Whilst the UK expresses its commitment to the principle of distributed generation with contributions from thousands - perhaps millions - of contributors, in reality the dice is heavily loaded against small-scale generation and CHP. For example:
• There is a complex and lengthy process to be undertaken before a small contributor can be accepted by a distribution network operator (DNO).
• All the costs of providing the hardware for connection are borne by the small contributor.
• The UK government will not acknowledge what the real market situation is vis a vis renewables as against fossil fuels. First, renewables must be compensated for the avoided costs of pollution. Second, fossil fuels must have their subsidies removed. According to the Organization for Economic Co-operation and Development (OECD) 2002 report we are subsidising fossil-based energy to the tune of $57 billion per year. The report states: 'Through the provision of subsidies on fossil fuels, governments are effectively subsidising pollution and global warming as more than 60% of all subsidies flow to oil, coal and gas.' The playing field is going to take a lot of levelling.
The subsidy system in the UK has now largely been transferred to the Carbon Trust with an overall reduction in budget. The case of Germany makes an interesting comparison. It introduced a system of subsidies aiming to equip 100,000 roofs with PVs by 2003. To achieve this there are low interest loans (1.9% in 2001) and a bonus on the buy-back price. In 1999 the federal government introduced the Law for the Priority of Renewable Energy (REL). It came into operation in April 2000 with a buy-back price of 0.51 euros (c. 30p or US 45c) per kWh. The aim was to achieve installed power of 300 MWp by 2003. The effect had been dramatic and the target exceeded. For example, in Bavaria the installed PV capacity in 1999 was 2350 kW. In 2001 it had become 21,730 kW. A New Renewable Energy Law has since been enacted with a further 100,000 roofs target. The feed-in tariff is about 35p per kWh for small operators. The difference with the original law is that large-capacity generators now receive a subsidy which makes commercial scale operations a viable proposition. PV 'farms' up to 18 MW capacity have been installed as a result.
The stark truth is that small-scale renewables and distributed generation will never take off in the UK whilst they have to compete with the depressed and subsidised prices of fossil fuels. There are gestures in the right direction with Distribution Network Operators (DNOs) being required to take a percentage of their energy from major renewables sources like wind or biomass. However, the only way that the situation could be rectified in favour of small-scale renewables is for the example of Germany to be followed or for there to be a
Europe-wide carbon tax which recognizes the external costs and subsidies associated with fossil fuels.
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