Editor's blog by Ian Vallely I believe that everyone is entitled to my opinion!

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Discovering the right FiT

08/12/2011 16:57:11 The Feed-in Tariff (FiT) was introduced by the Government in a bid to encourage the take-up of electricity generating technologies like solar photovoltaic (PV). Solar PV is uneconomic to install and run without a subsidy so it needs a kickstart and that is what the FiT is supposed to provide. Now comes the news that the FiT subsidy is being halved.



But it is arguable whether the strategy made sense in the first place, partly because subsidies distort the market, but also because the FiT is based on a dubious premise – that piling money into microgeneration is the best way to save energy and cut carbon emissions.

In fact, there are cheaper and far more effective ways to achieve energy savings and carbon reductions. The starting point should be reducing the demand for energy in the first place by fitting effective insulation (the Green Deal has an important part to play in this respect); next, use energy more efficiently; thirdly, supply energy from renewable sources; and finally, ensure that any continuing use of fossil fuels employs clean technologies and is as efficient as possible.

That’s why I believe the recent halving of the FiT is a step in the right direction. Arguments in favour of the cut were eloquently expressed by consultant Mike Malina in his recent blog for our website. He said: “I’ve never understood why one particular technology [solar PV] should have such a massive indirect government-controlled subsidy. In fact, we consumers are providing the funding through our electricity bills. The problem with this is it’s not equal and those at the poorer end of society see few of the benefits...

“Some would argue that without this subsidy, the deployment of the PV technology would not have had the scale of impact that it has had. This is probably true. But it doesn’t take away the fact that gimmicks to provide a bit more ‘green bling’ have negatively impacted on areas where the money could have been spent, for example, providing more targeted lower carbon and energy saving measures like insulation, controls and making sure householders’ heating systems were set up correctly and re-commissioned for optimal performance.”

Although he’s happy with the FiT cut itself, Mike is critical of its timing: “The Government has ineptly made the cut within six weeks of Christmas. The onset of winter weather makes roof installation potentially problematic and the 11 December deadline is likely to create a stampede akin to the Klondike gold rush.”

Whatever the arguments over the timing of the FiT cut, and the likely chorus of disapproval from those complaining that it will lead to the loss of valuable green jobs, the cut is right in principle – PV systems are not economically viable without a subsidy (funded by us all, rich and poor alike). We must get the basics right before we start tinkering around and creating a false market.