Courtesy of The Guardian:
George Osborne quietly moved to kill off Britain’s renewable revolution in Wednesday’s budget as he stealthily enacted David Cameron’s rumoured call to his cabinet to kill off the “green crap”.
With such stealth that it went almost entirely unspotted by environmentalists and journalists, who were busy focusing on his move to reduce fossil-fuel energy costs for big business, Osborne at a stroke abolished a key tax break that has attracted hundreds of millions of pounds of private money to help build Britain’s green energy future.
Tucked away in the budget’s red book is an innocuous-looking line that Enterprise Investment Scheme (EIS) tax breaks will no longer be available for companies benefiting from the renewables obligation certificate (ROC) scheme or the renewable heat incentive (RHI).
Of these, the ROC scheme is the big one. It underlies all the big wind, solar and other renewable technologies in the UK. The EIS tax breaks are available to investors who put money into all sorts of start-up companies. Until now that has also included firms building wind and solar farms. Now, after royal assent to the legislation in July, it will not be.
One City fund manager on Wednesday predicted that many funds would simply have to hand back money to investors that they could not deploy into solar or wind projects by then.
This will mean a big slowdown in the deployment of renewables in Britain, a crying shame because renewable investment and deployment have picked up sharply in recent years, after a decade of delay, as Britain finally seemed to be taking European renewable energy targets seriously.
The point about the chopping and changing of support for renewables is that it creates uncertainty among investors, as countries such as Spain and Italy have found to their cost. They made retroactive changes to laws that left many investors high and dry, so they will not consider other investments there.
Energy expert Dan Lewis of thinktank Future Energy Strategies puts it thus:
“No wonder some utility analysts are starting to call the UK energy sector “uninvestable”.The paradox is that any simplification or benefit cut to Britain’s deep, multi-layered and overly complex energy policy framework means that even a small adjustment has major yes or no investment implications right across the board.”
Before you decry “subsidies” to renewables, remember that much bigger subsidies have gone to North Sea oil and gas, coal and every other dirty fuel for decades, to say nothing of the ruinously expensive decision to build the new £16bn Hinkley Point nuclear reactor which, if built, will burden future generations with expensive electricity until nearly 2060.
Renewable energy, with the exception of offshore wind power, is now cheap, getting cheaper all the time and is well below what consumers pay for their electricity. It is also much cheaper than nuclear, and safer. It soon will require no support – in many countries it has already reached “grid parity”. This is what the economist Bjørn Lomborg, has completely failed to grasp.
The systems of “feed-in tariffs” used by many countries, especially Germany, have built in big annual cuts, thus rapidly forcing down costs, something subsidies in the usual sense do not do. The company I run, for example, built its first solar project only four years ago, at a cost of close to €4,000 (£3,300) per kilowatt installed. We now build at about €1,000 per kW.
We can produce solar power in the UK at about 8p per kW hour – not far above the wholesale price of 5p and about half the level consumers pay for their power. In sunnier countries, that 8p price can be halved.
You would think, especially given how the Russian crisis has exposed the danger of being reliant on unstable regions for our energy supplies, that politicians would have woken up to the fact that producing our own energy cuts our import bill, improves our trade balance and improves our energy independence.
And yet the communities secretary, Eric Pickles, is running round tearing up planning approvals for wind and solar farms. No wonder he could afford to doze off during the budget speech – he knows how effective the government’s job in killing off renewables has been.
These guys are being heavily lobbied by the traditional dirty and dangerous energy companies, who know full well the existential threat that renewables represent to them. They fail to realise that decentralised energy, where individuals or communities can produce their own energy, should be a natural Tory theme, not something to be feared.