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The renewable energy industry, especially the solar sector, have been nervously-awaiting the results of the Fast Track consultation on the Feed-In Tariffs (FITs). The announcement came on Friday. There have been impressive cost reductions in solar PV since the policy was introduced, last April, which was in the context of a significant new industry establishing itself, said the REA. Critical size is needed to achieve price reductions, and that had been happening. Before the announcement of the review, the REA estimated that 17,000 new solar jobs would be created by the end of 2011.
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Solar PV is the fastest growing technology in the world, and the dominant renewable installed across Europe last year. The proposals published this week reduce the tariff schemes for roof-mounted schemes of over 50kW by 39 – 49%, which the REA say will make them totally unviable. Many of these are community and SME projects which had tremendous popular support.
The tariff for standalone schemes - solar farms, a number of which had applied for planning recently, has been reduced by over 70%, with no transition arrangements. The new tariff rates, paid to producers of renewable electricity from solar panels, will be:
* 19p/kWh for 50kW to 150kW
* 15p/kWh for 150kW to 250kW
* 8.5p/kWh for 250kW to 5MW and stand-alone installations
A 50kW array is around the size of two tennis courts. The old rates were significantly higher:
* 32.9p/kWh for 10kw to 100kw
* 30.7/kWh for 100kw to 5MW and stand-alone installations
Climate change minister Greg Barker said the reductions were essential to prevent large scale “solar farms”, which have been springing up in Cornwall, diverting money from the scheme which was meant to help homeowners and small businesses.
“I want to make sure that we capture the benefits of fast falling costs in solar technology to allow even more homes to benefit from feed in tariffs, rather than see that money go in bumper profits to a small number of big investors. These proposals aim to rebalance the scheme and put a stop to the threat of larger-scale solar soaking up the cash. The FITs scheme was never designed to be a profit generator for big business and financiers,” he said.
The department of energy and climate change said that had the scheme continued unchecked, funding for solar farms would have reached the equivalent of 50,000 solar panels on homes.
There is disbelief within the industry that the Government has totally undermined the PV sector without having first properly understood its potential.
Gaynor Hartnell, Chief Executive of the Renewable Energy Association said “Larger PV projects are cheaper, and have a major role in driving down costs. We don’t want boom and bust in this sector either, but pulling the rug out from under the feet of those that have ventured into this market was precisely the wrong response. The UK will return to the solar slow-lane. It’s as good as a retrospective change and that does untold damage to investor confidence. It’s not acceptable and we will fight it.”
Howard Johns, Chairman of the Solar Trade Association said “The solar industry is one of the genuine good news stories in the UK today, providing both jobs, a new green industry and importantly some hope. Crushing it at this time is a serious strategic mistake but inevitable when it appears to be Treasury, not DECC, dictating energy policy. Not only is solar very popular, it is fast to deploy and inherently safe. We know that DECC can be visionary – it has been on renewable heat – it is in the public interest to apply similar vision to solar to reap the huge benefits of this technology.”
REA released a briefing showing the exceptional cost reduction pathway of solar PV over 20 years. The briefing also shows that DECC’s fossil fuel price projections are unrealistic. By over-estimating the cost of solar and underestimating the cost of fossil fuels the value of investing in solar has been seriously miscalculated.
REA and STA represent over 350 solar companies many of whom are already in difficulty following a destabilising and messy review process. The announcements today will damage the business plans of many members. REA’s briefing sets out 8 key reasons why the UK’s policy of sitting back and letting other countries take the strain of investing in solar wrong.
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