Feed-in tariffs are a small step in the right direction

Yesterday’s announcement on feed-in tariffs means the UK is finally catching up with some of its more proactive European neighbours.

This is a significant change of direction by the Department of Energy and Climate Change in terms of policy and has the potential to massively increase the deployment of small-scale and community-based renewable energy.

It means for householders and businesses that owning renewable energy systems will no longer be about a lifestyle or marketing choice.

The introduction of feed-in tariffs spells improved returns on investment are now possible. But this may not overcome all the barriers to deploying renewable energy.

For a start there is still much confusion for householders and small businesses caused by number of different options and lack of clear information and independent advice on which technology to choose. On top of this is a lack of "consumer-ready" packaged supply and installation deals.

But more trusted, major retailers may now, hopefully, get involved following the DECC’s announcement.

One downside of a sudden increase in demand - and the small scale of the industry - may be to drive up installation costs. There is also a lack of innovative financing, such as the "pay as you save" scheme proposed by UKGBC where future revenues are capitalised against the cost of installation. This proposal would mean householders pay no - or at least limited - up front capital costs, and share in the savings on bills.

there is still much confusion for householders and small businesses caused by number of different options and lack of clear information

And then there is the hassle factor of installing systems, particularly when it comes to retrofitting existing properties.

One interesting opportunity based on the 5,000kW upper limit for wind is establishing "community wind farms" where local residents own shares in the turbines and benefit from the income generated.

This can reduce objections to wind farms, keeps revenues in local communities and provides commercial rates of return without having to trade Renewable Obligation Certificates.

The Renewable Heat Incentive (RHI) is potentially a more significant policy change. For the first time government policy recognises the heat sector, which is responsible for around 47% of UK carbon emissions.

As the strategy for meeting the EU Renewable Energy directive, 12% of heat must be delivered from renewable sources by 2020, so the RHI will have its work cut out.

One thing that won’t help is that the incentive does not include low carbon heat from medium- or large-scale gas fired combined heat and power plants or waste heat from power stations, which can reduce emissions from heating by 30-50%.

The UK wastes more heat in power stations than is used to heat every building in the country.

it’s the large scale deployment of on and off shore wind, tidal, wave and biomass that are key

London First/Buro Happold’s report Cutting the Capital’s Carbon Footprint called on widespread adoption of district heating in dense urban areas as the only way to meet targets for decentralising energy supply (such as London’s 25% target by 2025) and providing radical cuts in emissions.

Hopefully further heat policy measures can be brought forward to ensure combined heat and power, with modern, efficient district heating, can fulfil the potential identified in other studies, such as the ICE’s Why Waste Heat report.

With proper recognition of the carbon savings from low carbon CHP/district heating more large-scale projects such as the London Thames Gateway Heat Network could be developed, using otherwise wasted heat and providing large reductions in carbon emissions.

While the announcement on feed-in tarrifs will go a long way to boosting the uptake of small-scale renewables it is worth bearing in mind that, in terms of meeting the UK’s overall renewable energy targets, it’s the large-scale deployment of on- and off-shore wind, tidal, wave and biomass that are key.

The real barriers to this lie in the planning system and the increasing cost of components imported from Europe due to the weak pound and lack of UK capacity.