Chester MP, Stephen Mosley

Visited Chester’s nationwide solar panel supplier, Solar Twin Ltd, Immediately after being elected. An engineer, Stephen Mosley took a keen interest in our Scottish invented, innovative solar water heating technology and business plan.

Stephen Mosley also heard our concerns about the competitive imbalance in the solar market where panels which heat water are currently not subsidised (apart from in a few places such as West Cheshire and Chester, where a generous £1000 solar heating grant still remains!). while solar panels (photovoltaics) which generate electricity are being subsidised generously with the Feed in Tariff of 41p per unit of energy for 25 years.

While at our Chester offices, Stephen Mosley signed an Early Day motion to support the “Renewable Heat Incentive” (follow this link to find out how many MP’s have now signed!) and, last week, in further support of this campaign for renewable heat to have “market parity” with renewable electricity, he asked this question in parliament:

Extract from the Parliamentary Record – Hansard: 13 July 2010 : Column 654W

“Topic: Renewable Energy: Heating

“Stephen Mosley [MP for Chester] asked:

“To ask the Secretary of State for Energy and Climate Change what steps he is taking to encourage the take-up of renewable heating systems. [7119]

“Gregory Barker [Energy Minister] replied:

The Government are committed to an ambitious agenda on renewable heat. Analysis by DECC has suggested that under one scenario in which the UK meets its target for 15% of total energy to come from renewable sources by 2020, around 12% of UK heat demand could be met by renewable heat. As of 2007 only around 1.1 % of UK heat demand was met from renewable sources.

“The Government are therefore committed to tackling the financial and non-financial barriers faced by the renewable heat sector. In particular we are currently looking closely at the renewable heat incentive (RHI) proposals. We will look to make an announcement on the future of the proposed RHI scheme as soon as possible.”

Barry Johnston, Managing Director of Solar Twin Ltd commented today:

“It is heartening that Solartwin’s local MP has supported us so actively in our quest for a lavel playing field in the renewable energy market. I hope that Government are able to make an announcement – before Parliament’s summer recess. The Renewable Heat Incentive must not be dumped into yet another consultation, one which may extend any delay into 2011.

What can be done to address the imbalances in the energy market right now? For example:

• Domestic energy wastage is in effect incentivised by only 5% VAT being levied.
• PV solar panels with wires coming out of them (5 years embodied energy payback) having their costs-benefits increased fivefold by FIT’s. They are now a financial no brainer. Some installers are even giving them away free – in exchange for owning the FIT income for 25 years!
• Themal solar panels which deliver heat instead (with a much better 2 year embodied energy payback) have no subsidy, except in a few places like Chester – where they are being snapped up by people who are fearful that even these grants will evaporate. Our cheaper and inherently more cost efficient solar thermal system, for example, is being outcompeted by DECC”s absurd market manipulation.

The government are not helping the microgeneration industry by mis-phasing the start of subsidy for one technology (in effect solar electricity) one year ahead of renewable heat. Imposing a year of of delay on renewable heat almost looks like industrial vandalism. How can UK ever build a decent renewables industry when the accelerator and the brake are each being randomly being stamped upon? Might a European competition regulator be able to intervene?

A fun way to appreciate the impact of UK’s current solar energy market-rigging problem is probably in the form of an analogy.
Can you countenance any credible government implementing a eat “healthy fresh food” policy by cutting the shop price of green apples (but not red apples) to a mere 20% of today’s prices? Will this wheeze raise taxes or Government spending? Not at all! Genius government bean counters are able to deliver this 80% subsidy “totally outside the tax system”. How? By implementing a law which forces food retailers to increase the price of all other non-apple forms of food to cover the subsidy costs, plus administration? (This general increase in food price will be called a levy – just to reassure everyone that it is not a tax.)

This is the green apple subsidy scenario. It begs interesting questions, such as:

• Is such a huge 80% price cut a wise thing to do?
• Even if a green apple price cut is appropriate – why drop the price so suddenly?
• Was a real “potential market distortion” analysis carried out beforehand?
• Will cost-conscious farmers start feeding their livestock on these cheap green apples?
• What, exactly is wrong with red apples? Why are green apples so sexy?
• Can the red apple suppliers get the competition regulators to intervene? No. Why will the competition regulators not intervene? Because of regulations, of course. (Get real!) What regulations? Well, the complex regulatory scheme which exists to prove that certain green apples are really green is an industry led, voluntary scheme. So there is no compulsion to have the 80% price reduction. Ha!
• Did the green apple suppliers pay their lobbyists well?
• Did the green apple subsidy consultation process ask the right questions? Could the green apple subsidy consultation have been scoped a bit wider?
• Why are batty but supposedly virtuous health promotion ideas exempt from logical challenge?
• How many more apples will be sold in total?
• By how much will this put up the cost of non-apple food?
• How soon will all the red apples trees be cut down, burnt and replanted?
• Are green apples so cheap that they are worth buying and turning into orchard compost – so that all the newly planted green apple trees grow faster?
• Will the red apple trees reach 5 years – the age of fruit production – before the excess nature of this scheme is realised and it is stopped?
• Is this a good way to use taxpayer’s money in pursuit of public health?
• Will the civil servants who led this project be allowed to set up any other new health schemes? Promoted? Honoured?
• Surely this levy on non green apple eaters is just a tax by another name? How dull do the backers of this healthy scheme think the public are?
• How, exactly, is the Green Apple Subsidy scheme a UK based improvement on a successful European idea, as they claim?

