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September 29, 2010United Kingdom is going to review the Subsidies given to Renewable Energy just 6 months after having started the scheme with much fanfare in April 2010.The Feed in Tariffs given to Solar Installations has led to a mini boom with thousands of homes taking advantage to the scheme to install solar panels.Companies have also taken advantage by offering finance and installations schemes to bolster their business.The Subsidy Burden has also not been too high as the installations despite exponential growth have been on a very low base.Besides the Green Subsidies are borne by Electricity Consumers without adding to the Fiscal Deficit burden of the Government.The move comes as a big surprise as the Ruling Party has said that it its Pro-Green and will help in increasing Alternative Energy in the United Kingdom.
United Kingdom a Laggard on Renewable Energy
UK has been the biggest laggard in Renewable Energy amongst the European Union.Despite being a leader in Offshore Wind,it severely lacks in other forms of Green Energy like Solar,Biomass etc.It has been very late in introducing a Feed in Tariff Scheme which has been a huge success in Germany and other countries.While there have been booms and busts caused by poorly designed FIT schemes in Czech and Spain,UK does not suffer from this problem.The Subsidy Scheme adopted by UK favors small distributed installations which is currently the aim of the other EU countries.This review has led to uncertainty in the minds of Green Investors as Government Subsidy is essential for reasonable returns.
Why UK is Reviewing the FIT
The Labour Government which implement this Green Policy has changed and the new PM David Cameron is trying to radically change the Government Policy.He has sharply curtailed the UK Budget and may want to change the Opposition Party set Green Policy as well.This seems to be the only justification behind this move which can only be described as erratic.
Uncertainty over UK solar PV feed-in tariffs unsettles investors
The feed-in tariffs were introduced in the UK on April 1, 2010 and cover
PV, wind, hydro, and anaerobic digestion with an installed capacity up to 5
MW. There has been some speculation that the FITs for solar PV could be
reduced before 2013.“Cutting rates now would seriously affect investor confidence, not only
in PV, but also in other government backed renewable schemes such as the
forthcoming Renewable Heat Incentive,” said Stuart Pocock, technical director
of the REA.The Department of Energy and Climate Change has said it will not clarify
the position until after the comprehensive spending review on October 20.In a statement, Pocock urged the government to make an immediate
announcement confirming that the published tariff rates will not be reduced in
advance of the scheduled first review, due to take place in 2013.However, Michelle Thomas, partner and head of the clean energy and
sustainability group at international law firm Eversheds, said that the
position is not at all clear and it should not be assumed that a reduction is
definitely going to happen.“Any change to the FIT regime would not only be significantly detrimental
to the UK solar industry…[and] could clearly cause the UK to be seen as too
risky an environment within which to invest,” Thomas said\. .The UK FIT scheme is funded by a levy on consumers’ and industries’
electricity bills.
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