The sun hasn’t shone much over the Christmas period however, the lead up to the Christmas period saw a refocus by the UK government on solar photovoltaic energy. Announced on the 22nd of December, the Department of Energy and Climate Change (DECC) consultancy will look at microgeneration and the way the UK government can help small scale renewable energy through mechanisms such as the feed-in tariff which has already proved successful.

The feed-in tariff, introduced back in April incentivises investment in renewable microgeneration by offering fixed, premium rates for units of energy both used and fed back into the grid. Already, this mechanism has seen a huge growth in solar pv investment with traditional industries such as farming taking advantage of the profits to be made out of solar panels. Despite this government support for renewable energy, there are some fears that if the plug is pulled on the tariff too soon,

future projects and of course the future of UK renewable energy will be jeopardised indefinitely.

The consultancy which will last until March 2011 will endeavour to ensure that the longevity of UK renewable energy is secured through foresight and careful legislation. The Department of Energy and Climate Change has stated that the consultancy will focus on ‘quality, technology, skills and information’ and that ‘consumers need confidence that microgeneration kit will be of good quality. The industry needs to develop the technologies, the supply chain needs skilled workers to install kit and consumers need good information on microgeneration’.

Announcing the consultancy, Energy Minister Greg Barker said,

“We’ve already pledged financial support to encourage people to install kit like solar panels and heat pumps, today’s consultation will ensure that the industry and consumers have the confidence to invest.”

Certainly, while the financial mechanisms are in place for the time being, consumer confidence is still lacking in what is a fledgling industry not always attracting responsible business operations. Speaking on behalf of the more responsible side of solar energy operations, Dave Snowden head of the Micropower Council said,

“We have already seen extraordinary growth in microgeneration power generation solutions thanks to the introduction of the feed in tariff earlier this year, and look forward to similar incentives being extended to renewable heating and hot water systems next June. Today’s welcome proposals will help the industry grow with proper attention to quality, technology and skills development, whilst making it all much easier for consumers.”

Germany, perhaps the greatest success story for solar energy and a leading exponent and pioneer of the now widely employed feed-in tariff is seriously considering re-thinking its backing of renewable energy. Cuts in German feed-in tariffs while not welcomed by solar investors or those simply looking to make a quick Euro in green energy, are of course necessary and an important mechanism in regulating what can be an explosive sector.

Feed-in tariffs work by offering fixed, premium rates for renewable energy generated and used by small scale generation projects. While Germany has been a world leader in solar energy generation on the back of generous tariffs, it now seems that it in the current climate of austerity, the German government is perhaps rethinking its legislative bias towards green energy projects.

In a statement issued by Environment minister Norbert Roettgen, it certainly appears that the current stance is unequivocally pragmatic when it comes to backing solar energy over more traditional fuel sources. Indeed, pragmatism turned Teutonic bluntness when questioned on plans to further reinforce legislation designed at boosting solar investment,

“We’re in talks with the solar power sector to come to a reasonable further development. Those who want renewable energy should keep in mind that there is a need for society’s acceptance of it,”

Of course, while there is a need to regulate the the solar market in order to prevent a situation similar to Spain where the market became saturated, the fact remains that feed-in tariffs do not come out of the public funds. Instead, they come from the big utility companies obliged by legislation to purchase the units of renewable energy at the rate set by the tariff. This goes to add weight to the argument against reducing tariffs too drastically in Germany. Certainly, protectionism of certain industries at the expense of others is questionable but the figures for renewable energy in Germany speak for themselves.

Reports from the German finance ministry have shown that the revenue from renewable manufacturers alone came to over 16 billion Euros in 2009. In the same year around 294,000 Germans were employed in renewable energy with 64,000 of these working in solar energy. With these employment figures in mind and the fact that in Germany there is a real appetite for renewable energy investment, it would be politically naïve for any government to make too dramatic a cutback to tariff rates, even during these times of draconian spending measures.

Ofgem’s Sustainable Development Focus has released figures showing that in the first 6 months of feed-in tariffs in the UK, over 11,000 generator have registered for the tariff, marking a considerable surge in solar photovoltaic installations in particular. Indeed, with 11,352 renewable systems installed, it indicates that the scheme has been more successful than predicted, with enough output to power around 35,000 homes.

Feed-in tariffs work by offering fixed, premium rates for both the energy generated from renewable systems (which is then fed-back into the grid), and the energy used. When first introduced by the Department of Energy and Climate Change (DECC), it was with the intention of incentivising investment in green energy by off-setting the costs of installing renewable energy systems by creating long term, guaranteed yields from the projects. Emulating schemes applied successfully abroad, it seems that in the first 6 months of operation, the tariffs have certainly been effective as a means of boosting renewable installations across the UK.

In order to get the UK grid network fully up to speed with the complex requirements of a low-carbon economy, the Sustainable Development Focus Report also published its proposals for updating the country’s network. Working on a framework of Revenue= Incentives+ Innovation+ Outputs (RIIO), Ofgem is planning on generating £32 billion of investment much needed to upgrade a UK national grid not yet ready for green energy and the mechanisms set up around it.

Alistair Buchanan of Ofgem wrote in a foreword to the report,

“This is the biggest change to the regulatory framework for 20 years and sets the network companies on a path to playing their full role in the transition to a low-carbon economy while delivering value for money for all consumers.”

Scottish and Southern Energy (SSE) has joined the growing list of companies offering solar photovoltaic (PV) schemes to its customers. The SSE solar PV scheme will harness the feed-in tariff to enable its customers to benefit from free electricity generated by the solar panels installed on their roofs. The plan which will see SSE install panels for free on roofs found to be suitable for solar energy follows in the footsteps of a number of other businesses currently running free energy schemes.

The feed-in tariff enables small scale solar pv generators to benefit from guaranteed, premium rates set out by the legislation. In the case of the SSE scheme, households will benefit from free electricity by having solar panels installed on their roofs. Speaking as National Development Manager for SSE, Alan Evans said,

“The introduction of feed-in tariffs (FiT) has changed the economics of micro-renewable generation in a very positive way. However, for many customers the initial outlay required to benefit from these tariffs is still too great. SSE has set up this deal to ensure that there is no outlay by the customer and that they will benefit from free electricity as soon as the system is connected.”

Of course, the greater benefit is for SSE micro-renewables who are able to benefit both from the solar panels and feed-in tariff over the project’s 25 year lifespan. Indeed, the 25 year tariff will enable SSE to benefit from 41.3p per kilowatt hour for electricity generated by the panels and 3p per kilowatt for energy fed back into the grid. With this scheme in place it is expected that a typical household adopting the solar scheme could save around £130 a year on their electricity bill.

Emphasising the benefit to his customers, Evans went on to add,

“Customers also have the reassurance that their contract is with one of the UK’s largest energy companies, with a track record of installing solar PV that extends over more than five years and is backed up by an excellent reputation for customer service.”