Energy and Climate Change secretary Ed Miliband has told the House of Commons the Energy Bill would be amended to introduce a 'feed-in tariff' to guarantee prices for micro-generation projects supplying electricity to the national grid.
On October 16, in his first speech to parliament as head of the newly-created Department of Energy and Climate Change, Miliband said he will amend the climate change bill to raise the carbon emissions cuts from 60% to 80% to be met by 2050. Miliband said part of that effort includes greater support for microgeneration technologies including combined heat and power (CHP). He said the amended bill will include a feed-in tariff for microgeneration as well as “small community-scale renewable energy projects”.

The government's commitment to a feed-in tariff has been made thanks, in part, to readers signing Heating and Ventilating Review's online petition to Downing Street which campaigned for a CHP feed-in tariff. The petition was launched in response to the current climate where UK microgenerators do not receive a guaranteed price for the electricity they sell back to the grid and in many instances they receive no payment at all.

With no figures given by Miliband for what the government's commitment translates into, in terms of p/kWh, industry experts estimate that a realistic CHP feed-in tariff for the UK of around 5p/kWh would lead to 18 million units being installed by 2030. This would reduce the country’s CO2 emissions by 24 million tonnes a year and would help plug the energy generation gap until the proposed new generation of nuclear power stations comes online.

“CHP has the best payback of any of the sustainable technologies whatever the market conditions,” said Mike Malina, technical consultant to the M&E Sustainability campaign headed by the HVCA and the Electrical Contractors’ Association (ECA).

A similar tariff system has already proved highly successful in Germany and is now being enhanced. Germany's CHP owners already receive a healthy payment for electricity they generate and sell back to the national grid. And from January 1, 2009, they will also receive money for electricity they generate and use themselves. This tariff is guaranteed until 2016 thanks to the country’s new CHP Act. At the same time, Germany has introduced a 10% surcharge on fossil fuels providing further incentive for users to invest in alternative energy sources.

“We have been calling on the UK government to support something similar for some time,” said David Shaw, business manager of Baxi-SenerTec UK – the British-owned company that manufactures mini-CHP units in Germany.

He added “In 1999 the German market looked very similar to how ours appears today, but incentives have totally transformed the commercial environment in favour of microgeneration. Under the new regulations, microgenerators now have the same rights as the large utility companies and power stations.”

Mike Malina said “The German model is an ideal one for the UK to follow because it shows what can be achieved by using financial incentives. If the UK government is serious about cutting carbon emissions and improving our security of energy supply, it must stand up to the utility companies and impose a feed-in tariff system that guarantees consumers a fair price for energy they generate themselves.”

Malina added “This latest announcement suggests that finally there may be some political will to make this happen.”