Why we want the judicial review to back the FiT reduction for schemes over 50kW (part 2)

Last week we commented on how the clamour of heavily funded solar PV speculators to reverse the Government review of FiT's wasn't good for the renewable culture we need to nurture in the UK.  Today we are concentrating on the economic impacts of large scale, grid connected solar farms if they are rewarded with the original feed in tariff rates as the complainants would have it.

So to set the scene: The UK is still suffering from the effects of the credit crunch and subsequent economic recession. Unemployment is high (although recent figures suggest a significant reversal, much of that has been attributed to part time workers), as is inflation, the banks are not lending, interest rates have been at historically low levels since March 2009 and the construction industry has taken a nosedive at a time where housing stocks are low.

The FiT review is designed to discourage 'solar fields'

The Coalition Government are charged with reversing these trends, and must do everything in their power to do so for the good of the country. One of the growth sectors they have identified is the renewable/green market, since we as a country have made a legal commitment to reduce carbon output in the Copenhagen Agreement.  The UK has signed up to ambitious targets to reduce our carbon impact by half against 1990 levels, so it would seem that investment in the 'green' economy is the only solution. As a means of raising funds necessary to help make this staggering change in our culture, the omni-profitable utility companies have been hit with a carbon levy, or 'green tax'.  It was decreed by the last Government that this fund be re-distributed (via the feed in tariff) to those who generate their own electricity; simultaneously penalising polluters and rewarding those who turn to renewable sources of energy.  2 birds, 1 stone.

In the UK there are a number of FiT qualified installations available but, much like in Germany, the overwhelming favourite, accounting for about 95% of our FiT payments, is solar PV.  Solar PV installations come in many shapes and sizes but the recent FiT review has sought to discourage large scale installations on a purely financial level - and therefore make smaller systems more attractive to those who wish to invest in this vital sector of Britain's modern economy.

When thinking about the economic impact of the choice between smaller scale installations and 'solar fields', the simple economic principle to consider is economies of scale.  This principle is universally accepted by economists, politicians, butchers, bakers and candlestick makers alike.  The simple premise is that in the creation of any product, the more you produce the cheaper the cost per unit and the greater profit per unit you are able to make (up to a point where you maximise the marginal returns). When you apply that theory to the solar PV part of the UK feed in tariff scheme, the larger a solar PV project the cheaper the unit cost of supply and installation. However, due to the fixed value of payments the most attractive marginal return is set too high and the subsequent drain on the carbon levy pot of funds is perceived as too great by the current Government.  The simple fact of the matter is that the last Government set the fixed prices too high and created a market where large value speculators can use economies of scale to make disproportionate profits.  We would argue that at this juncture - where tradesmen are out of work, where students are selecting further education purely because they fear unemployment - it is the grass roots of business that need the shot in the arm, to create the wealth of tomorrow.    

The Government would prefer you pop a few panels on your house,
and so would the economy!

Consider now the ineconomy of smaller scale production where labour represents a higher proportion of the input and proportionally greater management time and greater effort per unit is required, not to mention the design nuances of small scale bespoke projects.  This means added costs, but luckily, in the instance of the FiT scheme, the unit price (set by the  Government) is also proportionally higher.  So smaller scale MCS installations require great input from local sources; or in other words - they provide more jobs.  The income generated from the scheme then goes to the people who own the small scale installation, who are far more likely to be the kind of  'normal' folk who have been affected deeply by the recession.  The scheme now turns into something that does not provide benefit only to the wealthy but also provides employment and secure income to those who are deeply concerned that today's pension market may never fulfil their requirements. In economic terms the review has reduced the marginal return for all those installations above 50kW and shifted the highest marginal returns to those installations below 50kW - making smaller installations, and smaller installers, a more attractive prospect.

In summary, we believe that if the judicial review finds in favour of the conglomerate of suppliers, installers and others it will mean more money for the rich and less for the poor; but should the Government's decision be supported it will mean that government intervention has been for the greater good, bringing more jobs, income and tariff benefits to the people who need it.

