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on Oct 5, 18 • posted by rhoggett •

Submission: BEIS Consultation on the Feed-in-Tariffs Scheme

BEIS Consultation on the Feed-in-Tariffs Scheme

Helen Poulter, Catherine Mitchell and Rachel Bray

Energy Policy Group, University of Exeter

Summary

The University of Exeter Energy Policy Group (EPG) welcomes the opportunity to comment on the closure of the Feed-in-Tariff (FiT) scheme. We do not support the closure of the FiT scheme. We have 6 main concerns:

1) The small scale FiT has been a way for communities, small companies and housholders to become involved in the transformation from the ‘dirty’ to the ‘clean’ energy system. Delivering the Committee of Climate Change greenhouse gas (GHG) reductions is not going to be possible, or on time, without people giving their meaningful consent. There are very few mechanisms in place which encourage people’s inclusion, with the FiT being a very important, if not the most important one. To take that away at a time when Government is trying to work out how to have a customer focused energy system and to achieve meaningful consent from people, who will have to pay for the energy transformation and undertake new behaviours is short-sighted in the extreme.

2) The FiT has been a force for innovation. In very few years, 12.9GW of solar has been installed under a variety of business models, scales and new entrants as well as delivering jobs and skills. No other energy policy has been so successful in driving change. Again to get rid of a policy at a time when the UK is trying to innovate is without logic. For example, the UK has been trying to make the DNOs more active since the Embedded Generation Working Group in 2000[1], with very limited success. Altering DNO culture has proved to be incredibly hard. Small scale FITs has been more successful than anything else in moving the passive DNOs to becoming active, and to operate the system in new ways – which is seen as vital for delivering a flexible and smart energy system but which should also save customers billions. BEIS recently pointed that research by the Carbon Trust & Imperial College estimated the benefits of a smart, flexible energy system at £17-40bn to 2050[2]. Closing the FiT reflects a lack of coordination and a lack of whole system thinking by Government and Ofgem which is to the detriment of the people.

3) Ofgem has no idea what value distributed energy resources (DER) have to the energy system. It has not undertaken any studies. The US, and the NY Reforming the Vision (NY REV[3]) has undertaken these studies and concluded in many cases DER adds value to the system over and above the support mechanism[4]. For the UK to get rid of the FiT without any proper analysis of DER value shows the poor, narrow decision-making currently being taken in Ofgem and BEIS.

4) The lack of a policy to replace this scheme for small-scale distributed generation (DG), in particular domestic solar, is troubling. Although costs for DG are falling, lack of government support could halt the growth of small-scale generation, and therefore decentralisation, which has both economic and social value. As the CCC Report Meeting Carbon Budgets: Closing the Policy Gap[5] showed, there is already a policy gap. What we don’t need now is to make that worse.

5) The Impact Assessment[6] cost of keeping the policy going is derisory at £1 per domestic customer a year given the benefits it provides in terms of innovation. Moreover, the distributional impact assessment is flawed. An obvious aspect is that there are a great many benefits other than those that can be monetised. However, putting that aside, there will be a cost to customers of the move to a sustainable energy system – and that can be assessed in a short term static way – as this IA is undertaken – or in a more evolutionary, dynamic way. The UK has to undertake the energy transformation move, and therefore the FiT IA should be valued as part of that dynamic process – which it is not. As said above, anyway the DNOs have not costed the value of DER to their system costs. And finally, the total cost and the distributional impacts of that transformation will differ depending on the different technology paths, institutional frameworks and costing methodologies. Nowhere has this estimate been undertake in Britain. Again, it is extremely short sighted that such a successful policy as the FiT is closed without such an analysis.

6) Finally, the closure of the FiT does not fit with the stated strategic goals of the Industrial Strategy, the Clean Growth Plan or the Smart and Flexible Plan.

You can read the full submission here: BEIS Consultation on the Feed-in-Tariffs Scheme_ submission from Exeter EPG_Sept 2018

[1]http://webarchive.nationalarchives.gov.uk/20100919181955/http:/www.ensg.gov.uk/assets/21_10_2002_main_report.pdf

[2] Edward Nelson, Senior Policy Advisor to Smart Energy Team, BEIS, Whole System Approaches for
Smart, Flexible Energy Systems, Talk given to the ExeterEnergy kick-off meeting, 10 September 2018.

[3] NY State’s Reforming the Energy Vision (2014) http://projects.exeter.ac.uk/igov/lessons-from-america-new-york-states-reforming-the-energy-vision/

[4] Reset the Reset 3 blog series looks at the DER assessment process in CA and NY and Blog 3 in particular looks at the DER valuation of NYS http://projects.exeter.ac.uk/igov/new-thinking-reset-the-reset-3-der-walking-the-walk/

[5] https://www.theccc.org.uk/wp-content/uploads/2017/06/2017-Report-to-Parliament-Meeting-Carbon-Budgets-Closing-the-policy-gap.pdf

[6]https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/727193/IA_for_FITs_closure.pdf