Benefits for business of Clean Energy Cashback scheme in doubt

PR Log (Press Release) – Nov 03, 2009 – The Clean Energy Cashback Feed In Tariff (FIT) scheme initially received an enthusiastic response, as it suggested that commercial and domestic properties which invested in renewable energy capable of generating up to 5MW of power would be paid for the renewable energy produced by their energy provider at an above market rate.

This would put the UK on an even par with Germany, where businesses hastened to install renewable energy technologies, generating revenue whilst cutting carbon emissions.

However, recent figures released in the official consultation document of the Department of Energy and Climate Change suggest that large commercial projects would receive much lower tariffs than domestic properties, failing to address the significant commitment that office buildings and factories could make in installing renewable energy technologies.

Clean Energy Cashback Scheme offers low benefits

The commercial benefits of the Clean Energy Cashback initiative are even more dire when the return on investment (ROI) promised by the government’s FIT is considered. A government report suggests that the Clean Energy Cashback Scheme should provide a ROI of between 5- 8%, but according to a study by energy consultancy firm Poyry/Element Energy, ROIs would have to range from six to 15 per cent to attract commercial investment.

A comment by the German MP Hans-Josef Fell, who advised lower rates to prevent pushing the price of power up ‘too far’, seems to have inspired these figures; but critics within the renewable energy industry argue that the German renewable energy market is more mature than the UK, and thus can cope with potentially lower tariffs. In reality, many German projects enjoy rates exceeding 10%.

Clean Energy Cashback Scheme still the way forward

Whitehall had objected that higher FITs could lead to more expensive energy bills, but the government is already poised to introduce a levy on energy bills to help pay for carbon capture and storage projects. Moreover, the Clean Energy Cashback Scheme provides an equitable way of increasing renewable energy capacity as any profits from higher energy bills would support industries using renewable energy.

Businesses eager to boost their onsite renewable energy capacity are now being urged to lend their voice to a growing campaign calling on the government to increase the Clean Energy Cashback Scheme proposed tariffs, through campaigns such as We Support Solar. According to Timms, without an overhaul of the proposed tariffs many businesses will simply continue to ignore the potential for onsite renewable energy systems. With Copenhagen approaching, the government needs to seriously consider the role of businesses in contributing to the development of renewable energy systems in this country.