What Can Feed In Tariffs (UK) Learn From Germany

What Can Feed In Tariffs (UK) Learn From Germany

Copyright (c) 2010 Paul SherringtonSome commentators, even green minded ones, have suggested that the Feed in Tariffs (UK) system of renewable support is an inefficient mechanism for achieving carbon reduction. So what do we know about Feed in Tariffs elsewhere? How does the Feed in Tariffs (UK) scheme compare to those currently in place in other European countries and will the outcomes be the same? When the previous Labour Government developed the UK Feed in Tariff system, they looked to Germany to learn some very important lessons. Introduced in 1990, the first 'Feed in Tariff' in Germany, was the Stromeinspeisungsgesetz (StrEG). This required Utility companies to buy the electricity produced from a renewable source at a tariff rate guaranteed to ensure a profitable business for many wind power generators. The rate however, was not set high enough for the Solar Photovoltaic (PV) market to really take off. In 2000, the Erneuerbare-Energien-Gesetz (EEG) introduced a number of changes including: *Setting a differentiation in tariff rates subject to technology size and site. *Introducing fixed rates over a fixed period of 20 years.

More importantly, the tariff rates were set to encourage profitability and encourage the use of the most up to date technology, with Solar PV achieving the highest tariff rate. The EEG also provided for adjustments in rates to be made every two years to keep up with the market and technological developments. Subsequent amendments to the Act in 2004 committed Germany to increase the share of renewable energy to the country's electrical capacity to 12.5% by 2010, and to at least 20% by 2020. It also introduced the concept of digressive rates that reduces the tariff level each year from 1% to 6.5% annually, depending on the technology. These digressive rates were introduced to encourage technical innovation and cost cutting in the Renewable Energy sector. A further review of the rates in 2010 recognised the major cost reductions that could be achieved by Solar PV manufacturers, and resulted in reductions designed, in part, to encourage a move away from large scale Solar PV systems (e.g. solar farms) and more rooftop installations. The result of many years of fine tuning its Feed in Tariff legislation has been a lesson that other countries have sought to learn from. Despite Germany's energy demand remaining fairly constant over the period, the amount of electricity produced from renewable sources has increased from 10.2% in 2005 to 16% in 2010. Aside from the energy outputs generated by Germany's Feed in Tariff scheme, there has also been major growth in Green jobs. The Solar industry employs more than 20,000 people in Germany, with a turnover of 1.7 Billion Euros per year. The figures for the Renewable Energy industry as a whole are even more impressive. It employs around 285,000 people and had a turnover in 2007 of 25 Billion Euros in 2006, up from 16.4 Billion Euros in 2005. Whatever the merits or otherwise of using the Feed in Tariffs (UK) system of renewable energy support to reduce carbon dioxide emissions - and there may be cheaper ways of doing so - it is perhaps these figures on the Green economy and the sheer number of Green jobs created in Germany that make it difficult to argue against. When the Feed in Tariffs (UK) system of Renewable Energy support is reviewed in 2013, let's hope that the UK Government adopt the same principle of assessment that Germany did. Because if Feed in Tariffs (UK) produces anything like the industry and jobs that Feed in Tariffs produced in Germany, we should be grateful.

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