Government Restarts Subsidies to Wind and Solar, This Time By The Back Door

GWPF calls on Treasury to kill ill-considered “Smart Export Guarantee"

London, 16 June: In a briefing note published today by the Global Warming Policy Forum we show that the Smart Export Guarantee (SEG) shortly to be introduced by Greg Clark, Secretary of State for the Department of Business, Energy and Industrial Strategy (BEIS) is a disguised restart to subsidies for onshore wind, solar and other renewables, a restart that contravenes a Treasury ruling that there should be no new subsidies until the total burden of current subsidies starts to fall, which is not expected until the middle 2020s at the earliest.

The Smart Export Guarantee forces larger electricity retailers (suppliers) to provide guaranteed offtake tariffs to renewable generators up to a capacity of 5 MW, a ceiling that would permit solar farms up to about 20 acres and wind farms of two 150 metre turbines.

The SEG tariff rate is notionally left to the market, but will in fact be determined by the promised Ofgem “guidance” and by the Department’s own assessment of what is "reasonable”. Bullied in this way, suppliers will have little option except to provide expensive non-market rates, passing on the cost to their customers.

The total costs of this policy are impossible to calculate, since neither the tariffs nor the scale of adoption is or can be known. The government’s Impact Assessment is a hollow charade, and the truth is that the SEG policy is uncosted, and uncostable. 

Furthermore, no central registry of the tariffs will kept, meaning that no one, from Treasury to the general public, will be able to determine the full cost the SEG policy at any time.

And last, but not least, the SEG policy has no set closure date, meaning that unless cancelled it will apply in perpetuity.

Dr John Constable, the GWPF's energy editor, said:

The SEG policy is an underhand reintroduction of subsidies for renewables, apparently designed to prevent public audit, and seemingly indifferent to the potential for explosive development of locally harmful solar and wind schemes with high consumer costs. The Treasury should kill this ill-considered proposal without delay."

Dr Constable added:

Mr Clark, Secretary of State at BEIS, has made many questionable decisions during his tenure. The Smart Export Guarantee could easily prove to be one of his worst. "