Solar industry told to “face up to economic reality”
The government is about to halve its support next year for domestic solar power. It looks like the feed in tariff will be cut from 43 pence per kilowatt hour (KWh) of solar energy produced at home to perhaps 20p per KWh. According to the FT, Energy Minister Greg Barker will announce this cut tomorrow (October 28th). It describes this as a “lifeline” thrown to an industry expecting the support tariff to be pared back to 9p per KWh. Greg Barker sought to reassure the industry today at its annual conference that his Government strongly supported the principle of an effective feed in tariff. But the industry fears a cut to 20p per unit of electricity may well mean casualties and job losses.
Barker also commented that, “We have to face up to the economic reality that ever other sector of the economy is challenged by.” Reports abound of a turf war between the energy department and the Treasury to safeguard the £860m budget for feed in tariffs. It’s being used up at double the predicted rate. The money doesn’t come from the Treasury directly, but from a small charge spread across all consumers’ bills.
Jobs are growing fast. Barker said over 100,000 homes now generate some of their energy from their own renewable power stations. Government support for the UK solar industry – kicked off by Labour, continued under the Coalition – has doubled the number of solar units installed to 80,000 in a few months. It created 25,000 jobs in the domestic solar market. That’s 22,000 more installing small domestic systems than when the UK Feed-In Tariff (FIT) scheme began last year. And a further 2,500 new jobs were created in 2010 in the larger solar units covered by a separate Government support scheme.
Yesterday, the Energy Secretary spoke out for the renewables industry at its annual conference. He said 9,000 jobs were created and £1.7 billion invested in the renewables sector in this financial year. He criticised “The curmudgeons who hold forth on the impossibility of renewables”, describing them as “an unholy alliance of climate sceptics and vested interests”.
Barker also said today that home installers would have to meet an “energy efficiency” standard to qualify for the FIT next year. A good move, depending on how the test is drawn up. It is the case that the current tariff gives installers a return well above the current near zero interest rates. But a steep cut now may slow down green jobs growth at a time of rising unemployment.