A frequent criticism of renewable energy is the amount of Government subsidy it attracts. Hard-earned tax-payers money is used to fund Feed-in-Tariffs for solar panels, pay land-owners for Wind energy and other forms of renewable energy infrastructure.
Isn’t it terrible shout the sceptics, by now, renewable energy should be self-funding and succeed or fail by the strict rules of the free market. In practice energy is too crucial to modern life to leave to chance. This means that despite being around for considerably longer, worldwide fossil fuel subsidies total around £500 billion US dollars a year. In the UK fossil fuel production subsidies for fossil fuels actually increased in 2015 with £5.9bn given to major fossil fuel companies operating in the country, most foreign-owned, while £3.7bn is used to subsidise fossil fuel production overseas in countries including Russia, Saudi Arabia and China.
Tax breaks for North Sea oil and gas production announced by the chancellor, George Osborne, earlier in 2015 will cost taxpayers a further £1.7bn by 2020, according to government figures – tax breaks for fossil fuels.
Unfortunately the environment for renewables in the UK is becoming increasingly hostile. Climate Change and Energy Secretary, Amber Rudd, announced major cuts to renewable subsidies December 2015 – https://www.gov.uk/government/news/changes-to-renewables-subsidies with cuts to the Feed-in-Tariff for for the electricity generated from solar, wind, hydro or Anaerobic Digestion power to 4.39 p /kwh.
The Renewable Obligation has also been watered down. This places an obligation on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources.
This tinkering with subsidy has resulted in the rate of domestic solar installations is set to halve, according to the Solar Trade Association. Larger solar installations (more than 1MW) on roofs and in solar parks have had their support cut by 85% and 71% respectively, meaning the market for the most cost-effective projects is all but dead.
Rudd said: “We have to get the balance right and I am clear that subsidies should be temporary, not part of a permanent business model. When the cost of technologies come down, so should the consumer-funded support.”
Fossil fuels aside, the proposed, French state owned company built and Chinese state run new nuclear reactor at Hinckley Point will enjoy 35 years of bill payer subsidies to be the most expensive power station ever built.
The change of policy appears to be ideological rather than based in the real world, where countries such as Germany, US, Portugal and Sweden are rapidly increasing their renewable capacity as an investment in the future.
Perhaps most significantly China is getting in on the act as it recognises the negative effects of air pollution and climate change. All told, 18% of the country’s energy now comes from so-called “clean” sources, including hydro, wind, solar, nuclear, and natural gas. China’s National Bureau of Statistics figures for 2015 and officials believe that the country’s current growth path will allow them to soon surpass their carbon emissions targets. Specifically, China broke two new records in 2015, installing a record 32.5 GW of wind in 2015, and a record 18.3 GW of solar in 2015 — both of which were higher than initial estimates.