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Wind turbines turn at the Braes of Doune Wind Farm near Stirling Castle, Scotland December 5, 2014.
‘The first step is to stop trying to apply logic to what is not a logical fight. People who don’t like wind farms are unlikely to be convinced by statistics showing ‘most people do’. Photograph: Russell Cheyne/Reuters
‘The first step is to stop trying to apply logic to what is not a logical fight. People who don’t like wind farms are unlikely to be convinced by statistics showing ‘most people do’. Photograph: Russell Cheyne/Reuters

The renewable energy sector needs to commit to getting off subsidies

This article is more than 9 years old
Jessica Lennard

The renewable power industry needs a fresh approach if it is to win the public’s support and reach its full potential, says OVO Energy’s Jessica Lennard

The energy debate has left the territory of the rational. Graphs, logic, or claims to the moral high ground hold scant weight now. The impact of statistics about green growth and export opportunities is negligible. It no longer matters what national polls say about belief in climate change; or whether low-carbon generation is obviously preferable long term to finite, dirty fossil fuels from unstable parts of the world.

Renewable sources of power, such as wind and solar, have been caught in the crossfire of this debate. Blamed for rising bills, the sector has become a particular bugbear for some politicians, who are increasingly intent on reining back the industry. With the political tide at risk of turning against it, the renewables industry needs a change of perspective and a fresh approach if it is going to reach its full potential.

OVO Energy is a retailer. We don’t own power stations, so our perspective on the energy market is predominantly from the other end of the wire from generation, the customer end. The picture is not a positive one.

Domestic bills have doubled in a decade, while fuel poverty remains a national scandal. Switching rates have halved since 2008 and many non-switchers (a high proportion of them vulnerable) are being overcharged. Customers no longer trust they’re being offered a fair deal. Policy has been drastically over-focused on building big, expensive new power stations, while innovations which might actually make sense for customers (community energy, smart meters, energy efficiency, demand reduction) have been sadly neglected or undermined.

It is now clear that consumers were never connected to this massive national infrastructure programme for which they are picking up the tab.

The generation and retail sides of the industry have, in effect, been on a collision course. We, all of us, government and the energy industry (retail and generation, fossil fuel and low carbon) have lost the confidence of the people picking up the bill for what we’re trying to do.

Public frustration reached near fever pitch last year as Ed Miliband’s speech about freezing bills made energy the centrepiece of the cost of living crisis. An unprecedented politicisation of the energy industry has since ensued in which knee-jerk, headline-grabbing policy making and a series of u-turns have seriously undermined investor certainty.

Again, this is particularly true for renewables. A new approach is called for and the first step is to stop trying to apply logic to what is not a logical fight. People who don’t like wind farms are unlikely to be convinced by statistics showing ‘most people do’. People who don’t trust energy companies or politicians are unlikely to believe the bigger picture from us, even if we could explain it properly.

Next, the industry needs to see things from the customer perspective and confront the subsidy issue head-on. Renewables policy has suffered a deplorable lack of clarity and consistency; but this doesn’t change the fact that from the customer’s point of view, the idea of subsidies does not make sense. Whether bills will theoretically be cheaper or not in 2020, or whether fossil fuels are also subsidised, is irrelevant. Consumers just want to know they aren’t writing a blank cheque.

In reality, renewables are a huge success story, here and around the world.

Technology is evolving, costs plummeting, deployment is steaming ahead. But that’s not the way the story is told and that, in part, is because the industry has been so loathe to talk about becoming financially self-sufficient. To the public, justification of subsidies (in terms of growth and jobs, for example) just looks like a tug of war between industry wanting more and government pushing back. Now, the political reality is that cost trumps all.

Some renewables are already close to grid parity (i.e. costing the same as conventional sources of energy). The UK solar industry recently talked about being subsidy-free by the next parliament. So the direction of travel is clear and it’s what bill payers want and deserve to hear.

The renewables sector can choose its terms carefully and build reasonable flexibility into whatever pathway it chooses to develop –government certainly does. But winning broad public support now depends on industry not waiting for government to impose it, but making a pro-active, responsible commitment to getting off the subsidy hook as soon as possible.

  • Jessica Lennard is head of corporate affairs at OVO Energy

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