The UK solar industry has launched an attack on the Government’s proposed plans to cut the solar Feed-in Tariff (FiT), with an online petition for the decision to be reviewed reaching over 15,000 signatures.
On August 27, the Department of Energy and Climate Change (DECC) published a consultation that outlined plans to cut the FiT by around 87% by January 2016 due to “projected overspend on the scheme.”
The FiT allows homeowners to claim money from energy suppliers if they generate their own electricity, with solar panels proving to be the most popular method. Under the Government’s proposals, the solar Tariff rates for domestic schemes (now up to 10kW) would be cut from 12.47p per kWh to just 1.63p. DECC’s proposed changes also include a cap on new FITs expenditure of between £75-100m by 2018/19.
The department says that should it consider the scheme to be unaffordable following the consultation, it will propose ending generation tariffs to new applicants “as soon as legislatively possible”, which could be January next year.
These proposals shocked the solar industry, which already suffered cuts to the FiT in 2011 as well as several other subsidy reductions. A parliamentary petition was launched almost immediately calling for DECC to urgently review the current approach to the solar FiT. It claims the recent Government cuts to support solar and renewable energy will “cause a loss of affordable clean energy choices, taking away power from people and handing it back to big energy firms.” It also points out that subsidies for all renewables currently cost £3.5bn a year compared to £26bn year in subsidies for fossil fuels.
Under parliamentary rules, the Government must respond to any petition that gets more than 10,000 signatures, with 100,000 prompting a debate in Parliament on the issue. At the time of writing, the petition had received 15,861
and had been waiting for a response from Government for five days.
For many throughout the UK solar industry, the Government’s proposals are unexpected and extremely damaging to an industry that has been able to thrive in recent years despite several setbacks.
Chris Roberts, managing director of Midlands solar provider Poweri, wrote a letter to Prime Minister David Cameron on September 1 asking for an “explanation and justification of [the] Government’s attitude towards solar.” Mr. Roberts, who says he was a Tory voter in the recent General Election, went on to claim that the policy towards solar “makes no economic, financial or logical sense”, adding “the only explanation I have been able to come up for your Government’s proposals is that, ideologically, you do not want the proletariat, the common hard-working man and woman, generating their own electricity using such a democratic technology as solar. Instead, you want us all subservient to your big-business supporters.”
John Forster, chairman of the Solar Trade Association (STA) Scotland, has called the proposed FiT reduction “unnecessary, unjustifiable, unmanageable and ultimately destructive.” His comments follow the publication of the STA’s Solar Independence Plan (SIP) in June 2015, which set out how the solar industry could become subsidy free by 2020.
Currently, the solar FiT adds around £7 to consumer energy bills, which has funded approximately 700,000 domestic systems, along with some commercial and larger scale solar schemes. The STA’s SIP claims that an extra £1.70 on energy bills until 2020 would deliver over a million more solar homes and would allow the industry to achieve subsidy free domestic deployment in Scotland, providing a blueprint for similar action across the UK.
Mr. Forster added: “The Government’s stated justification for these destructive cuts is the desire to reduce the impact on household energy bills, whereas the true costs demonstrate that this is no reason for abandoning our solar industry.”
DECC’s defense to this is that solar costs have fallen by an estimated 70% in the last five years, making it an increasingly cost effective renewable technology and one that can stand alone without subsidy.
The Government has also been criticised for its proposals as no mention of funding cuts was made in the run-up to the General Election, suggesting it has no mandate for action. Leonie Greene, head of external affairs at the Solar Trade Association (STA), said: “The Conservative manifesto said nothing about attacking the British solar industry, which has flourished thanks to public support and delivered unprecedented cost cuts. Government should back that momentum, not push the industry over a cliff when it is so near to being able to repay public investment through lower and more stable bills in future – as well as tens of thousands of jobs.”
The impact on jobs in the UK solar industry is also a great cause for concern, with estimates of job losses anywhere between 20,000 and 35,000 expected. According to Henry Chown of Friends of the Earth: “The 35,000 people who work in the solar industry now face an uncertain future.” This is due to the fact that between now and January 2016 when the cuts are due to take place, there is likely to be a surge in deployment as consumers and installers seek to avoid being cut off from the FiT. After January, many will consider the rate too low to pay back the cost of installation, despite the lower cost of solar.
James Court, head of policy and external affairs at the Renewable Energy Association, said: “This is a phenomenally damaging and short sighted decision and will lead to higher costs in the medium to long term. 87% is beyond the worst fears of many of our members, it is hard to see how homeowners or businesses could see solar as an attractive option for the foreseeable future following these disproportionate cuts.
According to STA Scotland, there were over 8,000 registered installer businesses in the solar trade prior to the FiT cuts in 2011, which caused figures to fall to around 2,000 after rates were cut from 43.3p/kWh to 21p.
John Forster added: “The UK industry now supports around 34,000 jobs and yet the inevitable result of these astonishing proposed cuts in January 2016 could lead to the ultimate destruction of a large part of our industry.
Mike Landy, head of policy at the (STA), said: “A sudden cut combined with the threat of scheme closure is a particularly bad idea – it will create a huge boom and bust that is not only very damaging to solar businesses and jobs but does nothing to help budget constraints. We really are astonished at how self-defeating these proposals are.”
Julia Evans, chief executive of BSRIA, said: “Ministers slashing these subsidies for solar panels is yet another sign that the Government’s enthusiasm for green energy is waning. If implemented, such a step would remove virtually all incentive for home owners to install the panels and could mean the end of Britain’s solar power boom.
The deadline for responses to DECC’s consultation on the new FiT rates is October 23.