The announcement by the Department of Energy and Climate Change (DECC) that the Feed-In Tariff (FIT) for solar photo-voltaic will be slashed with effect from 12 December, although hurried, will come as no surprise, of course. It was clear to the Accounting and Bookkeeping College in February that the government was backing a horse at very expensive odds. Some of the language used by the minister, Greg Barker, still seems a little ironic, however, “My priority is to put the solar industry on a firm footing so that it can remain a successful and prosperous part of the green economy, and so that it doesn’t fall victim to boom and bust.” Having created the boom the government only needed to make a drastic cut in rates to ensure that the industry would fall victim to its policies.
So the department has had to acknowledge that some of its calculations, even those made quite recently, have been wrong. But what if the whole plan is wrong? This is what we asked to consider by analysts working at accountants KPMG who believe that the current grand plan known as ‘Green Transition’ is based on assumptions that are now hopelessly out of date. Their report, called ‘Rethinking the Unaffordable’, considers whether the planned investment of £199 billion, financed through our energy bills, represents value for money. There are examples of how the project is not going according plan with the operators of the National Grid having to pay for wind farms to be turned off because the network cannot absorb the extra capacity, for instance, and the report picks apart the figures for the introduction of smart energy meters to show that they would cost £256/ton of CO2 when the official rate is only £12. It goes on to list the assumptions from the Green Transition plan beginning with “The UK economy enjoys a rapid recovery” and continuing through, “New nuclear and Carbon Capture and Storage (CCS) demonstration projects are operational by 2020″.
Ultimately, if a number of the assumptions behind the current energy policy are obviously wrong then the case for a ‘dash for renewables’ collapses. It will be difficult for a government which believes itself to be the greenest ever to put aside its commitment to renewables but it may be that the lesson of the PV debacle is that the case for pressing ahead needs to be absolutely watertight or else the country, and the climate, may well be better off if we stick to what we know in the form of nuclear and gas.