Twitter and the green press is buzzing with the UK solar industry leaping up and down as they fear the Feed-in Tariff (FiT) is going to get cut by the Government. Apocalyptic predictions are flying about – the industry will crumble, investment dry up, the earth will end…
If you aren’t an energy geek, the FiT is a premium rate for locally generated renewable energy and it was designed to ensure a healthy return for investors to encourage uptake. The (capped) cost of the scheme is paid for by all electricity consumers.
What’s happening now is the price of solar panels is plummeting, so uptake is going through the roof (excuse the pun) – almost three times as much installed as expected – as people take advantage of the better return on investment (ROI). The Government is said to be considering cutting the FiT for a second time to maintain the original ROI.
FiTs aren’t universally popular, even in the green community. Commentator George Monbiot has criticised the FiTs for shunting cash from people who are often struggling to pay their electricity bills to those who already have the money to invest in renewables. I wouldn’t go that far – in fact I’m a big supporter of the FiT – but I think the industry still has to be mindful where that money comes from – and the current financial pressures on those householders.
If the Government does reduce the tariff to reflect the new, lower cost of solar, investors will get the same return as originally intended, more panels can be installed under the same cap and there won’t be any further increase in consumer bills. So what’s the problem? Who loses? How will this kill the industry?
Renewable industry players might have to take a little less profit than they had hoped (but no less than they were promised), but why shouldn’t the FiT track the capital costs of technology? It is after all a subsidy, not a right.
There’s a parable about a goose that laid golden eggs…