Tipping the balance - Will the Government's 'reward scheme' really work?
The Energy Review highlighted the Government's recent decision to require electricity suppliers to "acquire" exported electricity from micro-generators. If suppliers don't come up with a scheme within 12 months, the Government could impose a solution. While payment for exported electricity is clearly welcome, how justified is the Government in claiming that this will help "tip the balance in the decision making process of an interested consumer?" In other words, will the incentive of being paid a few pence per unit for exported electricity be enough to persuade many more consumers to go out and buy a micro renewable installation?
The scheme proposed by Government will at best enable micro-generators to be paid typically 7 or 8p per unit for their exported electricity, but rates could be lower depending on supplier. To put that into perspective, probably all the output from David Cameron's soon to be installed micro wind turbine will be used as it is generated. But even if 25% of its output were to be exported, Mr Cameron could expect to receive an annual cheque from his supplier for at most £13 and probably a lot less depending on turbine performance. For most people, is this going to be enough to "tip the balance in the decision making process" as claimed by the DTI? Only time will tell, but we have our doubts.
Unfortunately, the focus on micro-generation export reward is letting the Government off the hook in terms of the lessons we can learn from elsewhere in Europe. On the Continent, "feed in tariffs" are used in 16 countries, with supply companies paying customers set prices for their exported electricity, always at a significant green premium above the normal retail price of electricity. These tariffs which can be as high as 40p per unit for PV generated electricity clearly do "tip the balance." We need to see a similar approach here in the UK, and to be realistic about the impact of the Government's current export reward policy on the micro-renewables market.
Seb Berry
Head of External Affairs
