Renewable energy

Government in recent years has made some progress in the granting of initiatives to individuals who invest in means for generating electricity, from small scale renewable energy sources (RES) such as roof top photovoltaic systems. This policy is in line with Government's commitment with the EU to ensure that part of the country's energy requirements will be derived from RES.

Unfortunately the incentives offered have failed to stimulate the expected investment in RES by private individuals. This is because the payback period on the investment required to purchase the necessary equipment is too long given the relatively high capital outlay involved.

The return on the investment consists mainly in the offsetting of part of the electricity bill equivalent to the generated electricity which is used there and then by the investor for personal consumption. There is also a return from the feed in tariff which Enemalta pays the investor when the latter exports more electricity than he imports.

The European PV Association has found that a well designed feed in policy is the single and most successful driver when applied correctly. In Malta the current feed in policy leaves much to be desired. Basically the most that a domestic RES generator can hope for is that he can offset part of his electricity bill.

This is because in the rare case of net export he can only hope to get 3c per unit exported while the domestic tariffs for the sale of electricity vary from 3.27c to 7.36c per unit including surcharge. This policy hardly offers any encouragement and the results speak for themselves because private investments in RES electricity have been very disappointing locally.

Germany, Spain and Denmark who have adopted more reasonable feed in tariffs encompassing other initiatives besides more favourable rates, have experienced a boom in RES investments in recent years.

Government initiatives on the initial investment will only be effective in encouraging investments in RES in the longer term when all sources of energy (fossil fuels, RES etc.) will have reached the same level of competitiveness. However it is a reasonable feed in tariff which will really stimulate the RES market to take off.

Government through MRA has a critical role to play in the establishment of a realistic and supportive policy framework and in accelerating the introduction of RES. One must not forget to mention also the fact that RES in their modest way also ease the serious burden on Government to reduce the country's emission levels.

As such one expected that this issue would have been addressed seriously in the Budget if Government sincerely believed in the promotion of small scale RES.