02 November 2011
Launched in April 2010, the UK's FIT has dramatically boosted the use of solar PV and catalyzed the industry but ever since the UK government announced in October 2010 that it planned to review the FIT (see "UK Feed in Tariff: What it means for solar"), the country's solar industry has been in an uncertain state.
Now, it seems that a decision has been made. On Monday 7 November, Energy Minister Greg Barker, proposed to halve the support available for small-scale rooftop solar power generation, thereby saving an estimated £700 million ($1.13 billion) annually by 2014-15. Although still subject to consultation, the proposed tariffs would apply to all new small, rooftop solar PV installations with an eligibility date on or after 12 December 2011. Such installations would receive the current tariff before moving to the lower tariffs on 1 April 2012. The new tariff for schemes up to 4 kW in size would be 21p/kWh, down from the current 43.3p/kWh.
It seems that the FIT has been a victim of its own success: the recent surge in the number of households installing solar PV has threatened to break the government's budget. There were over 16,000 new solar PV installations in September alone – nearly double the number installed in June and almost three times as much solar PV as originally projected has so far been installed - over 100,000 separate installations with a capacity of over 400 MW.
According to Barker, "If the Government took no action, by 2014-15 FITs for solar PV would be costing consumers £980 million a year, adding around £26 (2010 prices) to annual domestic electricity bills in 2020. Our proposals will restrict FITs PV costs to between £250-280 million in 2014-15, reducing the impacts of FITs expenditure on PV on domestic electricity bills by around £23 (2010 prices) in 2020".
So what does this mean for the UK's PV industry? Today I spoke to Kerry Burns, General Manager of Solarsense UK Ltd. who acknowledged that a reduction in the FIT was inevitable but felt strongly that the Government's timing was ill-conceived. The company generally installs around 100 systems per month but now finds itself with just five weeks to complete 260 installations.
As a long established company, Solarsense will survive and already has firm orders for systems at the proposed new rate, but Burns acknowledges that many small or newer companies will go to the wall. He added "I feel very sorry for them" but is pragmatic. He said "The gold rush is over but the proposed new rate is sensible and sustainable. We can cope with it".
Derry Newman, CEO of Solarcentury Holdings Ltd. was equally pessimistic about the impact on the industry and said "Cuts to the feed-in tariff as proposed will have a devastating impact on the solar industry, job losses will be inevitable." adding "The industry campaign 'our solar future' is collecting support from those who want to prevent job losses in the industry and see it prosper".
Gaynor Hartnell, Chief Executive of the UK Renewable Energy Association reiterated this view and although acknowledging that a reduction in the FIT was both inevitable and necessary, she said that she expects to see a significant reduction in the size of the workforce. She argues that if the government places a budget-limited cap on the total installed PV capacity by 2013, as many as 20,000 jobs could go.
I have been following this issue closely since the FIT's launch and have seen the UK's PV industry blossom when many "traditional" industries have declined. Whilst recognising that the government is under pressure to reduce spending, it seems strange that it should jeopardise the future of an industry that "ticks all the boxes", by supporting its commitment to renewable energy and providing growing employment opportunities. The country's PV industry will of course survive but there is no doubt that this decision will slow growth and certainly lead to redundancies in the short term.
Written by Rob Bogue, Contributing Editor—UK, Solar Novus Today