Solar feed-in tariffs fall by half

Subsidies for solar panels installed after Monday will fall by as much as 50 per cent from next April, assuming the government adopts proposals set out in the on-going consultation on its popular feed-in tariff scheme.

The consultation on new rates for photovoltaic (PV) systems with capacity of 250kW or below does not conclude until 23 December. But the government’s controversial package of reforms suggest the proposed cuts will come into force for installations completed 12 days prior to the closing date of the consultation exercise.

The proposals means the bulk of systems installed after today will receive the current 43p/kWh level of feed-in tariff payments until 1 April, before switching to the lower proposed level of 21p/kWh. Community of social housing projects completed after today could see even deeper cuts to incentives under the government’s proposals.

However, the changes can not be officially confirmed until the consultation has been completed and ministers have had time to consider responses, probably some time in mid January.

The government insists a reduction in tariffs is needed to keep the scheme within its £867m budget and limit the returns investors were receiving under the old rates, although a leaked summary of a meeting between DECC and industry representatives seen by BusinessGreen last month suggests some officials doubt whether solar is a suitable technology for the UK.

Ministers have also used wildly varying figures to justify the cuts, ranging from an extra £26 on energy bills to £55, before Greg Barker declared feed-in tariffs would add £80 onto consumers’ bills.

Officials have claimed the changing estimates are the result of a rush of new installations intended to be completed before the changes come into force.

Most solar companies have accepted changes needed to be made to the feed-in tariff scheme, but are furious at both the size of the cuts and rushed timescale in which they have been brought in, as well as what they regard as misleading figures that have been used to justify the cuts.

Businesses were only given six weeks to adapt to the changes, which resulted in a rush of installations to beat the deadline, and saw the Microgeneration Certificate Scheme website, where people register systems for the feed-in tariffs, crash under pressure from heavy traffic.

The industry is also increasingly fearful that the cuts will lead to widespread redundancies.

Around 4,500 jobs are under threat at builders Carillion, a partner of installers HomeSun. Howard Johns, chairman of the Solar Trade Association, told BusinessGreen that as many as 20,000 jobs could be lost as a result of the changes.

“I’ve got a list of companies where 80 per cent of staff are going through consultation for redundancy,” he said, dismissing the idea that those losing their jobs would be able to transfer to other building and home improvement industries.

“A lot of people in the solar industry have diversified out of other areas because those areas are in serious recession. The idea that they can be redeployed easily is ridiculous.”

Chris Huhne was challenged on the speed of the cuts on the BBC’s Question Time programme last month by Peter Randall, chief executive of Gloucestershire-based Ecovision Renewable Energy.

Randall told BusinessGreen his company had placed about 155 of its sub-contractors on notice because of a fall in new business, both from people purchasing solar panels and those wanting Ecovision to fit them for free in return for the feed-in tariff payments.

“Expecting [companies] to respond on six weeks’ notice is ridiculous,” he said. “We’ve seen cancellations and no fresh orders [for panels]. And on the free side we’ve had complaints from customers who we haven’t been able to supply.

“Some will come back onside, as if they have a large roof we’ll do it. The people who will suffer most are those with smaller roofs, and typically they tend to be the ones facing fuel poverty.”

The solar industry has tried to fight back, forming the Cut Don’t Kill campaign which led to last month’s march on Parliament, while Friends of the Earth and two solar companies, Solar Century and HomeSun, are appealing against a High Court decision prohibiting them from blocking the government’s plans.

Leading business and political figures including Sainsbury’s chief executive Justin King, Green MP Caroline Lucas, and former Labour MP Alan Simpson have all backed the solar industry’s case, and it emerged last week that the EU may also take action.

Energy commissioner Günther Oettinger warned that legal proceedings would be launched if the cuts hamper the UK’s progress towards its goal of producing 15 per cent of the country’s total energy from renewable sources by 2020.

Meanwhile, the industry is also hoping to remove the confusion about how much support for renewable energy really costs. Research by Engensa suggests only six per cent of people know solar subsidies add less than £2 to annual bills, a finding which echoed the results of a similar poll by Sharp Solar last week.

“The general lack of awareness among UK energy bill payers… is hampering consumers, businesses and the government from making a rational, informed choice about the most appropriate rate at which to set the tariff,” said Andrew Lee, head of international sales at Sharp Solar.

“The FIT needs to be more flexible and intelligent to respond to the solar panel price reductions, but these ill-informed cuts will stop the industry dead in its tracks and undo the years of good work that has been invested in skills, infrastructure and businesses.”

Lee suggested a premium of between £2.60 and £3.60 a year on energy bills would be enough to support the tariffs, save thousands of jobs and provide £230m in tax income for the government.

“If set correctly, this FIT provides a scenario that’s beneficial for all parties concerned, cutting carbon and energy bills for homeowners that install PV, and supporting an industry that creates jobs and tax revenues for the government,” he said.


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