The Special Case of Energy Suppliers

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Let’s talk about the Feed in Tariff (FiT) for a moment. The UK launched an innovative scheme back in 2010, in order to promote the use of small-scale renewable and low-carbon electricity generation technologies across Great Britain. The scheme covered the following given technologies:

  • Solar photovoltaics (PV) up to a maximum total installed capacity of 5 MW
  • Wind up to 5 MW
  • Hydro up to 5 MW
  • Anaerobic Digestion up to 5 MW
  • Micro CHP plants with a maximum total installed capacity of up to 2 kW are also supported
  • Microgeneration up to 50 kW for power and up to 45 kW for heat

By the time of the announcement, the introduction of a FiT was seen as a great step forward in promoting green technology. However, even though the coverage of Micro CHP plants was seen as innovative, the capacity which made project eligible to the tariff was seen as short and timid when compared to other international cases. For instance, Britain has some of the best winds in Europe, nevertheless, many of the smaller projects that would have been built under the 2010 FiT did not have advantageous sites as commercial projects. Consequently, the proposed tariff for wind projects was seen as insufficient to drive development. “For community-scale or larger on-site projects,” said David Timms, a senior campaigner with Friends of the Earth (UK), “the rates [tariffs] are inadequate.” Wind energy projects among energy communities are not very common, due to not only its complexity but also the lack of financial support.

Less than 1 year into the scheme, in 2011, the new coalition Government announced a review of the FiT, targeting especially the PV technology due to the substantial increase of installations observed during the first year of the scheme. This meant that the support to larger than 50 kW solar installations was going to be cut. In 2012 and 2015, further cuts took place, leading to not only a great uncertainty within the renewable energy market in the UK but also a feeling of mistrust from the suppliers side. Many called it one of the worst environmental policy period in the previous 30 years. For instance, the figure below shows the number of PV installations in the first year of the FiT scheme and it clearly shows two “rush” peaks everytime cuts were announced ahead. All in all, the PV market which was once enlarged, ended up collapsing and many suppliers whose business was dependant on the FiT ended up closing down.

Number of domestic PV installations per week, tariff band 0e4 kW (source: Energy Saving Trust website)

The best example of the effects that the cuts had in companies is the case of Mark Group, once one of the leading PV solar technology installers in the UK. “Given the latest changes and proposed changes to the feed-in tariff [subsidy regime], it is difficult to see this [Britain] as a viable market going forward.” said Mark Babcock, vice-president of SunEdison’s residential and commercial business unit in Europe in 2015. SunEdison, a large US company, had originally bought the Mark Group because the British group had moved heavily into the insulation market only to see business collapse due to various government policy changes. All in all, 1000 jobs were lost.

Cuts in the FiT did have consequences beyond suppliers, they also put community energy project in serious jeopardy as it was the case of wind power installations. Smaller scale energy generation projects begun to have little support. According to Community Energy England’s State of the Sector Report 2017, most projects are dependent on governmental policies and incentive (88% of communities use the FiT to help finance their projects) and it suggests a clear link between the failure of community projects.

SmartKlub is creating innovative ways of going around these problems and find the perfect link between suppliers and communities. We want to find and create new business opportunities in the Community Energy market where there is trust and people’s engagement. Finally, building relationships is important to us. We aim at automatically match energy product suppliers to communities with an easy and straightforward approach. CLICK here to influence our approach and help us shape the future.

Mark Group lost 1000 jobs, blaming the government for policy changes back in 2015


Author: Rafael Bartolomeu Martins
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