Business leaders warn Treasury to leave feed-in tariffs alone

The heads of more than 60 renewable energy companies have warned the government that premature cuts to the feed-in tariff scheme would "cause investors to flee" the microgeneration sector.

Former Renewable Energy Association chief Philip Wolfe, Juliet Davenport of Good Energy and Dr Paul Golby, chief executive of E.ON UK, were among the signatories of the open letter addressed to the Treasury and energy and climate change secretary Chris Huhne.

The letter calls on the government to put an end to recent speculation that feed-in tariffs might fall foul of the ongoing Comprehensive Spending Review by confirming that they will continue at their current level.
Chris Huhne came under pressure only last month to stand up to any Treasury cuts to the scheme after a report concluded that scaling back the tariff would destabilize the UK's microgeneration industry by damaging investor confidence.

The letter echoes the report's findings, warning that early changes to the scheme, which is not scheduled to be reviewed until 2013, would represent an " unprecedented and confidence-shattering intervention."
Alterations would "destroy the value of recent investments", put the sector's "ability to attract future investment in mortal peril" and "seriously jeopardize" the UK's prospects of hitting its mandatory 2020 renewable energy and climate change targets.

"Premature adjustments to the tariff would have a profoundly damaging effect on long-term investor confidence in the clean tech and renewable energy sectors, and may cause investors to flee altogether, thereby stifling any future investment," it read.

And it closed by warning: "In short, investors simply would no longer trust government not to make subsequent, unpredictable interventions."

Dave Sowden, chief executive of the Micropower Council, which organised the letter, called on the government to protect jobs by clarifying its stance on the issue now, rather than waiting until the results of the review are published later this month.

"Customers are already responding to this speculation by canceling orders in case the feed-in-tariff gets scrapped. Thousands of jobs and hundreds of millions of pounds of investment are now hanging by a thread," he said. "It is therefore vital that the government squash this speculation without delay by confirming it will honour the current feed-in-tariffs."

His comments were echoed by Paul Foote, director of the Conservative Environment Network, who warned that any move to cut feed-in tariffs would seriously harm the government's credibility.
"Cutting the feed-in tariff poses extreme risks to the government's commitment to carbon targets, to investor confidence, and to David Cameron's reputation on the environment," he said. "If there isn't an ambitious scheme for feed-in tariffs and a renewable heat incentive, it is game over for our domestic and European targets to reduce carbon. We simply will not meet them."

However, government clarification on the future of the scheme is unlikely to come before the review is published later this month. A spokesman for the Treasury told BusinessGreen.com: "We don't comment on speculation and will not be drawn into running analysis on the spending review."

The government is facing growing fears that the spending review will hit environmental policy particularly hard. The latest letter comes just days after businesses and MPs signed a statement demanding that the Green Investment Bank be provided with £4-6bn over the next four years to boost low-carbon investment and jobs.
However, the latest move in the campaign to protect the feed-in tariffs was overshadowed somewhat by reports that Huhne yesterday went into the government's "star chamber" where the programme of departmental cuts is being finalised, suggesting that the all-important decision on the future of the scheme may have already been taken.

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Feed-in tariff incentive scheme must pay all generators the same

With the media awash with stories of rising numbers of new microgeneration installations and entrepreneurial companies springing up who will install them at zero cost, momentum behind the government’s feed-in-tariff (FiT) scheme is really beginning to gather pace.

Since FiTs were launched in April this year, Ofgem figures now show that nearly 9000 new solar, hydro, wind and microCHP projects have been installed around the country

As the UK’s leading 100 per cent renewable electricity supplier, with over 1300 independent generators on our books, Good Energy has been paying our own version of a FiT since 2004. And we’ve campaigned hard for the introduction of a support scheme to provide businesses and households with the financial certainty they need to invest in microgeneration.

We welcomed the introduction of FiT in February as a great step in the right direction. But the news that large numbers of early adopters have yet to register for the scheme, demonstrates that the FiT incentive doesn’t go far enough.

The problem is not that these generators simply don’t know about the FiT incentive, as suggested by ‘industry insiders’, but that they receive a much lower rate of payment than installations which took place after July 2009 – just 9p/kWh for their energy rather than the standard 41p/kWh that solar installations post-July 2009 are paid.

For someone with a 2kW solar PV, that amounts to average payment of around £150 a year – little wonder that they feel disgruntled, disenfranchised, and that it’s not worth the copious amounts of paperwork involved to get the payment.

These individuals and businesses were the pioneers who invested in small and medium-scale renewable generation before the feed-in tariff incentive was created. Why should they be paid less for their energy when they are the very people who took the greatest financial risks in the first place, helping to demonstrate to others how it can be done and encouraging further adoption?

The answer is simple: they shouldn’t.

Since I founded Good Energy 10 years ago I have met scores of companies and individuals who have invested the time, energy and money in renewable projects because of the rewards, both financial and ethical, that they have reaped from them. Those people have been vital to the development of the feed-in tariff scheme we now have in the UK. Without their commitment to microgeneration, Whitehall would have had to spend a lot more time and money encouraging individuals and business to invest in renewable generation projects.

Furthermore, they have taken the risks and broken the new ground necessary to help create the incentive scheme that we have today.

Earlier this year Good Energy launched our Fair Deal for Entrepreneurs campaign which prompted nearly 100 MPs of all parties to back the call to reward pre-July 2009 early adopters for their hard work and innovation. The then Conservative opposition committed, in writing, to reviewing Government policy in this area. Eighty per cent of Liberal Democrat MPs, including leading members who are now in government, backed this campaign.

As Parliament heads into its autumn programme, Good Energy intends to keep up the pressure on the new government, which plans to introduce a “full” FiT scheme.
If Good Energy has its way, the scheme will not only be full, but also fair.
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