Are we really going to let ourselves be duped into this solar panel rip-off?

George Monbiot, The Guardian
Those who hate environmentalism have spent years looking for the definitive example of a great green rip-off. Finally it arrives, and nobody notices. The government is about to shift £8.6bn from the poor to the middle classes. It expects a loss on this scheme of £8.2bn, or 95%. Yet the media is silent. The opposition urges only that the scam should be expanded.

On 1 April the government introduces its feed-in tariffs. These oblige electricity companies to pay people for the power they produce at home. The money will come from their customers in the form of higher bills. It would make sense, if we didn’t know that the technologies the scheme will reward are comically inefficient.

The people who sell solar photovoltaic (PV) panels and micro wind turbines in the UK insist they represent a good investment. The arguments I have had with them have been long and bitter. But the debate has now been brought to an end with the publication of the government’s table of tariffs: the rewards people will receive for installing different kinds of generators. The government wants everyone to get the same rate of return. So while the electricity you might generate from large wind turbines and hydro plants will earn you 4.5p per kilowatt hour, mini wind turbines get 34p, and solar panels 41p. In other words, the government acknowledges that micro wind and solar PV in the UK are between seven and nine times less cost-effective than the alternatives.

It expects this scheme to save 7m tonnes of carbon dioxide by 2020. Assuming – generously – that the rate of installation keeps accelerating, this suggests a saving of about 20m tonnes of CO2 by 2030. The estimated price by then is £8.6bn. This means it will cost about £430 to save one tonne of CO2.

…Buying a solar panel is now the best investment a householder can make. The tariffs will deliver a return of between 5% and 8% a year, which is both index linked (making a nominal return of between 7% and 10%) and tax-free. The payback is guaranteed for 25 years. If you own a house and can afford the investment, you’d be crazy not to cash in. If you don’t and can’t, you must sit and watch your money being used to pay for someone else’s fashion accessory.

Had this money been spent instead on insulation or double glazing, it could have helped relieve fuel poverty at the same time as cutting emissions. But the feed-in tax is both wasteful and regressive. The government has now decided not to oblige people to improve the efficiency of their homes before they can claim a tariff: you’ll be paid to put a solar panel on your roof even if the roof contains no insulation.

Though there’s a system to ensure functioning devices are installed, it can’t be long before thousands of petty criminals discover the perfect carousel fraud, bypassing their solar panels by connecting the incoming wire to the outgoing wire. By buying electricity for 7p and selling it for 44p (if you sell power to the grid rather than using it yourself, you get an extra 3p), they’ll make a 600% profit. Amazingly the government has decided not to measure how much electricity people are selling, but “to pay export tariffs on the basis of estimated (deemed) exports”. Elsewhere in its report it boasts of “encouraging a risk-based approach to audit and assurance”. Come on in, you crims, the door is wide open.
(1 Mar 2010)

Solar panels are not fashion accessories

Jeremy Leggett, The Guardian
George Monbiot’s attack on solar energy and the government’s “cash-back” solar photovoltaic (PV) market-building scheme paints a distorted picture of the industry I work in, and government policy towards it (Are we really going to let ourselves be duped into this solar panel rip-off?, 2 March).

First, Monbiot gets the workability of solar wrong. He says: “The amount of power PV panels produce at this latitude is risible, [and] they also produce it at the wrong time.” Those who buy panels, therefore, will own a mere “fashion accessory”. The companies who manufacture solar PV in the UK have shown that putting solar panels on all available building surfaces would generate more electricity in a year, under typical cloudy British skies, than the entire electricity consumption of our energy-profligate nation. Some fashion accessory.

Of course, just a fraction of that area of buildings would suffice because we would want to mix and match renewable technologies – large and small, onshore and offshore – so matching loads and compensating for the fact that solar generates by day and not by night.

Second, Monbiot says the government’s scheme targets money where economies of scale are “impossible” – an incorrect assumption because solar electricity costs will inevitably fall to the point, within just a few years, where they are cheaper than any form of fossil fuel and nuclear electricity. Systemic economies of scale in solar manufacturing and installation techniques are causing rapid reductions in solar PV costs globally, just as Ofgem and others worry so loudly about the inevitable rise of traditional electricity costs.

Third, Monbiot gets the precedent for the British government’s solar “cash-back” scheme – the German feed-in tariff – upside down. He says the “German government decided to reduce sharply the tariff it pays for solar PV, on the grounds that it is a waste of money”.

Fourth, Monbiot has it wrong about who pays the cash back…
(3 Mar 2010)

There is no ‘green treachery’ in questioning this solar panel rip-off

George Monbiot, The Guardian
Once again I am a traitor to the cause, a corporate sell-out, a dangerous maverick who has gone over to the dark side. My column this week on feed-in tariffs provoked the same sort of charges that were levelled against me when I first came out against biofuels in 2004. We’ve now seen how that’s panned out. When other greens wake up to the amazing waste of money and opportunities this scheme represents, I think the feed-in tariff scandal will go the same way.

