Solar industry speaks of “nightmare” changes to Feed In Tariff
The last few weeks have been a rollercoaster ride for those of us working in the solar industry and the thousands of people involved. Just today, as a result of Government plans to cut its support for the industry, I have seen York Council cancel 3000 planned social home PV installations, Westminster cancel 1000 social home PV installations, Anglesey cancel 300, Reading Council cancel a £5M solar project, Shoreline Housing Partnership (Grimsby’s largest social housing landlord) cancel 3,300 solar PV systems installations, Ashford Borough Council cancels £1.2M scheme.
It’s hard to fathom, so I will attempt to unpick what is really behind the roller coaster ride of the last year.
Solar has led the green growth agenda, creating well over 20,000 jobs, 2500 new small companies, and developing close to 100,000 happy solar-powered homes and businesses. You would think that these successes alone would be enough to get us some good headlines. When you couple that with the other big story – the huge cost reductions we have achieved over the same period – surely this should be hailed by all as a good news story.
But for some reason that is not the being hailed as a success – actually we are seen to be creating a problem for DECC and its Ministers. Delivering on the low carbon growth agenda is now a problem for Government.
Some basics: The feed in tariff (FIT) was introduced to stimulate the uptake of small renewable energy technologies up to 5MW in size, solar photo-voltaics (PV) being one of them. It was designed to be free from the Government’s Budget setting process, by being funded from a levy on consumers’ bills, with “degression” and regular reviews to ensure that it did not impact too heavily on them. The tariffs were always designed to come down as the prices of technology came down. Simple.
Somewhere during the first year of the scheme these principals were fundamentally changed. The new coalition government did something behind the scenes to change the classification of the FIT funding so that it now is considered as tax, and therefore a budget had to be set. Sounds fine – but unfortunately the Budget set was totally wrong. A spreadsheet showing the projected uptake of the scheme to inform this budgeting process was not seen by anyone in the industry, and was substantially inaccurate. This ended up with a totally unrealistic “budget cap” being set.
So Government rushed a first FIT review to stop “super size” solar, which has basically destroyed the market for all larger systems above 50kW – a school system perhaps. Ministers were saying the scheme was only ever designed for householders, and this was greedy investors making money out of the government with “double digit returns” – both wrong and nasty spin. That happened back in the summer and was effective in splitting the industry and public opinion. This was a band aid for the real problem – the budget cap.
The Budget cap is on the front pages once again, as Government launches its third review of the scheme in nearly as many months (whilst waiting for the fourth review to be published). Once again we are being painted as a greedy bunch just looking to make money out of the Government, but this time round the whole industry and many other groups are affected. What appears on the face of it to be manageable changes to the tariffs are not at all. The rates are one thing – but the timings and the new energy efficiency criteria make it a nightmare. Reading the impact assessment, it shows that the cumulative measures are designed to chop the UK market from 500MW this year to 10MW next year. I am not making this up – it is in the documents.
The infuriating thing in all this is that the Solar Trade Association actually called for the tariffs to be cut back by 25% six months ago – and was not listened to.
Yet the Feed in tariff and solar PV in the UK is a huge success. People love it, it creates jobs that people love doing, and it is a game changer. The moment you have your own power station on your roof, you start to really THINK about where your energy comes from – and use less power from the big six, have lower bills etc. Maybe there-in lies the problem.
We are being told the Budget is the problem, but to me this smacks of ideology rather than economics. If there was commitment to the green growth agenda by the coalition government, they would be looking at the whole picture here and realizing that this scheme is a massive good news story, and then take action to correct this absurd Budget cap. Energy Minister Greg Barker – the author of Conservatives green paper “Power to the People” which was all about people generating their own power – seems to have had a change of heart. This latest announcement was billed as: “Boom and Bust for solar must be avoided”. It is time for David Cameron to intervene to prove that there are still some green leaves on the Conservative tree and get the solar industry back on track.
The solar industry is coming together in Westminster on the 22nd November to ask MPs and Ministers to support us and get the solar industry back on track. Do come and join us – details here: www.oursolarfuture.org.uk