The Government’s controversial consultation on the future of the solar Feed-in Tariff (FiT) has closed amid further backlash against proposals that would cut the subsidy by 87%.
The plans to reduce the subsidy, which incentivises the use of small scale solar deployment by paying out for power generation, have been widely criticised by the solar industry over the last ten weeks. A parliamentary petition was launched almost immediately calling for the Government to rethink its approach to the FiT, which has since gained over 26,000 signatures.
A whole host of industry figures branded the plans damaging to the UK solar industry and wider economy, with John Forster, chairman of the Solar Trade Association (STA) Scotland, calling the proposed reduction “unnecessary, unjustifiable, unmanageable and ultimately destructive.”
The STA has claimed that 27,000 of the UK solar industry’s 35,000 jobs would be put at risk by the Government’s plans. Around 1,000 of these have already been lost following the closures of Mark Group, Climate Energy and Southern Solar, which all went into administration as a result of the Government’s plans.
In its response to the consultation, which closed on Friday October 23, the STA said the plan represented “the latest in a series of alarming policy proposals from Government that, taken together, represent what appears to be a systematic dismantling of UK renewable energy policy.”
Similarly, the Renewable Energy Association (REA) claimed in its response “the proposed scheme will not support the growth of the industry and will have a hugely damaging impact on companies and employment across all sectors.”
Over the course of the consultation period, the Government has said it has been required to review the FiT due to a projected overspend on the Levy Control Framework, which controls the costs to consumers arising from Government energy policies. Defending the planned cuts in the House of Commons in September, energy secretary Amber Rudd said: “At the front of everything this Government does is the impact on consumer bills.
“We do want to make sure we are careful with bill payers money while making sure we support the solar industry.”
The cumulative cost of the support for solar over the last five years under FiTs is around £640m, which adds around £6 to consumer bills. However, a recent report from Good Energy has claimed that solar – when combined with generation from wind – brought down the wholesale cost of electricity by £1.55bn in 2014. This means the overall net cost for supporting the two renewable sources was £1.1 billion, 58% less than the cost reflected in the Levy Control Framework.
The STA referenced this report in its response to Government, saying: “One can only conclude from this that the draconian FiT spend cuts proposed by DECC under this consultation are motivated by a desire to curtail renewables deployment for reasons other than their cost.”
Both the STA and REA have challenged the need to reduce costs for solar deployment, using their consultation responses to call into question the Department of Energy and Climate Change’s (DECC) plans, which would allocate around £7m for solar (down from £70m). While the REA claims the total Levy Control Framework fund should be restructured to offer more money to solar, the STA has called for £95m over the next three years. It argues this would add £1 to consumer bills but would see the solar industry free from subsidy in 2019.
The STA hopes that its ‘£1 solar rescue plan’ will work for both the solar industry and the Government, allowing a viable solar market to continue while giving the Government the cost control guarantees it requires.
Leonie Greene, head of external affairs at STA, said: “This emergency plan represents a compromise agreement which, given the current crisis, aims to find a way forward that is acceptable for both the Government and the solar industry.”
“The fact that this plan costs just £1 per household shows just how affordable it could be to adopt steady, gradual reductions in support for solar.”
The cuts to solar have also been proposed in spite of wider public support, with a recent Public Attitudes Survey published by the Government covering June 2015 showing 75% of the public is supportive of renewable energy.
Lauren Cook, solar policy analyst at the REA, said: “What is impressive about the reaction to this consultation is the range of those who have spoken out. It demonstrates that when people speak about small-scale renewables, it is not just about financial returns. The discussion is also about reducing emissions, supporting industry, economic growth, and jobs.”
The proposed cuts are already thought to have damaged wider investor confidence in the UK renewables market. As well as company closures, a report by Ernst & Young claimed DECC’s plans have caused the UK to drop out of the ten best places in the world to invest in clean energy. This prompted Lisa Nandy, shadow energy secretary, to say: “Investors looking at the UK are scratching their heads. [They] don’t know what the Government is trying to achieve.”
With the consultation now closed, the Government is expected to take up to four months reviewing the responses before announcing whether or not it plans to move forward with the cuts.