the wrong kind of incentive?

(updated Fri 5.3.2010)

I used to admire George Monbiot, but in his column this week he delivers a general bashing of feed-in-tariffs which includes a few points I have to disagree with. Feed-in-tariffs are a scheme first introduced in Germany 10 years ago and since then copied in around 60 countries and several US states, by which private households that generate their own electricity can sell it back to the electricity provider and get paid more than they would pay to buy the equivalent energy, thus providing a cash incentive for the installation of private solar panels, wind turbines, etc.

As of 1.4., the UK introduces a similar scheme, which Monbiot now rubbishes, dismissing the German scheme along with it. Addressing his criticism point by point:

1) The UK scheme (unlike the German one) is designed to deliver a guaranteed return on the householder's investment, which means that the most inefficient methods of producing energy get the highest subsidies. I agree that this is a fatal flaw in the UK scheme. (I think the German scheme is also different in that it pays generators _only_ for the excess electricity they feed back to the net, not for what they use themselves. So for German householders it pays to generate _and_ save energy.) Trust New Labour to do something ten years late and then get it wrong.

2) Compared with other options, Monbiot says, solar PV (photovoltaics, i.e. using sunlight to create electricity, as opposed to heat) is the most expensive way of saving a given amount of CO2 emission. Apart from the fact that some of the cheaper options include unpalatable things like massive use of nuclear power, I tend to think that we need all reasonable options, including expensive ones. He points out that replacing incandescent light bulbs with energy-saving ones actually saves money and CO2. Well, we did that in 1986, but it hasn't stopped global CO2 emissions from going up further.

3) Monbiot says that in Germany carbon saving by PV is zero, because under the carbon trading act other industries can release more CO2 and compensate any effect. But that would apply to everything anybody might do, so it's a flaw in the trading act rather than a shortcoming in PV specifically.

4) He says the scheme subsidises the "fashion accessories" of rich people (by which he means home owners, which is strange as in the UK around half the households live in their own home, and most wouldn't consider themselves to be rich) at the expense of poor people who can't use the incentive and have to pay for it through higher electricity bills. While there is a small grain of truth in that, I would argue that the better-off part of the population would tend to waste electricity (eg by having several refrigerators instead of one, and several huge flat screen TVs), while the poor would be aware of their electricity bill. So unless I get to see hard data, I would assume the scheme penalises people who waste electricity and isn't particularly hard on poor people.

5) In the last part of the column, Monbiot claims that criminals could easily abuse the system by using electricity off the net to sell it back to the net at a multiple of the price. A few lines further down, though, we learn that the FIT scheme introduced in the UK now doesn't involve metering the electricity fed back to the net but is based on estimated output calculated from PV capacity. As I understand it, this would mean the criminal scheme outlined above wouldn't work.

6) Monbiot is right to point out that the success of PV depends on latitude, i.e. sunshine -- when dismissing the German scheme he may have forgotten to consider that Germany is actually further south than the UK, and does have quite warm summers.

7) Monbiot argues that PV is useless in the UK as it produces power at times when it is least needed, i.e. during summer days, as opposed to winter evenings. However, as most of the UK power is produced by fossil fuels which can be burnt any time or stored if they aren't, every bit of solar power generated even on a hot summer day saves fossil fuels from being burnt. Even more so, as the sunshine intensity is predictable in the short term, so fossil fuel plants can turn down their capacity on those sunny days.

8) another advantage for Germany that Monbiot fails to acknowledge is that as an early mover, the German PV industry has hugely benefited from the scheme and is, I believe, second after China globally. This, of course, doesn't help the UK government which ineptly copied the scheme ten years later.

9) considering that he's been banging on about growing his own green food for years, it is also curious that he doesn't appreciate people may like the idea of producing their own green energy.

I've published a (somewhat more positive) piece about the German scheme in Current Biology a few years ago, which is on restricted access here (also see the relevant blog entry).

PS (4.3.): 10. Monbiot says the German incentives are being scaled down this month because the scheme wasn't working. I haven't researched that yet, but I would suspect that they were scaled down because the black/yellow coalition (conservative / neoliberals) saw the opportunity to cut back something the red-green coalition had put in place in 2000. Also, there may have been a 10 year guarantee which has now run out, not sure. Plus, as the scheme has been very successful in kick-starting the solar industry, the govt. may argue that it's done its job and isn't needed on a similar scale any more. Will have to look into that.

PS (5.3.): yesterday's Guardian carries a response from Jeremy Leggett (who works in the PV industry and is the editor of the book "The solar century" which I reviewed last year):
Solar panels are not fashion accessories,
rejecting Monbiot's claims in four points. Actually, I was considering to submit my 9points to the response column, but then thought Jeremy Leggett is surely going to write something (and he's more qualified). Psychic powers working well this week!

Also in yesterday's edition is an article on the finance pages suggesting that a crucial piece of legislation needed to make the FITs work has been delayed, so the whole thing may still go off the rails. Better wait before I top up that mortgage. This finance article refers to Monbiot as a "green campaigner". Not so sure about that any more, as he now supports nuclear and bashes solar power.