'Cashback' pledge for green power

Households that contribute electricity to the National Grid are to receive payments under a new government scheme.

Towns and villages will be encouraged to generate their own power with wind, water and solar energies, and then be paid for how much they produce.

Critics warn that small-scale production is expensive and projects may require government subsidy.

But Energy and Climate Change Secretary Ed Miliband said the project will "help create the clean energy of the future".

Similar "clean energy cash back" schemes already operate in 19 European countries including Germany.

'Feed-in tariffs'

At present, anyone in the UK who feeds electricity into the National Grid can get a reduction on their fuel bills through smart meters.

But ministers hope that the promise of cash in people's pockets will encourage them to seek new ways of generating their own power.

In Germany, whole towns have grouped together to buy wind turbines, build biomass plants and erect solar panels on all private houses.

They are then paid a guaranteed fixed price for every kilowatt of energy they produce - a higher sum than for electricity made from fossil fuels in traditional power stations.

Three wind turbines can make £15,000 a year for a single village.

Since so-called "feed-in tariffs" were introduced in Germany, some 400,000 homes, particularly in the sunnier south of the country, have installed solar panels.

But the government has had to subsidise such projects in order to keep them viable.

At present, only about 2% of Britain's energy comes from renewable sources, but the government has pledged to increase that to 15% within the next 12 years.

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