One of the more sophisticated responses came from my old sparring partner Jeremy Leggett, chairman of the installation company Solar Century. He managed to ignore most of my arguments, but never mind. Here is the fork he is impaled on. Either solar photovoltaic (PV) power in the United Kingdom is, as he claims, a cheap, efficient technology, or it isn’t. If it is, why should we be subsidising it to the tune of 41p per kilowatt hour? If it needs this subsidy, it is neither cheap nor efficient. If it doesn’t need it, the feed-in tariffs are even more of a swindle than I thought.

A recent paper Leggett helped to write (pdf) claims that solar PV will achieve “grid parity” for homeowners in 2013. This means that the electricity produced, when all costs are taken into account, will be no more expensive than the electricity we buy from the grid. Assuming we can agree on terms and measurement, I have £100 that says his prediction won’t come true. Will Leggett accept my bet?

But here again he runs into the same contradiction. If Jeremy really believed his sales pitch, he would be calling for the feed-in tariff for new installations to be scrapped in 2013, as it would then be redundant. But the government does not share his view. Its table of tariffs shows that in 2013 it will pay 38p/kWh for new retrofitted PV: a decline of just 8% from this year’s figure, rather than the 56% Leggett anticipates.

…I won’t list all the points Leggett fails to address – his space was limited – but the killer fact he ignores is this: feed-in tariffs cannot reduce our carbon emissions by 1g while the UK remains within the European emissions trading scheme. This is because any savings they make will be offset by the extra emissions that other industries will be allowed to release. Either we are in the trading scheme and must make it work, in which case measures like the tariff are redundant, or we accept that it doesn’t work and get out of it. But at the moment all the feed-in tariff can do is to subsidise polluting industries to produce more greenhouse gases.
(5 Mar 2010)

I accept George Monbiot’s £100 solar PV bet

Jeremy Leggett, the Guardian
1. Monbiot argues that “either solar photovoltaic (PV) power in the United Kingdom is, as (Leggett) claims, a cheap, efficient technology, or it isn’t. If it is, why should we be subsidising it to the tune of 41p per kilowatt hour? If it needs this subsidy, it is neither cheap nor efficient. If it doesn’t need it, the feed-in tariffs are even more of a swindle than I thought.”

This view takes a snapshot in time that is a flawed basis for analysis because it ignores both the past and the future, in terms of cost, plus the strategic context of the discussion.

…2. Monbiot bets me £100 that my prediction that solar PV electricity in homes will be no more pricey in 2013 than conventional electricity will be wrong.

I accept Monbiot’s bet. But I have a proviso: that the winner donates the £100 to the charity SolarAid, set up by my company, for the training and equipping of solar PV lighting entrepreneurs in Africa…

…3. Monbiot suggests that if I “really believed” my sales pitch, I would be calling for the feed-in tariff for new installations to be scrapped in 2013, as it would then be redundant: “He can’t have it both ways: defending the tariff while suggesting that the tariff won’t be necessary.”

I have never suggested that the “tariff won’t be necessary.” The government does not share my view of when grid parity will be delivered, but nor do they believe as Monbiot appears to that new industries and new installer capacity can just be turned on overnight.

…4. Monbiot asserts: “Every pound spent on PV is a pound not spent on a more effective technology.”

This is another use of the flawed snapshot argument devoid of strategic considerations.

…5. Monbiot says of the German feed-in tariff: “The realisation in Germany, after 10 years of minimal returns, that they have been getting shockingly bad value for money from their scheme coincides with the launching of the same fiasco in the UK”.

It is untrue to suggest that the returns are minimal. Consider just taxation.

…6. Monbiot questions the jobs the German feed-in tariff has created. He says: “Leggett goes on to claim, again without attribution, that the Germans have “created over 50,000 jobs in solar PV alone.”

The 50,000 German employees are counted by the Federal Solar Industry Association.

…7. Monbiot also questions the location of jobs created. He says: “The electricity users who have to pay for the tariff would be rather put out to discover that the jobs the government says it will create are actually on the other side of the world.”

How many mistakes can you make in one article? The Federal Solar Industry Association count over 100 factories in Germany in the industry built to date by the feed-in tariffs. Then there are all the installer companies.

…8. Monbiot persists with the argument from his first article: that the British poor will subsidise the solar roofs of the middle class. He says: “Their bills will rise just like everyone else’s to pay for a scheme which will mostly benefit the middle classes. This is why it is deeply regressive.”

First, it is necessary to be clear about the numbers and the likely impact on average household bills as a result of this scheme.

9. Lastly, Monbiot accuses me of ignoring a “killer fact”. He says: “Feed-in tariffs cannot reduce our carbon emissions by 1g while the UK remains within the European emissions trading scheme (ETS).

Monbiot and I might find things to agree on, when it comes to scope for nonsense in the European emission trading scheme, as it stands…
(9 Mar 2010)