Monday, March 10, 2008

Pollution Solution: Feed-in Tariffs

Heard the term Feed-in Tariff (also referred to FIT, or REFIT - renewable energy feed-in tariff)? Bet you have. It's the catchphrase of preference for all true RE geeks (that's Renewable Energy, not Religious Education). FIT's will help solve our failing RE targets and if you do not know this already you are sooo behind the times. Our Labour government are now toying with the term and contemplating stealing the march on Tory and Lib Dem sworn FIT policy. There has even been an EDM (Early Day Motion) proposed by Labour MP Alan Simpson that is proving popular with 180 votes so far. Friends of the Earth, Greenpeace and the Renewable Energy Association are all shouting loudly for FIT's. And so they should.

So, here for you, is the complete low-down on why we so desperately need to support RE, how to do it and what FIT's are...

Why do we need RE?
If you subscribe to the basic principle that we have no option but to replace our current use of polluting fossil fuel with sustainable non-polluting alternatives (whether it be for reducing greenhouse gases and/or because of our pending energy crisis), then energy from renewables is the inevitable solution.

How can we support renewable energy?
For specific RE technologies to succeed, well-conceived government intervention is required. The simple fact is that without appropriate legislative assistance, RE systems are unable to compete. We are afterall dealing with a historical energy system predicated on the use of fossil fuel. New mechanisms are need to be implemented to open the door to RE being included and indeed, in time, fully replacing fossil fuel.

What legislation is required to make this work?
A FIT law. FIT's are a specific market mechanism to facilitate non-commercial RE technology to become commercialised in as fast as time as possible. In other words, it will take RE technology to mass production levels where it can stand alone. They do this by guaranteeing a favourable price (the tariff) for the electricity produced (feeding-in to the grid) over a set period of time (usually 20 years).

It is well established that FIT's are the most effective, cost efficient and transparent system to facilitate not only introduction of RE into the marketplace, but also to promote homegrown industry in the sector. Just look at all countries that have successful FITs, eg Germany, Spain. One aspect of FIT's that is often overlooked but is so vital is that they place a legal obligation on the utility to buy-in the renewable electricity (at a set price); thus no queueing until some ageing dirty coal plant falls off the radar to finally be accepted ongrid. Priority access for RE is a vital mandatory tool.

In a nutshell:
• work on a tariff rate for specific RE technologies that is guaranteed for a set period (usually 20 years). For instance, Germany has FIT's for small hydro, onshore wind, offshore wind, biomass, biogas, PV and geothermal (each RES set at different levels) but not one for CSP because they do not generate CSP on home turf;
• place a legal obligation on the utility companies to purchase electricity at set pricing levels from RES installations which are produced nationally;
• do not apply to buying in of RES from other EU countries or third party countries;
• are not trans-boundary, nor are they ever likely to be. It is the EC's intention that they remain voluntary as a mechanism for each country to implement as they see fit to promote home-grown RE;
• so far 19 out of 27 EU countries have implemented FIT's under their national legislation. Another 12 countries world-wide have adopted this system, and there also exists the use of FIT's at state level in 10 further countries.

[map of EU countries with FIT's]

FIT Benefits:
• proven to be the most successful mechanism to develop RE markets and domestic industries, and achieving the associated social, economic, environmental and security benefits;
• easy to implement and administer, FIT’s are transparent and cost-effective;
• greater flexibility can be designed into the scheme to account for changes in technology and the marketplace;
• encourage steady growth of small- and medium-scale producers;
• low transaction costs;
• ease of financing;
• investor security;
• ease of entry.

Benefit to you
+ You get to buy your own solar panel, wind-turbine etc at good price;
+ You generate your own clean energy (and sell the excess onto the grid, thus helping others too)
+ You get to keep your bills down whilst helping the planet.

There are various books on RE and potential policy, but the best of the lot is: Feed-in Tariffs, Accelerating the Deployment of Renewable Energy,2007, written by one of the foremost experts in this area, Miguel Mendoca. Amazingly, he makes a very dry subject utterly fascinating.

