The eight most stupid things about the Government's stupid solar cuts
Yesterday the Department of Energy and Climate Change (DECC) announced massive, massive cuts to Feed-in Tariffs (FITs) – subsidies for solar, hydro and wind power.
My colleague Donna has rounded up the big picture. What follows is a bit more detail, following a soul-sapping scour through the small print, of exactly what it is DECC thinks is going to happen.
Simply for time reasons I’ve mainly looked at domestic solar in this blog because it’s the bit that most affects everyday people’s chance of being part of the green economy. No doubt things are just as grim for the other technologies. More anon on that.
Here’s the eight most dunderheaded things.
There’s not enough money to play with in the first place, because of George Osborne.
Begin at the beginning. The Chancellor’s antipathy towards renewable energy is legend. Back in 2011 his Treasury muscled into DECC’s turf and imposed an arbitrary, immovable cap on spending on renewables. That budget being apparently near its limit is the cause of everything that’s going on here – even though the actual budget is far bigger than FITs alone.
It’s good to keep an eye on costs, of course. But Mr Osborne’s playing hard-ball. He’s only letting DECC have £100 million to play with to fund all new installations between 2016 and March 2019. Laughable peanuts.
(Tax breaks to North Sea oil and gas, by the way, were worth £1 billion in 2013-14 alone).
A Martian would say: that’s a shame, eh. Can’t you give that a little bit more money, rather than chopping off its legs just as it’s getting going? To which Mr Osborne would say, go away, Martian: I’ve got some fracking to force through.
The new tariff rates are so low you may as well not bother
We’d all gritted our teeth in expectation of 50% cuts to the FIT. What we actually got, for the kind of solar you might actually put on your roof, was closer to 90%. Aargh.
As of right now, householders get 12.47p per unit (kWh) of energy they generate. That lets you pay back your panels in about, say, nine years. But what new folk will get from January 2016 is 1.63p. Less than two pence per unit! That’s not a subsidy. It’s an insult. Cuts to other scales of solar, and other technologies, are similarly wretched.
The only people that’ll bother now will be hippies in Totnes
DECC promises that “well-sited” solar panels will still attract investment. Oh yeah?
Right then. What does “well-sited” mean? Get this: it means just the south-west of England. Sorry, Scotland! Bad luck, Manchester! Your fault for not being better-sited. Ha ha, eh?
The tariffs have been set to “work” only for the very sunniest bits of the UK. And they don’t work even there. By DECC’s own admission, rooftop solar won’t actually make you any profit even after 20 years, even if you do live in Penzance.
So who’s going to bother? Only people that don’t care about financial return and just really, really like the planet (“motivated by sustainability” in DECC jargon). And/or who live on the English Riviera.
Community energy needed this like a kick in the undercarriage
Community energy is great. In Germany more than half of its zonking great renewable energy capacity is owned by individuals, families, towns, farms or other collectives of people bundling their money together.
Just 18 months ago the UK Government promised a community energy “revolution” in the UK. So much for that.
DECC admits the FIT cuts will mean curtains for most community energy schemes. Just like with those households in Truro, the ones that do make it through will need to be motivated by an “altruistic, energy saving” objective – ie, it’ll lose money.
The Government hasn’t worked out how many jobs it’ll cost
DECC’s cuts will see the best part of one million (!) fewer renewable installations in the UK between now and 2020.
Amazingly DECC haven’t done the sums on how many actual jobs this will cost, other than there being “likely to be a negative impact on existing jobs in the renewable electricity generation sector.” Thanks for that. Bit cavalier though eh, given the need for decent jobs in towns and cities across the UK.
Oh, and not only has DECC not worked this out, but it hasn’t built into its economic calculations the huge loss of tax income and increase in dole payments to which this’ll lead. Which, given the thousands and thousands of jobs in the sector, could be massive. I’d wager it might even outweigh the measly cost of preserving a decent FIT (see #7).
Yeah, not great news for climate change either
These cuts mean less renewable energy, which means more energy from fossil fuels, which means more carbon emissions. About 1.6 million tonnes more, to be precise. Which is something like putting 300,000 cars back onto the roads for a year. Great.
All to save £6 a year
And what’s it all for – this destruction of an industry, the mass unemployment, the increased carbon emissions and the huge step back in clean energy?
It’ll save you about £1 a year off your energy bill in 2016, rising to £6 a year by 2020.
The Government hyperbole about ‘hard working consumers’ is completely out of whack with the reality of how much helping people install renewable energy actually costs. A more sensible and fair thing to do, if lopping a few quid off bills really is the government’s prime concern, would be to pay for the difference out of general Government spending instead.
And what if it’s all just a precursor to closing FITs entirely in a few months?
The Government says that if these new plans don’t work – if that paltry £100 million I talked about earlier is all used up – then it’ll just flat out end FITs from January 2016. Finished. Nada. Zero pence.
And hmm. That’s exactly what’s going to happen, isn’t it? People are going to rush to install solar in the coming weeks while it still makes vague financial sense to do so. It’s the rational thing to do. And so what’ll happen is that the money will run out. Which means: bye-bye, Feed-in Tariff.
Proposing measly new FITs means that inevitably, there’ll be a rush on. At which point DECC will take away their ball and go home, shutting FITs forever.
Which would certainly keep Mr Osborne happy.
David Powell is Senior Economics Campaigner at Friends of the Earth. He tweets at @powellds.
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