UK’s solar industry is ‘strangled at birth’

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After what seemed like a decade of delay, the DECC has finally confirmed its intention to break the legs of the UK’s solar industry for good. The axe-wielding Government has now proposed crippling cuts to the solar feed-in tariff for all systems over 50kW. Yet again, our expectations are exceeded, and not in a good way.

Since the comprehensive review of tariffs was launched on February 7, with particular attention paid to large-scale solar photovoltaics through a fast-track version of the review, the UK’s solar industry has been up in arms. Numerous attempts have been made to demonstrate to the Government how detrimental, and somewhat ignorant, cuts to PV systems over 50kW would be.

Sadly, these voices fell on deaf ears.

On April 1, feed-in tariff rates were due to increase slightly thanks to inflation, which was fantastic news for an industry tainted with uncertainty. Under the tariffs set to come into effect next month, solar installations with between 10kW and 100kW capacity would have received 32.9p/kWh through the feed-in tariff scheme, while larger installations with between 100kW and 5MW capacity could earn 30.7/kWh.

This, it turns out, was just a premature April fool.

Farewell large-scale

Under the proposals contained in today’s consultation, installations with 50kW to 150kW will receive just 19p/kWh, mid-sized installations with 150kW to 250kW capacity just 15p/kWh, and solar farms with between 250kW and 5MW a pitiful 8.5p/kWh.

At a time when the UK is faced with great uncertainty in terms of its renewable future, only made worse by this week’s complete loss of confidence in nuclear power (if there was any in the first place), it would be wise for the Government to steer clear of making damaging cuts to a proven technology. Alas, intelligence doesn’t seem to have been a factor.

The drastic cuts outlined in today’s proposal serve only to ruin the UK’s chances of becoming a serious solar contender alongside its European neighbours. Large-scale solar parks will become completely commercially unviable – as farms with up to 5MW will see incentives slashed by 72% – and small-scale (I refuse to comply with the Government’s ridiculous categorisation) systems over 50kW will also become almost pointless to install.

At a glance – what the new Tariff rates mean for solar over 50kW

Old Bands and Rates

New Band and Rates

Implications

10-100kw      

31.4p

50 – 150kW

19p

Not commercially viable

100kw – 5MW

29.3p

150kW – 250kW

15p

Not commercially viable

250kW – 5MW

8.5p

Not commercially viable

Stand Alone

29.3p

Stand Alone

8.5p

Not commercially viable

Gaynor Hartnell, chief executive of the REA, 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.”

It is true that venom is being spewed industrywide in the wake of this decision, but realistically, will fighting this news actually make a difference? Across the board, in all sectors – from small-scale residential to large-sale industrial – not one person has had a positive word to breathe about this review.

Ray Noble, the REA’s PV specialist, said, “This is far worse than anticipated. This industry has been strangled at birth.”

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.”

While most of the hope for large-scale PV (by this I mean projects around the 5MW mark) was lost when the fast-track review was originally announced, there was still optimism in place for community schemes. The biggest fear today is that plans for these projects will also be washed down the u-bend.

A community disaster

If adopted, the proposals would mean a 100kW rooftop installation on a school, church, hospital or office would see available incentives cut by 42%, meaning most of the important community projects will be axed. Unfortunately, unlike larger-scale developers, not all community projects have the money and/or manpower behind them to push them through at high speed.

Kamil Shah, marketing manager at Wagner Solar, said, “The FiT review is really disappointing for schools in particular, who are struggling to maintain international competitiveness whilst faced with increasing costs for education material/technology amidst the growing austerity and budgets cuts. PV systems of between 50-150kW in size was a way out for schools to reduce operating costs and use tariffs to invest in much needed education material. The 19p/kWh will do nothing more than deter them from renewable energy.”

Mark Shorrock, chief executive of Low Carbon Solar, said, “If adopted the proposals would mean a large rooftop installation on a school or office with 100kW capacity would see available incentives cut 42%, while solar farms with up to 5MW will see incentives slashed by 72%. The result is that hundreds of solar energy community schemes are in jeopardy. The Government states its new proposed tariffs will bring the UK into line with the levels of incentives available to solar farm developers in Germany, France, and Spain; however, solar industries in those countries have had several years of higher tariffs to help them build up capacity and drive down costs, whereas the UK has had less than a year.”

As outlined in many of the large-scale projects showcased on the Solar Power Portal during the past weeks, there are many long-term benefits created by the bigger solar projects, including local community ownership schemes, a diversified income for farmers and landowners, reduced energy costs for businesses, schools and hospitals, thousands of jobs, and the legacy of a skilled local workforce.

“These are now all at risk. The whole reason for the FiT is to encourage green energy generation to tackle climate change. About 30% of our energy must come from renewable sources by 2020 or we risk hefty fines from Europe. It is nonsensical that at the same time the Government is proposing to severely handicap the FiT scheme for solar that was designed to be part of the solution to renewable energy growth for the UK. As a result Low Carbon Solar is now exploring legal options,” continued Shorrock.

Let the gold rush begin

By making investment in solar PV systems over 50kW almost pointless, the cuts are also expected to spur a massive amount of growth in the amount of solar installations over the next six months. Not only do large-scale solar developers now have a deadline to work towards, smaller-scale installers are also expected to act fast in order to receive the existing feed-in tariff rate. If the Government can make such a mind-bogglingly bad decision for large-scale, there is no knowing what they will do next.

“The proposals on cuts in tariffs outlined in the Government’s consultation announced today as part of the fast-track review of feed-in tariffs are nothing short of disastrous,” concluded Shorrock. 

Andrew Lee, head of international sales at Sharp Solar, who was to concentrate mainly on residential solar in the UK, said, “The announcement by Greg Barker is extremely disappointing and effectively destroys the solar industry for installations above 50kW. We agree that the issue of solar farms needed to be addressed, however this overzealous proposal will wipe out community projects like installations on schools, hospitals, and churches, will halt business and industrial investment, and will limit solar to small-scale domestic projects. This is terrible news for the renewable energy sector – the steep rise in job creation will stop and morale within the industry will drop as a result of this remarkable u-turn.”

The deadline for responses to the consultation is Friday, May 6, and the DECC said it would aim to finalise the changes in July in order for them to take effect from August 1. I’ve got a feeling the Government will get a little more than it bargained for in these “responses,” don’t you?

Emma is also the Editor of Solar Power Portal, PV-Tech's UK-based sister website.

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