The premature FIT cuts are going to wreck green industry and damage the case for community and business schemes
The government landed a body blow to the solar industry this week by announcing that feed-in tariffs to support the installation of solar PV will be more than halved.
Initial reports of an even more drastic cut – from the current rate of 43.3p to 9p, said to be the preferred option of some in government – were leaked out over the past few weeks in what looked very much like pre-emptive spinning to try to take the heat off ministers. But despite the spin, what has become painfully obvious is that the government’s solar policy is in chaos.
The feed-in tariff, a mechanism designed to support and stimulate the solar industry with clear points for “degression” as costs of installing and running the technology fall, has been highly successful in allowing homeowners, community groups, local authorities, and businesses to realise the benefits of solar. Since the scheme was introduced in April 2010, it has seen 100,000 solar installations, the creation of more than 22,000 jobs and almost 4,000 new businesses.
It has always been accepted that the tariff would need to be revised in line with falling installation costs, but the government’s failure to take a more gradual approach to cutting the rates, to enable people and organisations to plan ahead and adapt accordingly, risks reversing the achievements of this burgeoning industry.
The timing of the decision itself suggests a worrying level of disorder behind the scenes. We know that this reduction wasn’t supposed to happen until April, yet the government chose to bring it forward – causing great upheaval, just as it did with the solar installations greater than 50kw earlier this year.
This shock treatment could particularly damage the business case for local authority solar programmes, such as Brighton & Hove City Council’s ambitious plan for solar panels on public buildings and council houses. Brighton and Hove were looking to this scheme to partly offset coalition cuts to their budget, whilst reducing their carbon footprint, tackling fuel poverty and creating local jobs. So it’s understandable that Green councillors are now feeling pretty let down by this week’s announcement – and say they are ready to sue the government for compensation if the council loses money as a result.
On a separate note, the government’s plan for a lower tariff of 9p from April 2012 for properties which don’t have an energy efficiency rating of C or above is certainly a welcome idea in principle; there seems little point in installing solar panels onto a deeply inefficient building. However, as it stands, it’s highly unlikely that the underfunded Green Deal and Energy Company Obligation will be sufficient to bring enough properties up to scratch. So those who can’t afford to add their own money to the government schemes to get properly insulated – the people most likely to be in fuel poverty – will lose out to those who can when it comes to solar.
Furthermore, I’m concerned that the FITs reduction could have a serious impact on the coalition’s pledge to “encourage community owned energy where local people benefit from the power produced”. Community schemes of this kind can be incredibly effective, but they inevitably take longer to organise than, say, a home owner deciding to fit panels on a house.
The cut in support for solar could catch out those community groups in the middle of fundraising efforts, meaning that their efforts would be wasted. The least the government can do now is to grant a stay of execution for those projects that already have planning permission, so that they are not bound by the December deadline – something I raised with the energy minister, Greg Barker, in Parliament on Monday.
The truth is that solar has been too successful for the government’s liking – and this will certainly not be the last attempt to cut off its subsidies. No doubt some in the coalition would prefer to scrap them altogether. But this is a jobs rich, green industry which is just taking flight, and withdrawing support too soon, before its full potential has been realised, could be disastrous.