Even better, FIT's are so easy to adopt as national policy that there are now two websites that shows policy makers how to implement the requisite legislation:
Policy Action on Climate Toolkit - everything you need for implementing a FIT (and a nifty 5 min video too)
World Future Council - comprehensive documentation in support.

So, no reason not to get FIT, Mr Brown. Oh and one other thing - that Permitted Development Order that was shelved back on 10th October last year will need dusting off and implementing too, so that we shan't have the whole thing stymied for microgeneration installers by having to apply for planning permission. And while you are at it, could you overhaul the Low Carbon Buildings Programme too? Easy to apply for grants would be much appreciated also. That really would be a pollution solution package to shout about.

Desktop Direct Action: You can email your local MP to ask them to support the FIT EDM. Not sure who your MP is, or what their email address is? Go to Easy - and effective.


Anonymous said...

Overall, I think I support FITs too - but I don't think they're such as no-brainer. The main thing to remember is that FITs encourage microgeneration, not lower emissions per se. It is not really proven that installing microgenerators on homes is an efficient thing to do.

The other thing is that FITs are not free. The energy suppliers' customers have to pay for them. A FIT is a tax, in effect, and it works in favour of those that install renewables (i.e. usually the richer people).

It may be that a similar amount of money could be spent more effectively on large scale renewables (and it almost certainly could be spent more usefully on energy efficiency).

Polly Higgins said...

Dan, you raise some important points - which I would like to reply to.

1. I disagree - on three points. Re efficiency of microgeneration. Firstly, FIT's are applied to assist the uptake of renewable energy, which by definition is energy that does not come from fossil fuel and therefore does not generate carbon emissions from the energy it creates. If the externalities were factored in for fossil fuel use, then pricing and efficiency would prove a very expensive costing exercise.

If viewed in terms of cause and effect, a renewable technology does not emit CO2 emissions. Yes, there are initial emissions caused by the production of the item (turbine etc), but there are few if any emissions generated by the lifecycle of the machine.

Secondly, it is our use of fossil fuel that is creating our excessive emissions. So if we are to have energy at all that does not generate emissions it needs to be sourced from benign renewable non-polluting energy. Yes, it takes energy to make these things, but the environmental payback is but a matter of months (longer for PV admittedly - but at least they can be discussed in these terms - coal does not have a pay-back!).

Third, I do not understand what you mean by saying that it is not proven that installing microgeneration is an efficient thing to do. Energy efficiency is about using polluting systems in a less pulluting way eg energy efficient bulbs are 8 times more efficient than old fashioned flourescent bulbs. But, it's still creating emissions.

Likewise, energy efficient cars. The use of energy by your car may well be super-efficient in 2008 terms, but there is no getting away from the fact that the source of energy pumped into your car is polluting.

When the source of energy is replaced, from fossil fuel to renewable energy, then you do not have an (fossil fuel based) energy efficient system, you have a renewable system - a practical system that will not generate emissions. Infinately better than merely having a fossil fuel energy efficient system.

2. You are right: FIT's are not free. They are dispersed across all consumers , but that dispersal of cost is nominal. In Germany, the cost amounts to £12 per person per annum, £3 per quarter - not an insurmountable amount for most. Is that such a severe penalty to pay?

Sure an individual with a decent income will be more likely to install RE, but there is an equitable argument to say that it must remain connected to the grid, so that others may benefit from use of the excess.

3. Issue of what to spend money on. Surely this is a situation that choosing only the best price RE is a fallacy? We need both large and small.

Small has ancillary benefits that cannot be directly costed in, but can be assessed nevertheless. For example, support for microgeneration has proven to facilitate the necessary shift in behavioural change (it provides a hands-on solution). Also, distributed RE is vital for the post-peak oil community - if it isn't already running out, then it will very soon. And we shan't have the luxury of time to debate which RE technology is the one. It is a matter of grasping all RE that we can and rolling it out as fast as we can.