FIT for purpose

The island of Gigha is a small laboratory of community ownership at the southern end of the Hebrides. Local people set up the not-for-profit Gigha Community Heritage Trust and bought their island in 2002 with almost £4 million of public funding. Since then, several decades of depopulation have been reversed, Fyne Homes housing association has built 18 new rented homes and several businesses have relocated to the island. The list of people waiting to move to this haven of mutuality grows steadily.

The ‘dancing ladies of Gigha’ - Scotland’s first community owned and grid-connected wind farm - are among the first fruits of the trust’s work. Three elegant wind turbines bought second-hand in the Lake District, dubbed the ‘ladies’, are 30 metres high and each has a capacity of 225 kilowatts. Together they will supply two thirds of the island’s electricity.

Loans of £440,000 raised to buy and install the turbines will be repaid in five years. The trust estimates the wind farm will have a gross annual income of £150,000, yielding a net annual profit of about £75,000. It is a model that could be replicated in communities across Scotland.

The islanders will also benefit from the new feed-in tariffs that were introduced on 1 April and offer opportunities for other community trusts, housing associations and local authorities to spread the benefits of renewable energy.

Sticky money

Far removed from Gigha is Birmingham, Britain’s largest local authority, which plans to install photovoltaic panels on roofs in some of the more deprived neighbourhoods of the city. The revenue the council generates from FITs will support a revolving fund to pay for more panels and deliver energy saving advice in the neighbourhoods.

In Nottingham, a community energy co-op is at work in The Meadows, an inner city area with deep levels of poverty. It has plans to build a community-owned wind turbine and install PV panels. The FIT income will be ‘sticky money’ that stays in the local community.

Renewable energy

The national FIT initiative has the support of the National Housing Federation. Several housing associations, Gentoo among them, are looking seriously at the possibility of setting up renewable energy projects that will benefit their customers by tapping into FITs.

According to the Energy Saving Trust, the tariffs ‘offer a fantastic opportunity for local authorities and housing associations to benefit from investing in renewable energy and to reduce energy bills for residents’. Under the rules of the scheme, renewables could be installed on people’s homes free of charge, says the Trust. The social landlord would receive the tariff and the tenant would receive free electricity. The income could then be invested in low carbon measures creating an ongoing cycle of carbon reduction.

The case for FITs is overwhelming. They will help cut the UK’s carbon footprint, fund other measures to tackle fuel poverty and reduce our dependence on finite fossil fuel resources - much of it imported from erratic and unstable nations.

A report, Green houses, makes a similar case for the introduction of a government funded ‘green new deal’ to drive the retrofit of all UK homes. Published by the Human City Institute with the support of the Matrix Housing Partnership, the report looks particularly at the need for retrofitting in the west midlands where the six housing association members of the partnership work. Its recommendations, however, have a national resonance.

As one of the authors of the report, I have to state a personal interest, but I really do believe a concerted national retrofit programme is needed alongside the introduction of the FIT initiative and other measures, if we are to meet the challenges of climate change, fuel poverty and oil supply.
The report argues that £2 billion a year of the money raised by the restoration of VAT to 17.5 per cent should be hypothecated to help fund the retrofit programme. Furthermore, it argues, VAT on housing refurbish-ment should be reduced to provide a green stimulus to the economy and the construction industry.

I think European Union rules on VAT should be changed to accommodate a zero rating on retrofitting, such is the threat posed by climate change (at present, once imposed VAT cannot be removed altogether).

The other huge benefit offered by the combination of FITs and the green new deal is job creation. We are way off the pace in the UK on the use of renewable energy and the jobs that follow. While much of the first research and development was UK-based, other countries have reaped the rewards.

First among them is Germany, which introduced feed-in tariffs nearly 20 years ago. The German renewable energy industry had a turnover of €21.6 billion in 2006, up from €16.4 billion in 2005, and employed more than 200,000 people. By 2020 more than 500,000 Germans will work in the industry and outnumber those making cars.

Beat the clock

The UK clearly has a lot of catching up to do in a race a against the climate clock. Small, community based schemes, like the ‘dancing ladies of Gigha’ have their place alongside plans to build nine huge offshore wind farms around the UK during the next 20 years. But as Green houses points out, it all has to be part of a national programme. Only the state and its agencies can co-ordinate the effort and provide the funding. The party that wins the general election must embrace a green new deal and keep FITs.

Bill Randall is a housing writer, journalist and Green Party councillor