Feed-in tariffs: Renewables: the ongoing battle

Prodigious renewable resources could be more effectively exploited if policies supporting renewable energy feed-in tariffs were introduced. However, vested interests and lack of political courage stand as major barriers, argues Miguel Mendonca.

For me, the back-slapping, bonhomie and general sense of self-congratulation at the enormous Solar Power 2007 conference in Long Beach in September was strangely heart-breaking. As the opening speech got under way, radiating waves of high-spirited triumphalist verve, I had to fight the desire to shout ‘but this should have been happening thirty years ago!’ It was great to see 10,000 solar power fanciers in one room, but let’s get some context.

Two days previously, on a sight-seeing trip from Long Beach to Los Angeles I saw not a single solar panel anywhere, despite flawless skies and uninterrupted sunshine. Even in cloudy Britain they can be seen by the roadside, powering speed restriction signs. But here: nothing, after maybe 150 km of driving. A day previously, we toured a small handful of solar installations in Los Angeles, and again I was amazed at how many solar panels I didn’t see. Nothing, aside from what was on the tour.

Why does a state like California, with around 360 days of sun per year (I’m told) – have so little infrastructure to harvest it, despite its standing as one of the world’s leading markets for installed solar capacity? Well, at least those at the convention knew. A CEO panel, which featured the heads of several of the world’s top solar companies, was largely agreed that in terms of policy measures, nothing could compete with feed-in tariffs for rapid, low-cost deployment. Later, while in San Francisco to meet with one of the US’s top feed-in fans, California Energy Commissioner John Geesman, he told me that feed-in would almost certainly come into common use in the US in around five years, partly because, ultimately, it is the best tool for the job.

California has much to gain financially, for two reasons: Silicon. Valley. The business opportunities for US manufacturing in general – in solar, wind and other areas – are immense. For instance, job-depressed Michigan, home to a leading thin-film solar manufacturer United Solar Ovonic, has just had a feed-in law proposed by Representative Kathleen Law. In such a region, opportunities would open up rapidly if a significant new industry were to take hold there – and the legislation looks strong enough to trigger these effects.

In Europe, home of feed-in tariffs, the big story has been the alleged murky activities of a few governments, prompting speculation over their motives. Once again, the behaviour of the UK government is looking shameful with regard to renewables. In the 1990s the then Conservative government opted for a tendering mechanism to support the market development of renewables (the Non-Fossil Fuel Obligation or NFFO). Tendering, as the name suggests, is a bidding system wherein developers bid for power-purchase agreements and or/access to a government-administered fund. Generally, government bidding systems in the past have automatically sought the lowest bid, with obvious results. Winners often cannot deliver the specified quality and quantity, and so the outcomes are limited and largely unsuccessful. The UK system performed as most do: poorly. In a somewhat bizarre twist, the current Conservative party, now in opposition, is again suggesting we return to this low-cost, low deployment, scale and technology-limited system – but calling it a ‘German style feed-in tariff,’ or a ‘competitive feed-in tariff.’ An examination of their proposals reveals a complete absence of a ‘German-style feed-in tariff.’

Compared to the Conservative slip of the tongue, however, the present government apparently has no shame. According to reports, the evidence is grim. But, a little background first. The New Labour government, it seems, decided the NFFO system was not doing enough to get renewables moving. The energy white paper of 2003 was very encouraging – it said no new nuclear, and suggested lots of support for clean energy. Fine. But, the support scheme they had gone for, despite strong advice to the contrary, was a quota/green certificate system. This system has been proven to deliver little RE for the money with high cost, low deployment technology and scale-limited. This is not a successful approach, but it does shut out smaller investors from the market, and create windfall profits for those investors big enough to stand the high investment risk built into the system. So, a winner for corporate interests, arguably a crushing blow to everyone else with an interest in RE.

To truly underline the UK government’s position, a leaked briefing paper recently showed that Britain couldn’t meet the EU targets of 20% of energy from renewables by 2020 under present conditions. Instead of examining how this could be rectified, officials at the Department for Business, Enterprise and Regulatory Reform (DBERR) looked at how the target could be dodged. Quoting the Guardian’s article which broke the story: ‘They advised lobbying EU member states to agree that the target could be interpreted more flexibly by including investment in solar farms in North Africa, or by counting nuclear energy as renewable.’ Another section asks ministers to examine ‘what options there are for statistical interpretations of the target that would make it easier to achieve.’

Sources in Brussels have stated that the UK, French and Polish governments have been working behind the scenes to have the targets met by trading Guarantee of Origin (GO) certificates. An EU Directive is now being drafted which may enforce a mandatory, unrestricted certificate trading system. This would allow member states to buy renewable energy certificates, instead of developing domestic resources and the attendant infrastructure. The effects of this would be horrible, increasing the prices for generating electricity from renewables, thereby creating public opposition to successful feed-in laws in world market-leader countries. Scrapping the finest instrument for producing high deployment at low-cost – which also accommodates all technologies and scales – would eventually cripple the European renewables industry, passing the lead to the US, China and Japan. A quarter of a million jobs would be at risk in Germany alone, while domestic energy needs would have to be met by nuclear and coal.

This outcome cannot possibly be lost on government and therefore, it must surely be a conscious choice, to opt for carbon-intensive, centralized, polluting, limited, corporate-owned fossil and nuclear-fuelled electricity production, instead of a carbon-neutral, non-polluting, limitless, decentralized, renewables-based system. To deny knowledge of this would be an admission of gross negligence and ignorance, and to admit to it would be an act of downright bewildering political behaviour. But – this is actually happening.

One major problem is the lack of organized opposition from industry, green groups, academia and trade associations, and an inability to work together to take advantage of opportunities. Rancour, division, politics and self-interest are glaringly apparent, but either all pro-renewables interests finally stand together, or we will be flattened by the ‘clean’ coal and nuclear juggernaut, and we all know it is heading our way fast.

Unless messages on renewables are synchronized, and we work together in lobbying for real support for all technologies and scales – to massively increase and accelerate international renewables deployment – individual branches of the industry will be left short-sightedly scrapping for their slice of the cake.

What is most troubling is that the conventional energy industry is getting so much more mileage out of the climate change issue than renewables. Is this not the greatest opportunity we’ve ever had to educate the public, gain political support and industry momentum – to get to the energy tipping point? You’d be forgiven for thinking otherwise.

The opportunity remains for renewable energy to force its way into the mainstream of global energy production, and finally remove many of the myths it has been dogged by for decades. We have the need, the technologies and the policies – renewable energy is here to stay, but as campaigners we also need the industry’s help. We need a common message to give to decision-makers and the public, we need solidarity, better information flows – and we all need to get one central thing in focus: if we truly believe what we are saying about how little time we have left to stop burning fossil fuels, then we must act not just with haste, but in a more coherent, cohesive manner. Part of this means defending policies that really work, and bringing these policies to those who don’t have them. The conventional energy industry can join in too, instead of spoiling the party – and then we will truly have something to celebrate.

Miguel Mendonça is Policy Officer with the World Future Council
web: www.worldfuturecouncil.org

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