SUBSIDY UNNECESSARY AS RISING FUEL PRICES WILL MAKE MICROGENERATION ATTRACTIVE

 02 June 2008

 Today saw the publication of a major study on the uptake of microgeneration, The Growth Potential for Microgeneration in England, Wales and Scotland.

The study was part-funded by Renewable Energy Foundation (REF), alongside many other organisations, including BERR.

 The principal findings are;

• While strong policy support measures could drive significant uptake of microgeneration the cumulative policy cost of this subsidy would be £21 billion by 2020 and £76 billion by 2030.

• Element energy estimates that this expenditure would save 24 million tonnes of CO₂ annually, which is about 4% of UK emissions (560 million tonnes).

REF believes this is a very high cost for a modest contribution to fuel saving and emissions reduction.

• Most importantly, Element Energy estimates that a rapid rise in conventional energy prices, much as we are currently observing, would render subsidy support needless, with a doubling in fossil fuel prices driving spontaneous uptake in 10 million homes by 2030. (See pp. 62-63.)

REF has for some time expressed concern that subsidy support mechanisms for market-ready renewables are unnecessary and drive in expensive sub-optimal technology, when rising fossil fuel prices will do the job better at lower cost.

Commenting on the report, Campbell Dunford, CEO of the Renewable Energy Foundation, said: "This important study should give Government confidence to resist misguided calls for the construction of complex, costly and counterproductive support mechanisms, when it is clear from Element Energy's excellent work that rising fuel prices will motivate spontaneous uptake of microgeneration with benefits all round."

For further information please contact Margareta Stanley on 020 7930 3636 or 07968 049 832, email press@ref.org.uk or visit our website www.ref.org.uk

Notes for Editors

1. Renewable Energy Foundation is a UK registered charity supporting research into renewable and alternative energy. The Foundation is supported by private donation, and has no corporate membership or political affiliation.

2. The full study and supporting documents can be downloaded from the website of the Department of Business, Enterprise and Regulatory Reform: http://www.berr.gov.uk/energy/sources/sustainable/microgeneration/research/page38208.html

3. The study was carried out by Element Energy, and was funded by a consortium consisting of Ashden Trust, British Gas Service Ltd, Department for Business, Enterprise and Regulatory, Reform, Ceres Power plc, Energy Saving Trust, E.On UK plc, Micropower Council, National Energy Action, Renewable Energy, Foundation, East Midlands, Development Agency, London, Development Agency, North West, Development Agency, South East of England, Development Agency, and the South West of England, Development Agency.