Performance Audit: Evaluation of Feed-In Tariff Schemes for Photovoltaics

Despite the benefits of indigenous renewable energy generation attained through photovoltaic installations, the opportunity exists to explore in greater depth the potential of cooperation mechanisms:

The Auditor General acknowledged the progress registered in generating renewable energy through solar photovoltaic (PV) panels. Malta is on track to attain the National and the European Union (EU) obligatory target, regarding the 10 per cent share of energy from renewable sources in the gross final consumption of energy by end of 2020. This statement, however, does not imply that attaining this target is a foregone conclusion or that it is a low risk situation.

Feed-in Tariff (FiT) Schemes generally proved beneficial in kick starting and sustaining the use of PVs. As at end 2017, Government invested around €84 million through FiTs and €60 million in grants on the relative capital outlay by the Schemes’ participants, mainly through EU funds. These FiT Schemes fulfilled three NAO established effectiveness criteria. Firstly, FiT Schemes’ uptake has improved over time, which suggests subscribers’ buy-in of these initiatives. Secondly, a payback period ranging from an average of five to nine years is less than half of the 20-year life expectancy of PV installations, which implies a good investment opportunity for Schemes’ subscribers. Thirdly, the estimated discounted additional value of each unit of renewable energy generated through PVs has decreased significantly over time.

The indigenous initiatives yield additional benefits both to the environment as well as to the economy. The PV Renewable Energy Source (RES) leads to a reduction in the emissions associated with the generation of energy through conventional means. Economical benefits reaped through the generation of PV RES include the propagation and nurturing of an industry as well as an increase in the number of green jobs.

On the other hand, cooperation mechanisms highlighted through the Renewable Energy Directive 2009/28/EC, provide other options for the exploitation of renewable energy to complement the indigenous initiatives. These mechanisms include joint projects, joint support schemes and statistical transfers. The National Renewable Energy Action Plan 2015-2020 considers cooperation in the context of back-up if Malta fails to attain its EU obligatory target or if this option provides higher net benefits.

Publicly available documentation shows that certain countries traded statistical transfers at a lesser cost than the discounted additional costs incurred by the Government of Malta to finance the indigenous generation of renewable energy through PV FiT Schemes. These circumstances emphasize the potential advantages of this cooperation mechanism, which however must be viewed within the broader context of the local environment and the economy.

Malta has registered significant progress in generating renewable energy from PVs and the attainment of the EU 2020 obligatory target looks more than just a possibility. The current indigenous approach yielded various benefits. Nonetheless, the opportunity exists for National Authorities to continue in their quest to obtain deeper insights into the potential of cooperation mechanisms and their applicability within Malta’s context, particularly in preparation for the post 2020 targets.

The Report proposes a number of recommendations.