Every silver cloud has a black lining…

Tuesday 03 Jan 2012

Cost saving scandal casts shadow on future of solar power

I’ve often been described as an eternal optimist, and am happy to be seen in such a light, so writing these words on January the first 2012 almost physically hurts. The article I’ve just read started off as a brilliant good news story, the world’s largest solar plant powers up, [UK Independent Jan 1st] (as first reported in WAN 20th February 2008). It features an amazing achievement of science and commerce.

The Andasol project in Seville, Spain is refreshingly original, and unlike many wind farm installations, this project will be highly efficient. Utilising an area equivalent of some 210 football pitches, the €350m scheme uses Concentrated Solar Power (CSP) technology which focuses the Sun’s rays into a traditional turbine (fed by natural springs of course) to produce 150 MW annually, saving some 500,000 tonnes of carbon along the way. The project is audacious in its scale and bristling with innovation, such as being able to generate power eight hours after the sun has gone by storing heat in banks of salt and having collectors that track the sun.

So far so good, so what’s the problem?

The problem is the current financial crisis. Undermined by the Euro crisis and general lack of funds, Governments are inevitably scrutinising every cost, every budget, looking for potential savings. And unfortunately they have found a great one. Tucked away, out of sight of the man in the street (and dare I say voter), is the innocuous sounding feed-in tariff (FIT). Ask your mum, or your kids, it’s just not out there.

Unfortunately the FIT is the bed rock, the very foundation of every sustainable energy (even wind farms) initiative. Within the FIT typically lies a vital subsidy for (renewable) power generation and the rate that most government regulated utility bodies buy in green energy; it is defacto the one number that makes a scheme viable or unviable. To be or not or not be.

You might expect this tariff to be fixed for the length of the expected return on investment for the capital required to create such projects, but no. To give you an idea of just how precarious this rate is, the UK Government has just halved the published rate for solar power.

This unprecedented action triggered an immediate outcry and a legal challenge by Friends of the Earth and two solar companies who argued that the government's decision to cut the FIT from 43.3p to 21p with only a few weeks' notice was premature and unlawful, and has led to unfinished or planned projects being abandoned. A high court judge ruled the rash decision 'legally flawed'. The ruling opens the door for a judicial review that could force the government to delay its plans, potentially allowing thousands more people to claim the higher subsidy.

But all this will only delay the axe; cash-strapped Governments everywhere are desperate to cut budgets and the environment is low hanging fruit.

To add a touch of reality, from my window as I write this, I can see my neighbour’s solar panels, installed at great cost, less than three months ago. Hugely ugly of course, but that’s another story. Their payback time for the project had they installed it now would have doubled. Possibly taking it beyond the lifespan of the PV panels… yes, you’ve worked it out too, making the project totally unviable.

Tinkering with the FITs will inevitably undermine all the good work being done by initiatives such as Andasol and ultimately could unravel the entire green energy movement.

Michael Hammond
Editor in Chief at WAN

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