Sunday, May 20, 2007

Pay people for the power they provide!

Donnachadh McCarthy is a micro-generator, green consultant and former Liberal Democrat federal executive member. In 1997, before it was fashionable, he installed solar panels on his South London roof. (Though the illustrations are of local solar heating and generating installations.) He has since added an experimental wind-turbine.

He calculates that he will never have to pay for energy again and is even able to recoup some of the cost through a deal with EDF Energy. Donnachadh receives from them 7p per unit for electricity generated which he does not use. Thus, he was able to bill them for £45 last year. At the retail price of 11p, he reckons to have made a further saving of £55 annually.

However, he paid over £13,000 for his solar panels and wind-turbine. Even with a government grant, he reckons that it will take between 90 and 120 years for him to pay back the capital cost of the system.

Some UK energy companies will pay the full market price for micro-generated electricity, but charge the customer for the installation of the export meter. This could be £100 or more.

The German government compels its energy companies to buy back from consumers at a far more generous rate. That could account for the fact that there are over 300,000 installations of solar panels generating electricity in Germany. The UK equivalent is 5,000.

The Labour MP (and at one time a challenger for the deputy leadership of his party) Alan Simpson chaired a recent symposium at Westminster. Simpson is an enthusiastic micro-generator, but only receives 40% of the market price for his exported electricity. German customers get four times the market price. Simpson calls for a similar deal for UK consumers, guaranteed over twenty years.

The capital cost of solar panels has come down. However, the UK government grant has come down even more. The maximum is now £2,500, whereas it was previously, in practice, £7,000. (See table below.)

The government defends its policy, saying that more households will be able to benefit from the lower grant. It also calculates that subsidising households as the Germans do will cost £380m annually.

However, our Shadow Trade and Industry Secretary, Susan Kramer commented:

“This announcement means fewer people will be able to afford to generate their own electricity.

“This will have a knock-on effect on the industries servicing green energy. Even before this announcement, the mishandling of these grants has caused redundancies. This announcement will mean businesses withdrawing from the sector and further redundancies.

“The Budget announced an extra £6million for the Low Buildings Carbon Programme. Given that the cuts in grants will no doubt lead to reduced take-up, how exactly will this extra money be spent?”

TechnologyPrevious maximum grantNew maximum grant
Solar Photovoltaics£15,000£2,500
Wind Turbines£5,000£2,500
Small Hydro£5,000£2,500
Solar Thermal Hot Water£400£400
Ground Source Heat Pumps£1,200£1,200
Automated Wood Pellet
Fed Room Heaters/Stoves
Wood Fuelled Boiler Systems£1,500£1,500
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