proposing a more predictable and transparent scheme as the costs of technologies fall, ensuring a long term, predictable rate of return that will closely track changes in prices and deployment.

“I want to see a bright and vibrant future for small scale renewables in the UK and allow each of the technologies to reach their potential where they can get to a point where they can stand on their own two feet without the need for subsidy sooner rather than later.”

A BETTER FIT SCHEME FOR CONSUMERS AND COMMUNITIES

• A tariff of 21p/kWh will take effect from 1st April this year for domestic-size solar panels with an eligibility date on or after 3rd March 2012. Other tariff reductions apply for larger installations.
• The Department has listened carefully to feedback on the energy efficiency proposals that we put forward in the consultation of 31st October. Properties installing solar panels on or after 1st April this year will be required to produce an Energy Performance Certificate rating of ‘D’ or above  to qualify for a full FIT. The previous proposals for a ‘C’ rating or a commitment for all Green Deal measures to be installed was seen as impractical at this stage. We estimate that about half of all properties are already eligible for a ‘D’ rating.
• From 1st April 2012, new ‘multi-installation’ tariff rates set at 80% of the standard tariffs will be introduced for solar PV installations where a single individual or organisation is already receiving FITs for other solar PV installations. This reflects the lower costs of such installations, as they benefit from the economies of scale. Based on the feedback  received, the threshold is set at more than 25 installations. Individuals or organisations with 25 or fewer  installations will still be eligible for the individual rate. DECC is now consulting on a proposal that social housing, community projects and distributed energy schemes be exempt from these multi-installation tariff rates.
• The tariff for micro-CHP installations will be increased to recognise the benefits this technology could bring and to encourage its development.

A BETTER FIT SCHEME FOR INDUSTRY

• In line with the evidence of falling costs for solar PV, DECC is proposing to peg the subsidy levels to cost reductions and industry growth to provide more certainty for future investments.  This will ensure that subsidy levels keep in step with the market. It builds on the best of the existing German system and will remove the need for emergency reviews.
• Using budget flexibility to cover the overspend resulting from high PV uptake this year, while still allowing £460 million for new installations over the Spending Review period. This won’t have any impact on consumer bills beyond the agreed overall cap on renewable subsidies as it will primarily be funded from an under spend on the budget allocated for large-scale renewables.