Intelligent Energy

UK Feed-in-Tariffs: Wake up and go to sleep, Round 5!

UK Feed-in-Tariffs: Wake up and go to sleep, Round 5!

Posting in Energy

More plate-spinning zaniness in UK renewable energy policy. The Energy Secretary says he'll appeal the latest court rejection of his plan to cut subsidies. If you're investing, use a safety net!

The zaniness of British renewable energy policy hit plate-spinning uncertainty today. No sooner did a court reject the government's attempt to slash renewable energy subsidies known as feed-in tariffs, than the country's energy secretary shot back saying he'd appeal to the Supreme Court.

As we've reported, the FiT saga has already taken a number of turns that many people in the solar industry find maddening, as the vicissitudes of FiT policy wreak havoc on investment decisions. FiTs pay people handsomely for generating their own electricity using solar or wind technology.

Follow this chronological, reverse order summary if you dare, but please turn the other way if you get dizzy easily:

--Today, the Court of Appeal rejected a Department of Energy and Climate Change appeal. DECC was trying to overturn a lower court ruling that blocked DECC's plan to slash FiTs in half, from 43 pence (67 cents) to 21 pence (33 cents) per kilowatt hour.

--The cut was originally planned for April 2012, but DECC announced last year it would implement it on December 12, 2011. That prompted industry members to go to the High Court, which on Dec. 21, ruled in favor of the industry, calling the government's plan "legally flawed."

-- In August last year, the government slashed FiTs by between 42 percent and 72 percent on any installation over 50 kilowatts in capacity, wrecking any plans for small-scale utility or community-sized solar plans. This limitation still stands.

--It all started with great intentions in April 2010, when the UK first implemented its FiT scheme as way to encourage low-carbon electricity.

As alway in this story, it ain't over yet.

"The Court of Appeal has upheld the High Court ruling on FiTs albeit on different ground," Energy Secretary Chris Huhne said. "We disagree and are seeking permission to appeal to the Supreme Court." The government argues that subsidies should come down now that the cost of photovoltaics have plunged.

A reduction in the FiT would "help reduce the pressure on the budget," Huhne said today. Exactly what budget he was referring to is an engima, since FiTs in Britain are paid by utilities, not by the government. Utilities recoup the cost via enormous rate hikes they impose on customers who do not deploy solar or wind.

DECC did not reply to my request to explain Huhne's "budget" remark by the time this story posted. Meanwhile, if you're investing in the British solar circus, I hope you have a safety net.

Photo: churchofbob

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Mark Halper

Contributing Editor

Mark Halper has written for TIME, Fortune, Financial Times, the UK's Independent on Sunday, Forbes, New York Times, Wired, Variety and The Guardian. He is based in Bristol, U.K. Follow him on Twitter. Disclosure