Why we want the judicial review to back the FiT reduction for schemes over 50kW

Much has been written and said about the accelerated feed in tariff review and the subsequent judicial review requested by a number of individuals and organisations.  Most of the comment has been from the perspective of the very same parties who are likely to miss out as a result of the reduction in feed in tariff for those solar PV projects larger than 50kW.  As a mostly small scale domestic installer, Norman Environmental feel that an important side to this argument is being ignored by both the press and the web's 'thought leaders' - who appear to us to be heavily weighed down by the financial returns of 50kW+ solar PV 'fields'.


We at Norman Environmental believe that to secure a low carbon future, the whole country has to undergo a culture-shift, and slowly we believe that this is beginning to happen.

We're backing Chris Huhne on FiT reductions over 50kW

Evidence of this can been seen all around us.  For example, cost cutting has meant in some counties refuse and recycling waste are picked up on alternate fortnights, forcing many people to recycle more waste and recycle more efficiently. Also, things we used to take for granted like petrol, diesel, electricity and gas are more expensive than ever, meaning that we are being more frugal in our energy usage.  

Meanwhile the term 'carbon footprint' has permeated our language to such an extent that we are more aware than ever that each and every one of our actions has the potential to impact the environment.

Solar fields will not create the cultural change we need in the UK

The question you may be asking is, where does micro generation fit into this?  And those of you who disagree with the thread we are developing are right to think that more solar panels equals less carbon output.  You may think that since that is our goal, solar fields are are a good, swift solution to our problem. 

Well no. That's not how we see things at all.  In fact we would argue that that attitude is (almost) as short sighted as the one that got modern western society in this mess in the first place. 

It is true that the quicker we install more solar panels and large scale renewable energy sources the quicker we will reduce our reliance on fossil fuels. But where then? How do we ensure that in the long term we treat energy with respect, thereby minimising waste? How do we ensure that we are not just putting the problem off until tomorrow? We believe that, in the minds of the subsequently ignorant population, a plethora of large solar fields are no better or worse than fossil-fuel-hungry power stations. However, should micro generation become part of UK culture - and everyone, or at least as many as possible, in the UK becomes more aware of the human, environmental and financial cost of harnessing energy for their own use - then we believe that we, as a nation, will create a culture of treating energy with respect.

The fact is that our carbon output has to be squeezed from both sides, minimising consumption AND maximising economy.  Encouraging small scale installations will allow solar PV to help reduce carbon output from both directions as individual homes monitor their energy generation and consumption. In our opinion too many solar fields will unbalance the equation toward haste and away from lasting change and that is why we want the judicial review to find that the Government are within their rights to make the tariff reduction on schemes above 50kW.

Our next blog will be part 2 of why we want the judicial review to support the Government giving our thoughts on the subsequent economic benefits.

Solar Thermal and the Renewable Heat Incentive (RHI)

Solar thermal panels and tubes are designed to reduce our reliance on fossil fuels to provide heat in our homes and commercial properties. They work almost in reverse to air conditioning and refrigeration units, by harvesting solar-heat and transferring it to a water cylinder. They can be of great benefit as a subsidiary heating source especially where the property in question relies on oil or LPG gas for heat. These fossil fuels are becoming prohibitively expensive and as such the free heat provided by the sun through a solar thermal system is hugely attractive, especially to those in remote areas.



This diagram shows how solar thermal installations work as an addition to your existing system

 The upcoming renewable heat incentive (RHI) provides potential buyers with another financial attraction on top of the savings described above. So far we have been made aware that the RHI will apply to a number of different systems, such as;

• Wood fueled heating such as biomass boilers,
• Ground source heat pumps,
• Air source heat pumps, and,
• Solar thermal installations

The renewable heat incentive will work in two stages, stage 1 provides the client with a subsidy toward the upfront cost of installation and stage 2 will work in a similar fashion to the feed-in-tariff (FiT) - insofar as it pays the owner a set fee per unit of heat harvested by the system, measured in kW hours. Current indications are that the stage 1 payment for solar thermal installations will be £300, whilst stage 2 payments will be 8p per unit, and that recurring payments will be index linked and paid for a period of 20 years.  The Energy Saving Trust believe that although all installations completed since 15th July 2009 will be eligible for stage 2 payments, stage 1 payments will not come into effect until 2012.

Are you interested in a quote for a Solar Thermal installation at your home or business premises? Fill in this form to arrange for a survey and quote today.