Green Week: Energy Economy

Green Week on Place North West, published in association with the Environment Agency, Envirolink Northwest and Hill Dickinson

The UK and North West microgeneration industry was given a massive turbo-charged boost this year, writes Mark McManus. Microgeneration companies had become frustrated with the Government's lack of action to help the sector but the announcement in February of two new cash incentive schemes for property owners to go green confounded expectations.

The schemes, Feed-in Tariff and the Renewable Heat Incentive, should have a dramatic impact on the green energy industry over the next ten years. As a German firm manufacturing heat pumps and solar panels for markets across the world we knew the UK was way behind the likes of France and Germany in the take up of microgeneration products. A prime reason for this is that property owners just simply weren't being incentivised enough to go green.

However, the new schemes should fundamentally change people's attitudes.

The Government has set a target of producing 20% of energy from renewable sources by 2020. Drilling that down, 12% of heat production must come from renewable sources and all new properties must be built to zero carbon standards by 2016. These are extremely ambitious targets when you consider that just 1.5% of energy is generated by renewable sources today.

The FIT was introduced on 1 April. Through the FIT scheme, property owners who install low-carbon electricity technology such as solar photovoltaic panels and wind turbines up to 5mw will be paid for the electricity they generate, even if they use it themselves. The level of payment depends on the technology and is linked to inflation. They will get a further payment for any electricity they feed into the grid. These payments will be in addition to the benefit from reduced bills. A typical 2.5kW well-sited solar pv installation could offer a homeowner a reward of up to £900 and save them £140 a year on their electricity bill.

The RHI, meanwhile is due to come into force in April 2011. The scheme is expected to lead to a rapid increase in the number of homes and offices heated by woodfuel, biogas, solar thermal, heat pumps and waste-to energy technologies. Through the RHI property owners installing a ground source heat pump in an average semi-detached house could be rewarded with £1,000 a year and lead to savings of £200 a year if used instead of heating oil.

We believe these incentive packages are without question among the biggest developments seen in the green energy property market. As a result property owners are going to see a major cash return on going green. These are exactly the kind of genuinely eye-catching measures the industry has been demanding for years.

Mark McManus is UK managing director of renewable energy giant Stiebel Eltron, based in Wirral

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