Large scale commecial photovoltaics farms and the feed in tariff scheme

There has been much discussion recently about the feed in tariff system of supporting renewable energy in the UK. For those who aren't aware, feed in tariffs are a way of supporting renewable energy in the UK. They are used to support a wide variety of technologies, but on a smaller scale than those projects which are supported by ROCs. When installing new renewable energy equipment which qualifies for feed in tariffs (FiTs) there is a guarantee of a fixed price per unit of electricity for 20 years, which is above the market price of electricity. One technology covered by FiTs is solar energy, and the FiTs for solar photovoltaics (PV) are massively above the market price of electricity. A limit was put on the size of such schemes which can qualify for this assistance at 5MW.

The level of the FiTs has proven to be a good investment. So much so that companies will pay to install solar panels on the roofs of householders and businesses. However, many companies have realised that the FiTs are set at a good level, and as a result hundreds, if not thousands, of PV plants are planned for the UK, in particular the south, most at or near 5MW. This has driven concerns that the pot of money will quickly be depleted, preventing home owners from benefiting. Furthermore, there are issues over tax payers supporting private companies from the UK and abroad to make profits in times of national belt tightening and so there are rumours that the government may change the FiT scheme to prevent such solar 'farms'.

The problem with preventing solar farms taking part in the FiT scheme is it will most likely vastly reduce the UK PV market. This has two main issues. Firstly there are issues surrounding less electricity coming from renewable energy which impacts on carbon emissions, energy security etc. Secondly, the PV industry is booming in the UK and employing many people, with prospects to employ many more in the future (just look at Germany where now hundreds of thousands work in the solar industry). For all the talk of attracting wind turbine manufacturing to the UK, the largest renewable energy factory in the UK is Sharp's solar PV plant in Wrexham, Wales which employs 900 and has announced plans to grow by a further 300 due to increased demand for solar PV. Of course, there are jobs in the manufacturing of the product, but there are also many jobs in the development, construction and operation phases of projects.

So what do I think should be done about this little issue the government has got itself in to. Well, you can probably tell I am a fan of renewable energy (hence this blog!), but I am also pragmatic enough to realise the country hasn't got unlimited supplies of money. As a result, I would recommend reducing the FiTs offered to large scale solar farms, whilst keeping them constant for other projects. If reduced to the correct level, it will not destroy the solar farm business, but will reduce it so that only the best possible sites are chosen. I have no figures, but my intuition would be that 100 50kW schemes probably result in more employment in the UK than a single 5MW scheme, and so from a purely economic point of view this is where I believe the money should be concentrated. Furthermore, by keeping FiTs constant for domestic properties, this will ensure the scheme continues to have the support of the voters (as well as possibly increasing support for wider renewable energy).

As always I hope you enjoy this article and feel free to comment!