The age of generous subsidies for renewables is over. Our new government will not be re-opening the coffers – unless the Greens make it into a true ‘rainbow coalition’.
Renewable technologies and installations will have to stand on their feet and be competitive in the open market. The cost of products has fallen rapidly, reducing the need for subsidy and driving us closer to grid parity with fossil fuels.
And that is how it should be…although it is fair to ask whether this would have happened without subsidy creating the market in the first place.
Whatever their merits at the time, feed-in tariffs overheated the solar PV market and led to a lot of inappropriate installations. Similarly with heat pumps; the subsidies meant developers were installing electric systems in homes on the main gas grid – leaving a legacy of systems that will never pay for themselves either economically or in carbon saving.
Fortunately, we now seem to be entering a new era where each possible solution – renewable or conventional – will have to satisfy economic and environmental criteria on their own merits. What might surprise people is that many renewable technologies will still be the most economic choice.
Stranded
Building clients looking long-term are starting to view investment in fossil fuel technologies as decidedly uncertain – they are concerned about ending up with stranded assets in ten or 15 years’ time. Although we have enjoyed significant falls in tariffs since the oil producing countries, in tandem with emerging shale gas markets, drove down the wholesale energy price; the long-term picture for oil, gas and coal is increasingly uncertain and ‘energy security’ is coming back onto the agenda.
Building clients looking long-term are starting to view investment in fossil fuel technologies as decidedly uncertain – they are concerned about ending up with stranded assets in ten or 15 years’ time. Although we have enjoyed significant falls in tariffs since the oil producing countries, in tandem with emerging shale gas markets, drove down the wholesale energy price; the long-term picture for oil, gas and coal is increasingly uncertain and ‘energy security’ is coming back onto the agenda.
Couple that with growing maturity and more technical innovation in the renewable sector; and you have a recipe for greater investment in small scale, building specific renewables. For example, one big drawback with solar panels is that they are usually positioned facing south to capture the most intensive solar energy. However, demand for power tends to be lowest in the middle of the day because homes are unoccupied and commercial buildings use more natural daylight and less heating – but that is when the sun is in the south.
The industry has battled long and hard with the problem of how to store renewable energy for when you need it most, but it also has an alternative solution: Solar panels that automatically adjust their position east to west tracking the sun are now available. This makes it possible to use solar energy for longer periods in the day, which fundamentally alters the economic equation. We can expect to see their wider adoption in the UK in the near future.
This kind of solution is not expensive and is why technology is set to play a much bigger role than subsidies. As a result, the renewable industry has a much more sustainable, long-term look about it with greater job security for everyone it employs.
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