Resources for a sustainable future

2/3/2010 Guardian Those who hate environmentalism have spent years looking for the definitive example of a great green rip-off. Finally it arrives, and nobody notices.The government is about to shift £8.6bn from the poor to the middle classes. It
expects a loss on this scheme of £8.2bn, or 95%. Yet the media is silent. The
opposition urges only that the scam should be expanded.
On 1 April the government introduces its feed-in tariffs. These oblige
electricity companies to pay people for the power they produce at home. The
money will come from their customers in the form of higher bills. It would make
sense, if we didn’t know that the technologies the scheme will reward are
comically inefficient.
The people who sell solar photovoltaic (PV) panels and micro wind turbines in
the UK insist they represent a good investment. The arguments I have had with
them have been long and bitter. But the debate has now been brought to an end
with the publication of the government’s table of tariffs: the rewards people
will receive for installing different kinds of generators. The government wants
everyone to get the same rate of return. So while the electricity you might
generate from large wind turbines and hydro plants will earn you 4.5p per
kilowatt hour, mini wind turbines get 34p, and solar panels 41p. In other words,
the government acknowledges that micro wind and solar PV in the UK are between
seven and nine times less cost-effective than the alternatives.
It expects this scheme to save 7m tonnes of carbon dioxide by 2020. Assuming –
generously – that the rate of installation keeps accelerating, this suggests a
saving of about 20m tonnes of CO2 by 2030. The estimated price by then is
£8.6bn. This means it will cost about £430 to save one tonne of CO2.
Last year the consultancy company McKinsey published a table of cost
comparisons. It found that you could save a tonne of CO2 for £3 by investing in
geothermal energy, or for £8 by building a nuclear power plant. Insulating
commercial buildings costs nothing; in fact it saves £60 for every tonne of CO2
you reduce; replacing incandescent lightbulbs with LEDs saves £80 per tonne. The
government predicts that the tradeable value of the carbon saved by its £8.6bn
scheme will be £420m. That’s some return on investment.
The reason for these astonishing costs is that the government expects most
people who use this scheme to install solar panels. Solar PV is a great
technology – if you live in southern California. But the further from the
equator you travel, the less sense it makes. It’s not just that the amount of
power PV panels produce at this latitude is risible, they also produce it at the
wrong time. In hot countries, where air conditioning guzzles electricity, peak
demand coincides with peak solar radiation. In the UK, peak demand takes place
between 5pm and 7pm on winter evenings. Do I need to spell out the implications?
We have plenty of ambient energy, but it’s not to be found on people’s roofs.
The only renewables policy that makes sense is to build big installations where
the energy is – which means high ground, estuaries or the open sea – and deliver
it by wire to where people live. But the government’s scheme sloshes money into
places where resources are poor and economies of scale impossible.
We don’t need to guess the results: the German government made the same mistake
10 years ago. By 2006 its generous feed-in tariffs had stimulated 230,000 solar
roofs, at a cost of ¤1.2bn. Their total contribution to the country’s
electricity supply was 0.4%. Their total contribution to carbon savings, as a
paper in the journal Energy Policy points out, is zero. This is because Germany,
like the UK, belongs to the European emissions trading scheme. Any savings made
by feed-in tariffs permit other industries to raise their emissions. Either the
trading scheme works, in which case the tariffs are pointless, or it doesn’t, in
which case it needs to be overhauled. The government can’t have it both ways.
A week ago the German government decided to reduce sharply the tariff it pays
for solar PV, on the grounds that it is a waste of money. Just as the Germans
have begun to abandon their monumental mistake, we are about to repeat it.
Buying a solar panel is now the best investment a householder can make. The
tariffs will deliver a return of between 5% and 8% a year, which is both index
linked (making a nominal return of between 7% and 10%) and tax-free. The payback
is guaranteed for 25 years. If you own a house and can afford the investment,
you’d be crazy not to cash in. If you don’t and can’t, you must sit and watch
your money being used to pay for someone else’s fashion accessory.
Had this money been spent instead on insulation or double glazing, it could have
helped relieve fuel poverty at the same time as cutting emissions. But the
feed-in tax is both wasteful and regressive. The government has now decided not
to oblige people to improve the efficiency of their homes before they can claim
a tariff: you’ll be paid to put a solar panel on your roof even if the roof
contains no insulation.
Though there’s a system to ensure functioning devices are installed, it can’t be
long before thousands of petty criminals discover the perfect carousel fraud,
bypassing their solar panels by connecting the incoming wire to the outgoing
wire. By buying electricity for 7p and selling it for 44p (if you sell power to
the grid rather than using it yourself, you get an extra 3p), they’ll make a
600% profit. Amazingly the government has decided not to measure how much
electricity people are selling, but “to pay export tariffs on the basis of
estimated (deemed) exports”. Elsewhere in its report it boasts of “encouraging a
risk-based approach to audit and assurance”. Come on in, you crims, the door is
wide open.
So who is opposing this lunacy? Good question. The Conservatives, Liberal
Democrats, Friends of the Earth and Greenpeace have lined up to denounce the
government for not being generous enough. The only body to have called this
right so far is the loathsome TaxPayers’ Alliance, but nobody listened because
it has cried wolf too often.
There appears to be a cross-party agreement to squander the public’s money. Why?
It’s partly because many Tory and Lib Dem voters hate big, efficient windfarms,
and this scheme appears to offer an alternative. But it’s mostly because solar
panels accord with the aspirations of the middle classes. The solar panel is the
ideal modern status symbol, which signifies both wealth and moral superiority,
even if it’s perfectly useless.
If people want to waste their money, let them. But you and I shouldn’t be paying
for it. Seldom has there been a bigger public rip-off; seldom has less fuss been
made about it. Will we try to stop this scheme, or are we a nation of
  dupes?

Go to: http://www.guardian.co.uk/commentisfree/2010/mar/01/solar-panel-feed-in-tariff