When thinking about renewable electricity for your home, two options spring to mind; photovoltaic panels and small wind turbines. But which one should you choose? The government has introduced a feed-in-tariff that pays a subsidized amount for the electricity they produce and the amount paid for small wind turbines is similar to that paid for small PV systems (34p/kWh compared to 41p/kWh).

The key criteria to deciding which technology will be the most profitable is the cost of producing a unit of energy from each one. For this you need to factor in the up front costs such as equipment and installation, and then look at how much energy they will produce once out there over an average year. Without going too heavily into numbers my argument is that in some instances, micro-wind turbines will have a lower cost of energy than solar panels, but for the majority of cases solar panels will be better and this can be explained by some basic science.

Without a doubt, on a large scale, wind energy is cheaper than solar. The cost of energy from large-scale wind farms is somewhere around 10p/kWh whereas the cost of energy from large-scale solar is three to four times greater at present. Big wind turbines are now very well designed products and many years of industry development means that the costs have fallen dramatically and continue to do so. Big solar farms are also rapidly reducing in cost and make a lot of sense in some locations, particularly in the many regions where wind farms are not suitable, but for now they do not compete.

On the small scale however, the economics are drastically different. As the size of a solar installation decreases, the performance falls linearly with the amount of area used, and therefore the cost of energy does not change so dramatically. In contrast, as wind turbines get smaller their performance gets disproportionately worse. This is for two mains reasons:

The first reason is that as the turbine blade length gets shorter, the ‘swept-area’ decreases quadratically. This means that if you decrease the length of a blade from 80 meters to 40 meters, the area covered by the blade decreases from 20 thousand square meters to just 5 thousand. The ‘swept-area’ determines how much wind energy the turbine can use. So when you decrease the blade length you still need all the expensive moving parts like the generator, but you get disproportionally less energy – for one big wind turbine you would need thousands of smaller ones to cover the same area. The second reason is that where you use micro-wind turbines the wind speed is generally slower. This is because most of us live in built up areas where there are other buildings nearby. These buildings disrupt the wind, making it irregular and slow. Wind speed is crucial to the effectiveness of a wind turbine, again because the energy contained in the wind is disproportional to its speed. If the wind speed drops by a factor of 2, the energy produced by a wind turbine decreases by a factor of 4. Comparing most built up areas, the average wind speed is much lower than half the wind speed found high-up in open spaces where you find most wind farms.

These two factors combine to mean that for most homeowners solar panels are the most sensible and safest option. Of course, if you live near an open space and get a lot of wind then a micro-wind turbine could be a great investment. However, if you do live near a windy open space, I would suggest trying to build as big a wind turbine as possible, as their cost effectiveness increases dramatically with size.

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 bid to prevent a shortfall in rate payments for pioneers in small scale renewable energy investment, Good Energy has promised to continue to pay its generators 15p /kWh rather than the 9p / kWh set out in the recently announced tariff legislation.

Good Energy, dealing solely in renewable energy has announced that the government’s recent tariff scheme would harm their so-called ‘pioneer’ generators who installed their renewable technology before the cut-off date of July 15, 2009. Under the new tariff regime to come into effect in the Spring of this year, these pre -July 15 customers would only be eligible for a 9p/kWh payment for units of renewable energy compared to a payment of 41.3p/ kWh for installations after this date.

In a bid to keep pioneer installors viable until when they hope the government will amend their pre July 15, 2009 rule, Good Energy will continue to pay these generators the previous 15p/kWh rate. Currently, Good Energy sees itself as a market leader in renewable energy uptake incentivisation and wants to continue awarding attractive incentives for smale scale installors of renewable energy technology. Leading the way in 2004 with their renewable energy incentive scheme HomeGen, Good Energy believe that the government’s scheme is treating long term micro-generators unfairly.

CEO of Good Energy, Juliet Davenport, announced:

“It’s outrageous that the new FiT only pays the highest reward to new generators – Good Energy believes that the early adopters of microgeneration technology should also be recognised for their pioneering attitude and taking a lead.

That’s why we’ve decided to continue paying our existing accredited HomeGen generators 15p a unit for all the electricity they generate and lobby to change the government’s mind.

It’s outrageous that the new FiT only pays the highest reward to new generators – Good Energy believes that the early adopters of microgeneration technology should also be recognised for their pioneering attitude and taking a lead. That’s why we’ve decided to continue paying our existing accredited HomeGen generators 15p a unit for all the electricity they generate and lobby to change the government’s mind.”

With the details of the much anticipated (and much debated) UK feed-in tariff announced, discussions are already taking place as to whether the rates will suffice to kick start the fledgling solar industry in Britain.

With the UK as one of the last major countries in the EU to implement a feed-in tariff mechanism as a means of boosting solar investment attractiveness, we have already given the opinion on this website that the government seems to be taking reals steps towards a viable renewable energy economy.

Praise

Coming under praise following the government’s lengthy consultation process have been key features of the tariff mechanism such as 25 year lifespan which will help to secure investments, inflation linkage , and calculations that the average annual ROI for sub 4kW installations will be around 7-8%.

With European tariff models having already pioneered the way through trial and error, it seems that the UK government has taken heed of some of the potential pitfalls that can harm the effectiveness of feed-in tariff mechanisms.

Certainly, in their annual Solar Attractiveness Indices, Ernst & Young consistently look favourably upon those nations with strong, long term tariff rates which offer security and real value to money for investors. With the recently announced tariff details it certainly appears that everything is in place for a strong solar industry to develop in the UK as investors are enticed by the opportunities of this new market.

With a history of incentivising renewable micro-generators, energy suppliers, Good Energy are well aware of the benefits that can be achieved from the recently announced feed-in tariff system, with CEO Juliet Davenport commenting that,

“Good Energy has shown for many years that financial incentives work on a commercial scale, benefiting generators at minimal cost to the energy consumer when delivered effectively.”

Solar thermal potential

The announced details of a further thermal tariff to be implemented next year also seem to have exceeded most expectations with regards to the solar thermal industry in the UK.

Tariffs offered for micro-generation using solar thermal technology will significantly boost the UK solar thermal industry as Chief Executive of Micropower Council Dave Sowden has stated,

“We particularly welcome the significant boost given to heat technologies such as solar thermal and heat pumps, and the recognition by Government of the crucial role microCHP is going to play in reducing carbon emissions for those with gas-fired central heating,”

Criticism

Unsurprisingly, criticism has been voiced from environmental campaign group and strong advocates of widespread renewable energy use Friends of the Earth (FOE).

With the government having set a target of generating 10 per cent of its energy from renewable sources by 2020, there is a concern that not enough is being done to dramatically reduce carbon emissions. While solarfeedintariff.co.uk amongst others have been happily surprised by the tariff announcement, FOE maintains that the rates will not be sufficient to attract investment in the industry in the face of strong competition from abroad. FOE campaigner Dave Timms has commented that,

“Installing renewable technologies will now be a good investment for many homes – but farmers, businesses, communities and others will get little or no extra incentive to invest in clean electricity.”

FOE maintain that in order for the UK solar industry to take off, just as the German industry did, the return on investment will have to be more around the 10 per cent mark rather than the 6-7 per cent figure in order to attract the levels of investment required to render the industry viable in the long term.

Solarfeedintariff.co.uk believes that the UK has a great role to play in the future of renewable energy generation and that with the feed-in tariff in place, 2010 is going to be a very exciting year.

If you are interested in what the tariff could mean for your home or business, or want information on the investment potential of solar in the UK, this website will be regularly updated with news and investment products to meet your needs.