The Great British Solar Scam

It is not that Britain doesn’t get sun you understand. It does. But, coming originally from Manchester, famous for its gray skies₁, it is hard to have any real faith in the ‘British’ sun. American actor Robert Vaughan, moving back to the US after a spell living in England, once put it well enough: “The British summers are impossible”. I have constantly sought to reveal the true economics and the feeble efficiency and reliability problems inherent in the current wave of renewable energy alternatives. But when radical leftwing eco-ideologue and journalistic Point Man for the climate alarmist lobby George Monbiot describes the British pro-solar plan as a “great green rip-off”, you know something must be seriously amiss. In April the outgoing UK Labour Government introduced a new feed-in tariff scheme obliging the power companies to pay their customers for any power they may produce either for themselves or for feeding into the National Grid. The money to pay them will, of course, be raised through higher energy bills. As Monbiot points out, the trouble is that these subsidizing feed-in tariffs (FITs) schemes too often end up rewarding schemes that are “comically inefficient”. It is not often I agree with George Monbiot, but I applaud the sense and humanity inherent in his biggest two gripes over the national solar plan:

1. The scheme hits the poor hardest by shifting a total wealth of £8.2 billion from society’s poorest (who will have zero chance of raising the large amounts of cash to install the wind, solar et al infrastructure in the first place) to the middles classes (the ones able to afford the investment in infrastructure).
2. The scheme makes no economic sense whatsoever as there are far more efficient ways to lower carbon emissions as the publication earlier this year of the government’s own table tariffs makes abundantly clear.

The UK government wants everyone, whatever the size of the generator and capacity generated, to get the same rate of return. Thus, its own table of feed-in tariffs is highly revealing as to where the gross inefficiencies of the system lie. While the larger giant wind turbines and hydro plants can earn up to 4.5pence per kilowatt hour over a guaranteed payment period of 20 years, smaller wind turbines and solar panels can earn up to 34.5p and 41.3p, respectively; the latter for a guaranteed 25 years. As Monbiot points out, that’s a blatant admission that the micro wind and solar PV systems being urged on the general populace in the UK are “between seven and nine times less cost-effective than the alternatives.” The reason for the disparity is clear. Government expects that solar panels are the technology easiest to install in their homeowners and businesses. As if the Government’s math over the economics of solar toward low-carbon efficiency, the plan becomes downright bemusing when one considers the oft-gray British skies and the fact that Britain’s peak demand periods will coincide with its dark winter evenings. In contrast, solar panels make more sense in hotter climes when peak demand coincides with the use of high energy air-conditioners. The British Government maintains the scheme – on which it expects to make a loss of around 95 percent – will save a (mere) 7 million tons of carbon dioxide by 2020. According to Monbiot, having made allowances for an accelerating installation rate through to 2030 at an estimated investment cost of £8.6 billion, suggests a carbon saving cost of around £430 per ton. According to last year’s McKinsey curve comparison report, investing in nuclear power could save a ton of CO2 for just £8 per ton. Insulation and other energy conservation methods cost nothing or actually produce a negative carbon-powering cost. The British feed-in tariff system is making installing solar panels a highly attractive investment proposition, with a return potentially as high as 10 percent annually. A return that is index-linked and tax-free. As Monbiot says, “If you own a house and can afford the investment, you’d be crazy not to cash in” on this latest domestic “fashion accessory”. Of course, the small matter of being subsidized by households across the land who cannot afford it ... well, that’s a separate moral issue. After all, business is business – at least for those wealthy enough to be able to afford the initial expensive outlay, that is. According to the National Renewable Energy Laboratory (NREL), feed-in tariffs (FITS) that pay producers of renewable energy a fixed amount for years to come for any power they produce are responsible for 75 percent of the world’s solar energy development. The NREL says that’s around 15,000 megawatts of solar photovoltaic capacity between 200 and 2009. But, over in Europe, the solar ‘sun’ is fast waning as the economy-sapping impact from guaranteed high returns over such an extended period has begun to register. Even in the world’s solar showcase, sunny Spain, the 2007 law that guaranteed 25 years of high market price returns to developers is about to be rescinded, after £22 billon has already been invested by industry. Subsidy cuts of around 30 percent for solar plants, 45 percent for ground-based PV generators with other reductions for rooftop generators are planned; cuts that will bankrupt hundreds of PV operators. In January this year, France began scaling back their market-skewing feed-in-tariffs by 24 percent for rooftop systems. In March Germany voted to slash the tariffs electricity companies have to pay by 15 percent. Small German beer when we remember, in July, the German Upper House further voted to implement incremental cuts of up to 13 percent to its solar feed-in-tariffs, with more planned for 2011. Italy is also in the process of scrapping ‘green certificates’ scheme which guaranteed billions of dollars in loans to solar and wind companies. You might think that Britain would have learned from its European partners, especially seeing the impact of Germany’s fast back-peddling on its longer-standing FIT plan. Though the clouds may be gathering for Britain’s broader alternative energies regime with a subsidy review imminent, as far as its great solar scam is concerned, the sun is still rising. Anyone for the Costa del Manchester? This article first appeared at Energy Tribune on August 20, 2010 where Peter C. Glover is Europe Associate Editor. ₁ It’s a myth that it always rains in Manchester. Plymouth and Cardiff are annually wetter on average. Manchester skies are more gray than wet.