Solar industry awaits the Feed-in Tariffs verdict

Britain’s renewables industry is waiting for a verdict from the government on its review of the Feed-in Tariffs (FiTs) scheme, which proposed considerable cuts in support, including an 87% reduction in the tariff for domestic-scale solar installations. Public consultation on the review closed on 23 October and a decision may be reached by the end of this month.

The government says that deployment of renewables schemes under the FiT scheme have exceeded expectations, to the point where spending has breached the limits of the government’s Levy Control Framework, which itself sets limits on the amount of money that can be added to consumer bills to support low carbon electricity generation. The Department of Energy and Climate Change (DECC) proposed at the end of August a range of reductions, including a cut to the tariff paid for electricity generated by solar rooftop panels from 12.4 p to 1.6 p from January 2016.

The Solar Trade Association (STA) is dismayed at the proposed cuts, suggesting that, even as unconfirmed proposals, they have already had an effect on the market as two solar installation companies have closed. And the STA sees much larger job losses ahead if the proposed cuts are made; perhaps up to 27,000 people in the solar energy sector.

As well as rate cuts, the FiT Review consultation proposed stringent new maximum deployment caps for renewables. The STA has suggests these would result in a maximum of just £7mn of support on new solar deployment under the FiT scheme from next year, representing a 98% cut in the total budget. For comparison, £7mn is less than what Buckinghamshire County Council spends on potholes in a single year, adds the STA.

The Association also points out that solar industry had another form of support, the Renewables obligation, removed over the summer, and currently there is no clarity on future auction rounds for large-scale solar under the Contracts for Difference system.

Paul Barwell, CEO of the STA, commented: ‘This 98% cut in support is extreme and will decimate the nation’s most popular source of energy, and puts at risk over 20,000 solar jobs. The UK will be left behind if we turn our back on a global solar revolution. Given how close solar is to being subsidy-free – which these cuts will delay – giving this vital technology one last push is clearly in the interest of consumers. Currently, government is set to trip its solar revolution up at the last hurdle, which makes no sense at all.’

The STA had previously proposed a ‘Solar Independence Plan for Britain’ (see Energy World July/August) that recommended adjusting FiT rates gradually to zero by 2020, at which point rooftop solar-generated electricity would reach parity with retail electricity prices.

Ahead of the government decision, there is some cautious optimism in the industry that a compromise solution may be found. An alliance of organisations ranging from the National Farmers Union, the Confederation of British Industry, social housing providers and local authorities recently urged the government to urgently reconsider its proposed cuts, and DECC has said that it is listening to representations.