The above story almost could be a plot for surrealist novel. Just add in a bit of romance and the human consequences: starvation, sudden riches, lost jobs, lost homes, farms closing, fury at the leaden character of government, etc. Now for the real thing – just change a few words – but not the concepts or consequences.

The Feed in Tariff. (This is real!)

Can you countenance any sane government implementing a “support green energy” policy by boosting the costs benefits of renewable energy technology solar panels, but only those which are electrical and which have wires coming out of them by adding 425% to their costs-benefit over 25 years, while at the same time not boosting the costs-benefits of renewable heat producing renewable energy technology, such as solar panels with pipes coming out of them? How about the government bean counters, with an weather eye on cleverly delivering this 80% subsidy “outside the tax system” by implementing a law which forces energy retailers to increase the price of all other non-renewable forms of food to energy the subsidy costs, plus administration? This general increase in energy price will be called a levy – just to reassure everyone that it is not a tax.

This is a real, not a theoretical, scenario. It obviously begs interesting questions such as:

• Is huge 425% improvement in costs-benefits a wise thing to do? Why boost the costs-benefits so much and so suddenly?
• Was a real “potential market distortion” analysis carried out beforehand?
• Will cost-conscious pensioners and investors start feeding their bank accounts with this 25 year solar panel income because it is far, far, better than any bank interest rate?
• What, exactly is wrong with renewable heat? (77% of all energy used outside the transport sector is used as heat!) Why is renewable electricity so sexy?
• Can the renewable heat suppliers get the competition regulators to intervene? No. Why will the competition regulators not intervene? Because of regulations, of course. (Get real!) What regulations? Well, the complex regulatory scheme which allows for the 425%   subsidy for green electricity’s costs benefits is an industry led, voluntary scheme. So there is no compulsion at all. Ha!
• Did the renewable electricity people pay their lobbyists well?
• Did the Feed In Tariff consultation process ask the right questions? Could the FIT consultation have been scoped a bit wider – perhaps to look at renewables and energy efficiency in general?
• Are such narrow, and supposedly virtuous, “green energy promotion” wheezes exempt from logical challenge?
• How many more solar electric panels will be sold in total? By how much will this put up the cost of conventional electricity? Answer: obviously by 4.25% per 1% of solar electric panel energy market penetration.
• What happens if there is 10% energy market penetration by solar electric panels? (Electricity prices rise by 42.5%, of course.)
• How soon will all the renewable heat business last? Many will be gone by Christmas. The rest will be weakened. Companies need customers in order to pay for salaries, R&D and other bills
• Is solar electricity now so heavily subsidised companies will give away free solar panels in exchange for the subsidy? This is already happening. Our business analysis of the current business involved shows 7 years to reach capital payback and the remaining 18 years of subsidy is free money from the energy user. We all have to have to climb on this stupid bandwagon and we are looking for investors who will allow up to give free solar panels away too.
• Will we get the funds in place and the panels installed before the excess of this subsidy scheme is realised and it is stopped or reduced?
• Is this subsidy really a good way to use taxpayer’s money in pursuit of sustainability and carbon emissions?
• Did you know that solar electric panels take five years to reach “energy breakeven”? Over 5 years is the time it takes for them to pay back the energy which is consumed in their manufacture.
• Did you know that the unsubsidised solar heat panels take less than two years to reach “energy breakeven”? What is the sense in pushing them off the market?
• Will the civil servants who led this project be allowed to set up any other new health schemes? Promoted? Honoured?
• What is the point of having a civil service at all if they end up trashing emerging new technologies?
• Surely this levy on non-renewable energy is just a tax by another name? Just how sleepy do civil servants think the public are?
• How, exactly, is the Feed In Tariff scheme a UK based improvement on a German idea, as is claimed?

Move to West Cheshire and Chester – for a £1000 (typically 25%) solar water heating panel subsidy!