“Don’t let the sun go down on solar” – two parliamentary committees warn that planned changes to subsidies for solar power are too rushed.
The joint report from the environmental audit and energy and climate change committees is the latest in a series of criticisms of the plan to cut feed- in tariffs.
The feed-in-tariff subsidies (FITs) are payments made to households and communities that generate green electricity through solar panels. Energy Secretary Chris Huhne wanted major cuts to the money available on installations completed after 12 December this year.
Ministers want the payments halved because they believe they are too generous, given the falling cost of solar technology. Too many people cashing in on the scheme made it unsustainable, the government argued.
But the MPs said ministers should have spotted the “solar gold rush” sooner and not acted in such a “panicky and rushed” way. This response has, they said, damaged the industry.
Ministers should have spotted this solar gold rush much earlier. Tim Yeo MP, chairman, energy and climate committee
Tim Yeo MP, chairman of the energy and climate change committee, said: “There is no question that solar subsidies need to be urgently reduced, but the Government has handled this clumsily. Ministers should have spotted this solar gold rush much earlier. That way subsidy levels could have been reduced in a more orderly way without delivering such a shock to the industry.”
In November, the Confederation of British Industry described the proposals as “the latest in a string of government own goals”. Director General of the CBI John Cridland said the low-carbon sector could be derailed by the the change, with the loss of thousands of jobs.
He said: “Industry trust and confidence in the government has evaporated. This bodes poorly for investment in future initiatives.”
In the report, the MPs advised that while there is a need to reduce payments, there needs to be an orderly scheme for reviewing and adjusting the levels of subsidy in response to falling costs – in order to protect investors and provide security for those who have put money into the schemes, or set up small businesses providing solar panels.
Also criticised was the governments plan to require homes to have a “C” grade energy efficiency rating before they qualify for a FIT. The report noted this would require 86% of homes to be better insulated. This would mean home owners paying £14,000 upfront before they have even bought the solar panel – a rise from the current level of £8,400.
They raised a concern that introduction of even lower subsidies when an organisation is claiming payments for a number of separate sets of panels would hit community schemes and projects on social housing, which were originally aimed at reducing energy bills for poor families.
On Wednesday at the High Court, a judge ruled that the plans are “legally flawed” after Friends of the Earth and two solar companies argued that the cuts are creating “huge economic uncertainty”.
Friends of the Earth Executive Director Andy Atkins said: “We hope this ruling will prevent ministers rushing through damaging changes to clean energy subsidies, giving solar firms a much needed confidence boost.”
The government promised to seek an appeal on the decision.
It doesn’t make sense to let the sun go down on the solar industry in the UK. Joan Walley MP, chair, environmental audit committee
Speaking after the report, Joan Walley, chair of the environmental audit committee, said: “It doesn’t make sense to let the sun go down on the solar industry in the UK. As well as helping to cut carbon emissions, every panel that is installed brings in VAT for the government and every company that benefits from the support is keeping people in work.”
A spokeswoman for the Department of Energy and Climate Change said: “We appreciate the uncertainty faced because of the changes we have proposed to the feed-in tariff scheme, but we believe solar projects will still be an attractive investment. We stand by the need for the proposed changes in order to protect the budget which is funded by consumers through the energy bills.”