The US has “a more progressive renewable support policy than Europe”, where there is “a perversity from heaping the whole cost of renewable subsidies onto the consumer”.
That’s the verdict of Jonathan Lane, head of consulting for power and utilities at consultancy GlobalData.
He claims that the US federal support scheme for renewables, the production tax credit, is much more efficient that European models, in which “subsidies are loaded onto customers’ electricity bills, usually through a tax or sometimes via an electricity retailer obligation”.
He said: “While this approach confers the advantage of keeping tax subsidies out of the electricity sector, with the competitive market setting the price for consumers, the reality is that it is government intervention pushing prices upwards.”
Lane argues that “as energy prices become more politically charged across the world, Europe should take a look at the US”.
He states that there is a “perversity from heaping the whole cost of renewable subsidies onto the consumer”.
“Germany has over one million solar installations and 42 per cent of the final electricity bill is tax. Italy has 300,000 installations and 35 per cent of the bill is tax. In effect, those that cannot afford solar panels are subsidising those that can. This can’t be considered fair, and complaints are getting louder.
He adds that the reason governments subsidise renewable generation “is a social good – aimed at reducing carbon emissions and reducing fossil fuel import dependency – and it makes far more sense for these goals to be delivered via general taxation. Under the US system those most able to pay for renewables do so: under the European system those least able to afford it pay. Something needs to change, and quickly.”