Tesco joins the stampede to supply DIY electricity

TESCO will start selling solar panels this week, leading a stampede of retailers aiming to cash in on a controversial new subsidy scheme.

The rush has been triggered by the launch of the government’s new feed-in tariff (Fit) programme. Taking effect on Thursday, this pays homeowners and small firms for generating electricity from photovoltaic solar panels and wind turbines, either for their own use or to be sold back to the grid.

The payments are guaranteed for up to 25 years to ensure payback on the costly technologies. The government claims the scheme can generate up to £950 in cash payments and energy savings annually.

Philip Wolfe, a director at the Renewable Energy Association, the trade body, said: “All sorts of new companies will be coming up with offers. Tesco is just one of them.”

Some campaigners are less enamoured with the idea of low-carbon power for the masses, labelling the Fit scheme the “great green rip-off”. They warn it will hurt the poor by pushing up household bills artificially and the billions the government will pay out over the life of the programme would be better spent on proven measures like insulation.

Tom Murley, head of renewable investing at HG Capital, the buyout firm, said: “My worry is about customer protection. There are a lot of dodgy people in this industry. You will have people coming with offers to install a panel on your roof with promises for cash payments, but most people don’t know the first thing about what technology may be best.”

Wolfe recently started Ownergy, a firm advising individuals and companies on which technology is most appropriate for their needs and location.

Despite the controversy, companies are lining up to bring mini-renewables to homes and business. Lucy Neville-Rolfe, executive director at Tesco, said: “Tesco has always led the way by bringing affordable green products to the mass market. With low-energy lightbulbs, we cut the price and demand went through the roof. Now we are making solar power mainstream by giving customers a simple, high-quality product at the right price.”

Rival Sainsbury’s already sells solar panels, as do other retailers, such as B&Q.

Their hope is that the tariff scheme will spur a boom like the one in Germany. The country was the first to introduce feed-in tariffs in Europe, in 2000, and today it is the biggest renewables market in Europe. Last year 16% of its electricity came from clean sources. In the UK, which can claim only 5.5% at the moment, most green energy will come from large projects such as offshore wind farms. The Fit scheme aims to increase capacity at the other end of the scale.

The government is committed to slashing Britain’s carbon-dioxide emissions by 34% from 1990 levels by 2020. Industry observers say the long lead times for nuclear plants and offshore wind farms mean smaller generators will play a crucial role in closing the gap.

But Murley warned that if the scheme is too successful — in encouraging a flood of small-scale generators — it could depress prices and have a detrimental effect on the wholesale electricity market, making life hard for big nuclear and wind suppliers. In northern Germany, where the countryside is littered with small wind farms, the power price has actually plummeted to near zero at times of low demand.

One of the big obstacles to small-scale generation has, until this week, been cost. A small solar-panel electricity system, for example, sells for £9,999 at Tesco. Sainsbury’s charges £2,000 more for the same system. A larger, 3.12kW model could top £16,000.

Andy Cox, energy partner at the accountant KPMG, said: “The introduction of a feed-in tariff to Britain’s solar market finally brings some real certainty to the level of returns available to investors and lenders.”

Under the scheme, small-scale generators are paid a per-kilowatt subsidy on all the electricity they generate, and a small additional amount for everything they sell back to the grid. By generating power they will need to buy less from their supplier. Solar photovoltaic panels, the most expensive and often least efficient of the renewable technologies, qualify for a 25-year payback.

Cheaper options such as wind and waste-to-energy systems will get premium rates for their excess power for 20 years.

Cox said: “Whether the new Fit will be a step change for the UK renewables market is not clear. For a typical domestic application, estimates are for a potential payback period of more than nine years assuming an upfront capital outlay of about £16,000. This may be too long for many homeowners.”

Thanks tohttp://business.timesonline.co.uk/tol/business/industry_sectors/retailing/article7078855.ece

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