CBI attacks government solar tariff cuts
With a month to go until payments are cut for households starting to generate solar energy, business leaders have attacked the move, which was announced by the government suddenly last week.
The decision to bring in the lower tariffs on 12 December – even before a consultation on the issue has ended – was described as “the latest in a string of government own goals” by the director general of the Confederation of British Industry (CBI).
The feed in tariff scheme has been credited for encouraging people in the UK to install solar photo voltaic (PV) panels. More than 100,000 people now generate their own energy as a result of the tariff, which offers cash to households generating green electricity through solar panels.
John Cridland said the low-carbon sector, which has grown throughout the recession, risks being derailed in the UK by this unexpected change, with the loss of thousands of jobs.
Mr Cridland said the UK needed to expand its share of the low-carbon energy market.
“But last week the Government announced a dramatic cut in the solar feed-in tariff,” he said. “A reduction was already on the cards from April 1, but this will now come in by mid-December – before the consultation has even ended.
‘Mood of uncertainty‘
“This is the latest in a string of government own goals, following the carbon reduction commitment becoming a pure revenue-raiser and the North Sea oil and gas tax.”
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Mr Cridland added that moving the goal posts does not only destroy projects and jobs: “It creates a mood of uncertainty that puts off investors and they wonder what’s coming next.”
He said that some companies had invested heavily in solar photovoltaic systems, and in the supply chains needed to install them. “That commitment has been undermined by the feed-in tariff decision – and so industry trust and confidence in the government has evaporated. This bodes poorly for investment in future initiatives.”
Climate change minister Greg Barker said the current regime is resulting in returns for investors in solar PV that are unsustainable and, without action, could result in the spending envelope for the scheme rapidly being breached.
The proposals, subject to consultation, would introduce a new tariff for schemes up to 4kW in size of 21p/kWh – down from the current 43.3p/kWh. Reduced rates are also proposed for schemes between 4kW and 250kW.
It proposes that the new generation tariffs should apply from 1 April 2012 to all new solar PV installations which become eligible for FITs on or after an earlier date which it proposes should be 12 December 2011.
Mr Barker said it is important that the government’s approach to public subsidy “is responsible and results in the widest possible deployment”.
Legal action
The government’s move has already been threatened with two legal challenges by environmental group Friends of the Earth (FOE) and the solar industry.
FOE wote to Mr Barker saying that unless the Government agrees to amend its proposals by 4pm 11 November, it will commence court proceedings.
The charity confirmed it would be taking legal action after it received only a brief, holiding response from the government.
FOE claims that many solar energy projects across the country, including community energy projects that would benefit schools and hospitals, are under threat or have already been cancelled.
And schemes that would have seen thousands of social housing tenants benefit from lower fuel bills through having solar panels installed have already been abandoned.
FOE says this cut-off point, two weeks before the consultation ends, is unlawful and will lead to unfinished or planned projects being abandoned.
Friends of the Earth’s policy and campaigns director Craig Bennett said: “With soaring fossil fuel bills and mounting anger about the Big Six energy firms, the Government should be encouraging people and communities to generate their own clean electricity – not destroying a new industry in its infancy.”
“Ministers have failed to listen to our concerns about the legality of their plans to slash solar subsidies – we have now been left with no choice but to take the Government to court.
“Ministers have pulled the rug from under the feet of one of the few areas of the economy that is creating new jobs – and completely undermined business confidence in clean energy.”
UK success story
Robert Meehan, the technical and business development manager at Beechdale Energy, said he felt let down by the government and predicted 25,000 job losses across the sector.
“Our directors have invested £1m and created over 30 local jobs from graphic designers to engineers, roofers, electricians and sales staff. The company is highly unlikely to get that money back now.
“There will be customer refunds en mass which will bankrupt many companies who bought up solar modules in advance of the deadline but now can’t install them without inverters. Millions of panels will be left uninstalled in warehouses across the UK.
“We have lost somewhere in the region of 400 installation projects including domestic, commercial and free solar for those who can’t afford the capital outlay.”
Mr Meehan added that solar is a UK success story and one of the few thriving industries in a difficult economic climate.
“Villages and towns have taken to solar, unlike wind farms, with many projects on the horizon that have taken months to plan and drum up local support.
“I find it so frustrating to see the solar industry being treated with such contempt for doing everything – and more – that the government has asked of it.”