1. Social
August 31, 2018

Households with solar panels are “effectively providing a subsidy to the commercial energy market”

By Leonie Cooper

A Labour member of the London Assembly calls for reform of renewable energy policy.

I have this week signed an open letter, from the Solar Trade Association, along with over 200 key public figures. This letter calls on the government to make sure that people producing renewable energy through solar panels are paid a fair market rate for the power that they send to the national grid.

The landscape for small scale renewable energy generation is diverse and dynamic. It includes individual households with solar panels on their roof, community energy projects allowing organisations like schools and day centres to generate energy, and a large number of small businesses. These groups, collectively known as ‘prosumers’, as they both consume and produce energy, already make a significant contribution to the UK’s energy market. If the government is serious about supporting the UK’s clean growth, it is essential that they help create the market conditions for these prosumers to thrive.

Currently, many prosumers struggle to be viable without the ‘Feed-in-Tariff’ and ‘export tariff’ – these are not subsidies, but are key market mechanisms that enable prosumers to be paid at a fair rate for their energy and compete with large energy providers. Ultimately, without these mechanisms, small-scale renewable prosumers would be the only producers of energy in the UK not to be paid for their energy – which is clearly unfair given the varied benefits that they provide and would stifle a currently dynamic and innovative market.

We would be left in a situation where prosumers would effectively be providing a subsidy to the commercial energy market, and even large providers such as E.On, Ecotricity and Ovo Energy, have joined me in signing the letter as they agree that this would be unacceptable.

Small scale solar generation will help the UK to meet its carbon reduction targets, by reducing reliance on fossil fuels and other high-carbon energy sources. They also increase the UK’s energy generation capacity and improve the reliability of the National Grid – this is likely to become ever more important for the UK after we leave the EU, due to uncertainties about the cost and feasibility of importing energy and fuel.

Furthermore, supporting the prosumer market to grow and thrive will create economies of scale and reduce installation costs for others over time. This means of supporting the industry is a cost-effective policy which, in the medium to long term, makes renewable energy more accessible for individuals and businesses. In fact, in 2016 the IPPR estimated that community and local energy schemes contribute over £23m to community benefit funds, create jobs and help to support the local economy.

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The government has displayed important and necessary ambition for wind power, underscoring the significance of these technologies to the UK’s future clean growth and energy security. However, the small-scale low-carbon generation sector offers many of the same benefits and future potential as wind power, so the level of ambition should be similar. Proposals to scrap both the Feed-in-Tariff and export tariff risk stifling a market that already makes invaluable contributions to the UK’s energy system and still has huge untapped potential.

In London, community energy projects receive support from Mayor Sadiq Khan via the London Community Energy Fund (LCEF). This enables community groups to tackle the challenge of high start-up costs, and begin generating clean, green and affordable energy sooner. Beneficiaries have been as diverse as schools in Ealing, Kentish Town City Farm, and New River Sports Centre in Haringey – this clearly shows the varied potential that a prosumer market offers.

I have worked hard with the mayor towards his ambition to make London a zero-carbon city by 2050 and changing our energy landscape is a key component of that. The second round of funding from the LCEF has just opened and I am excited to see the range of innovative projects being championed by Londoners. I would urge anyone seeking to get their community energy project off the ground to apply as soon as possibl.

I am glad that so many colleagues across the energy industry and from environmental organisations have come together in calling for a continuation of fair market conditions for prosumers. I now urge that the government takes heed of this clear support for small scale renewable energy generation, and urgently reverses the proposal.

Leonie Cooper is a Labour London Assembly Member for Merton & Wandsworth, and the Labour group’s spokesperson on the environment.

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