Source: Nottingham City Council.
As the UK's feed-in tariff scheme draws to a close, our sister site Solar Power Portal is running a 'Farewell FiTs' series looking at the impact it has had and the new opportunities emerging for the sector. Here Alice Grundy speaks to some of those there to witness the 'gold rush' created by the flawed subsidy programme.
Nine years on from the beginning of the feed-in tariff and the solar industry is a changed beast. Larger, certainly. Wiser, perhaps. One thing is for sure, it has learned to thrive in the face of uncertainty and rampant adversity.
The process to implementing a feed-in tariff (FiT) wasn’t the easiest, requiring lobbying of a government that didn’t have any faith in solar. On 1 April 2010, however, it was finally introduced by what was then the Department of Energy and Climate Change (DECC), met with excitement and hope by the industry that had campaigned for it.
“Everybody was over the moon,” says industry stalwart Ray Noble, speaking of his instrumental role in lobbying for the scheme. Noble has had a long history with the government, working as an adviser for approximately 20 years.
Noble says the FiT was hard to get off the ground for the very reason it was needed: there had to be proof that solar would work in the UK. As it was, there was a belief within the government that solar wasn’t an option for the UK due to less than optimal weather conditions in comparison to the booming markets of the time in Southern Europe.
There were no plans by the government to have a FiT in the UK. But then things changed.
There were the first inklings that solar might be viable in the UK, with demand for the large-scale building projects and first domestic roof projects that were springing up exceeding the money available. Whilst this was a sign of a market that was starting to grow, the belief in government was that solar would only work south of the M4. The view was that solar further North, particularly solar in Scotland, could not and would not work. Of course, that idea seems almost laughable now.
And so in 2010 the FiT was born, with the hope of it sparking a wider solar market in the UK. And that it most certainly did.
The gold rush
“The industry exploded,” Noble says, describing the time as a “gold rush”. The government’s plans to deliver 1MW over the course of the five-year FiT was exceeded in the first 9 months, creating a panic over funds.
“They had not done their homework and they got the numbers all wrong.” Noble added, “I told them on day one they’d got the prices wrong. They should have reduced the prices by 25% before they even started.”
Noble added that the government didn’t factor in price reduction, believing it would take much longer than ended up being the case. “They thought it would take time… two years, before you need to review it. It changed in price virtually overnight and continued to change in price. So they were always behind the curve trying to balance their budgets.
“That was the main problem with the FiT. It should have been based whereby the tariff was related to the price of solar. Saying that, without that we’d probably still be in the same frame of mind here - does solar really work in the UK?”
August 2015 is an infamous date in the solar industry and one which sealed the fate of how the FiT would be remembered. No longer was it a shining beacon leading solar towards a bright future. Instead, things were starting to look very cloudy indeed.
DECC released its review of the FiT and with it, unleashed a tidal wave of outrage from the industry. Support for solar installations up to 10kW was proposed to fall by a whopping 87%, down from 12.47p/kWh to 1.63p/kWh. It was expected that there would be substantial cuts, but nothing like what was dropped on the solar industry that afternoon.
After a lengthy consultation, the government relented and upped the rate from 1.63p/kWh to 4.39p/kWh. But this was still a substantial cut.
“It took the rug from under us”
Chris Roberts, director of the FiTs watchdog the MCS, and an ex-solar installer himself, says that it “took the rug from under us”, stating that “half the problem” stems from those in government that “do not have a clue how commerce works.”
Roberts continued to say that the government wanted to stimulate an industry and get “as big a result as possible without understanding that these things need to be sustainable and planned into the long term”, likening the issue to going to the gym on steroids.
“They grew an industry in a way that wasn’t sustainable and now we are left with a bigger industry than we otherwise would have had, but there’s been a lot of carnage and a lot of wastage along the way.”
Noble also says that part of the issue lies with the government “[losing] all their officials”, adding that most were “dragged” into Brexit or retired when George Osborne sought to “cull Whitehall by 25%”.
However, Noble points to Spain and Portugal as a suggestion of where UK solar might be heading, with the countries “originally” having a reputation for being “the place to put solar” due to their tariffs.
“Then the bubble burst because they spent too much money too quick, just like the UK did, so they pulled the plug. A year ago people started looking again at Spain and Portugal and realised it works without the subsidy - it’s reached grid parity.” Noble added, suggesting that UK solar will also reach grid parity “in no time at all.”
Looking back, Noble says that despite the cuts and miscalculations from the government, the FiT was a success and was the driving force behind the exponential growth the industry has seen.
“The good news is climate change is now recognised, solar has proved that it works, solar is now the cheapest form of generation along with wind, and storage coming along is the holy grail of solar. As an industry we should be over the moon.”
Now in its 7th year, Solar Finance & Investment Europe is firmly established as the must-attend event for solar developers, asset owners and financiers to understand the latest trends and opportunities in the European solar landscape.