Energy and Climate Change Secretary Chris Huhne, who is making a keynote speech today [Tuesday 21 September 2010] at the Liberal Democrat party conference, is being urged to protect a landmark scheme to boost renewable electricity from Treasury cutbacks.

Chris Huhne recently won praise from Friends of the Earth for allowing local councils to benefit from feed-in tariffs by overturning a long-standing ban that prevented them from selling green electricity back to the grid.

The call comes as Friends of the Earth launches a new report today by independent experts ARUP, which shows that cash-strapped councils, schools, households and businesses can make a guaranteed income and reduce fuel bills by generating electricity from small scale renewable energy systems, such as solar panels, under the feed-in tariff scheme, which was introduced with all-party support earlier this year.

The new report is the first in-depth look at the financial performance of a wide range of local renewable electricity projects using the new feed-in tariffs (FITs) and proposed Renewable Heat Incentive (RHI).

The report uses ARUP's financial modelling to show that councils (as well as communities and local businesses) that harness wind, sun and food waste to generate clean energy can, in the right circumstances, enjoy an attractive return on their investment - making money to help fund vital services and energy efficiency programmes like insulating homes.

For example, a community co-operative that buys a 1.5MW wind turbine (enough to power 1,000 homes) could earn 15.9 per cent return on investment annually for 20 years. The scheme would pay for itself in just seven years.

And fitting 8KW solar PV panels on a community centre could generate 11.5 per cent annual interest for 25 years, with the scheme paying for itself in around eight years.

The report also shows a school could earn almost £8,000 a year by putting up a 15-metre tall wind turbine on its playing fields, while a housing association could earn more than £7,500 a year by installing 20KW solar panels on a small block of flats.

However, a few schemes performed less well, indicating areas where the scheme might need improving in the future.

Friends of the Earth's Policy and Campaigns Director Craig Bennett said:

"Chris Huhne must stand firm and allow councils, communities and businesses to benefit from green energy revolution.

"It's absurd that the Treasury is even reviewing feed-in tariff payments because the scheme isn't financed by taxpayers, and there is already a planned review in two years time.

"This new research shows the scheme will allow everyone to benefit from renewable energy -  from people living in social housing powered by the sun to children learning in classrooms lit by a wind turbine. These benefits are threatened by this Treasury review.

"We hope that as many people as possible across the UK take advantage of this scheme to invest in renewable electricity projects - with oil supplies dwindling and fuel prices rocketing, the UK urgently needs to generate more green energy."

ARUP's Director Mark Watts said:

"Our report shows that feed-in tariffs now make many renewable technologies an attractive investment for a wide range of public and private sector groups who were previously excluded from the renewable energy market.

"The chief benefit of the feed-in tariff and proposed Renewable Heat Incentive is offering investors the certainty of a long-term commercial return - but it will only be possible to judge how much of an incentive it provides after a year or two of operation.

"Investor confidence is likely to be severely damaged if there are any unanticipated changes to the tariff scheme in the meantime."

ENDS

1.   The full report, FIT for the Future, is available here:
Independent experts ARUP used computer modelling to analyse twenty scenarios, from solar panels on an office to a community wind turbine, taking into account real-life circumstances to provide an accurate picture of how much each would cost and how much income it might generate.

2.   Selected renewable electricity scenarios from the ARUP report, showing estimated rates of return on investment, are outlined below:

Scheme and size: 1,500MW community-owned wind turbine on edge of town, about 80 metres tall
Annual estimated return on investment: 15.9 per cent
Initial cost: £1,944,187
Time for scheme to pay for itself: 7 years
Annual estimated revenue: £407,340

Scheme and size: 5MW city-scale anaerobic digestion plant bought by municipal authority
Annual estimated return on investment: 12.6 per cent
Initial cost: £58,600,000
Time for scheme to pay for itself: 7 years
Annual estimated revenue: £3,784,320

Scheme and size: 8KW solar PV on the roof of a suburban community building
Annual estimated return on investment: 11.5 per cent
Initial cost: £25,875
Time for scheme to pay for itself: around 8 years
Annual estimated revenue: £3,566

Scheme and size: 15KW wind turbine at suburban primary school, about 15 metres tall
Annual estimated return on investment: 10 per cent
Initial cost: £53,386
Time for scheme to pay for itself: 8 years
Annual estimated revenue: £7,716

Scheme and size: 20KW solar PV on the roof of a city social housing block of 15 homes
Annual estimated return on investment: 7.1 per cent
Initial cost: £66,775
Time for scheme to pay for itself: Around 9 years
Annual estimated revenue: £7,585

3. Case studies of areas taking advantage of FITs to invest in green energy are outlined below:
• In Bristol the local authority has won planning permission for two 3MW wind turbines in Avonmouth, enough to meet the electricity needs of around 2,700 average households a year.
• Houghton Kepier Sports College in Sunderland installed a 6KW wind turbine in February 2010, with another to be set up this year. About 15 metres high, the turbines will help power the building and significantly cut the school's energy bills. They are expected to generate about 9,400 units of electricity a year, enough to make 470,000 cups of tea.
• Housing provider Places for People is ready to fit solar PV panels to 50 rented homes in the Isle of Wight and 100 in Norwich. The tenants will enjoy free energy, while the upfront costs will be paid by the installer, who hope to recoup their investment through FITs.

4. Friends of the Earth led the successful campaign for feed-in tariffs (FITs) - also known as the Clean Energy Cashback - which were introduced in April 2010. FITs give guaranteed long-term payments to homes, businesses and communities for all the energy they generate from small scale renewable schemes up to 5MW (equivalent to two large wind turbines) such as solar panels and wind turbines.

5.  Answering a question about Feed-In Tariffs in the House of Commons on Thursday, Energy Minister Charles Hendry said "we inherited schemes from the previous Administration that were extremely generous but which were not absolutely clear as to who was going to pay for them and how they were going to be paid for. We are absolutely committed to encouraging the roll-out of renewable electricity and renewable heat, but we must study very carefully exactly how these schemes can be paid for". Energy & Climate Change Secretary Chris Huhne also said, in relation to the Renewable Heat Incentive: "In the context of the comprehensive spending review we need to review some schemes that we have inherited from the previous Government, and we will come forward with as much detail as we conceivably can as soon as that review has been completed." Hansard: 16th September 2010:

6. Friends of the Earth says that the Government shouldn't need to review feed-in tariff payments as part of its spending review, because the scheme's funding does not come from the public purse. A review is already planned for 2012/13.

7. During the General Election campaign both the Liberal Democrats and the Conservatives pledged to improve the feed-in tariff scheme if elected.

8. Press release: Lib Dems and Conservatives promise bolder green electricity scheme:

9. The Renewable Heat Incentive, due to be introduced by April 2011, is a guaranteed long-term payment to households, businesses, communities and councils who generate heat through renewable schemes like solar thermal water heating.