Since the intoduction of the government’s feed-in tariff scheme in April 2010, renewable energy and the potential for individuals to cash in has been a running theme in the British media. While certain newspapers have taken a negative view of the potential for green energy and an even dimmer view of some of the companies attempting to take advantage of the new legislation, there is little doubt that feed-in tariffs have had a big impact on the British mindset on renewables.
Historically reactive and often adverse to change, the British public is becoming increasingly aware of the financial rewards that can come from investing in renewable energy based on feed-in tariff pay outs both for the energy used by the household and energy fed back into the national grid. Once commercially unviable, feed-in tariffs work by offering premium, guaranteed rates to renewable micro-generator thus off-setting the high costs of solar panels while offering attractive returns to investors over a period of 20-25 years. This financial mechanism has led to a great deal of companies springing up with offers to fit solar panels to households for free, the benefit to the homeowner being reduced utility bills and the benefit to the companies being long term returns from the tariff.
Indeed, British Gas research alone has shown that the tariff will spur around half of Britain’s homes to eventually invest in solar panels, bringing in an annual revenue of between £600 and £1000. The national grid, which has been criticised of late for its perceived inability to cope with the shift towards green energy has released findings about the future for solar energy in the UK. Certainly, with the UK on target to meet its climate change targets within the next decade, it seems that solar photovoltaic (pv) should also go from strength to strength on the back of the tariff legislation. The national grid has shown that within the next 10 years around 31,950 MW of solar panels will be connected.
The national grid has shown that around 29,000 MW will be needed to exceed government targets of generating 15 per cent of energy by renewable means. This would mean enough energy to power around 20 million homes, a massive change in the way energy is both generated and consumed in the UK. The national grid has shown that while we are certainly on the right track in order to bring about a root change in the way the UK generates energy, the government has to remain focused on renewable energy. With a review of tariff rates due, it will be essential that the government maintains a tariff rate which continues to incentivise long-term investment.