If the UK is anything to go by, feed-in tariffs (PDF) are an idea whose time has come. In just six months, Ofgem, the British regulating authority, has had more than 11,000 generators registering for feed-in tariffs, proving that small-scale renewable power is being installed at a phenomenal rate. If you do the math, these applications equate to about 44MW of renewable energy — enough to power 35,000 homes.
Interestingly, I had expected to discover that small wind turbines would take the top slot, proof that I still buy into an old cliché. However, solar panels have proven to be the most popular renewable installation by a wide margin, indicating that the foggy, damp climate of Sherlock Holmes or Jack the Ripper has little to do with the modern UK climate in a warming world.
The Ofgem figures prove what many analysts have predicted — that the potential for selling energy back to the grid would prove wildly popular and drive a dramatic increase in renewable energy installations. For many small businesses and the construction industry, the tariffs must be a godsend, creating jobs in large and small communities across the nation.
Of course, Ofgem’s figures also support arguments made by renewable energy experts on this side of the Atlantic — that a feed-in tariff is just what the North American market needs. For years they’ve been arguing that there is no need to reinvent the wheel. A solid incentive program that offers customers who conserve energy in their homes, and produce more energy than they use through renewable installations, has incredible potential to take a load off the grid, and set the renewable industry on a profitable course. Of course, robust federal regulations supporting the concept wouldn’t hurt either.
Of course, the devil is in the details. According to Wikipedia, to create a successful feed-in tariff, three provisions must be met to encourage interest among small — and large — energy producers:
- Guaranteed grid access
- Long-term contracts for the electricity produced
- Purchase prices that are methodologically based on the cost of renewable energy generation and tend towards grid parity.
Ofgem would seem to have found a fine balance.
The UK is also making strides on the second part of the feed-in and renewable energy equation — a crucial aspect that so often overlooked. All the renewable energy in the world won’t save the planet unless a way is found to get that electricity to market efficiently and reliably.
Ofgem is using what it calls the Revenue = Incentives + Innovation + Outputs (RIIO) framework to build the £32 billion investment required to overhaul the country’s aging transmission infrastructure. The RIIO framework will reward network operators that “innovate and invest efficiently” in clean technologies without burdening their customers. Companies that deploy advanced technologies and provide excellent service will enjoy higher returns than companies that hold to old polluting ways. Those companies will face stiff penalties, intrusive legislation, and a declining bottom line. Ofgem expects prices to rise, but believes those increases can be manageable with this new policy.
“This is the biggest change to the regulatory framework for 20 years and sets the network companies on a path to playing their full role in the transition to a low-carbon economy while delivering value for money for all consumers,” said chief executive Alistair Buchanan.