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As soon as the Department of Energy and Climate Change (DECC) announced its intention to reduce feed-in tariff (FiT) payments by more than 50 percent, with a cut-off date of December 12, the UK solar industry sprung into action. Some begun campaigning against the proposal, claiming it would damage the future of UK solar beyond repair, while most others prepared to work 24 hours a day, seven days a week, in order to complete as much as they could before deadline day.
The sheer number of those choosing the latter path was reflected in the installation and capacity figures published on DECC’s own website. Throughout 2011 the weekly installation registrations continued to climb from the 1,000s at the beginning of the year in January and February until they broke into the 3,000s in the concluding summer months. By the time October 31 came around (and DECC’s intentions to cut the tariffs were clear) the amount of systems being registered had tipped 6,000, reaching a climax of 29,880, or 126MW, by close of play week ending December 11.
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It was then abundantly clear that Government’s drastic announcement had stimulated a gold rush and, while a number of these installations can be attributed to duplicate submissions and fraudulent installers registering fantastical systems, this highlighted a problem: the budget was being swallowed up too quickly.
Now, before a tirade of comments ensues from this point, let me clarify why there is a ‘budget’ surrounding feed-in tariffs when they are in fact paid by the utilities. The FiT policy is treated as public expenditure for reporting purposes for the OECD (the Office of Budget Responsibility) and the Office of National Statistics. It is also subjected to the same value for money assessment methodologies as “normal” public expenditure, and requires a Regulatory Impact Assessment, as well as falling under the requirements for EU State Aid clearance. The Treasury therefore has considerable locus and influence over the policy, regardless of it being funded by electricity bills rather than general taxation. The CSR’s agreed spending envelope for this policy is therefore subject to the same accountability as any other item of public expenditure, and the DECC Permanent Secretary fully accountable for its delivery on budget.
So, with this in mind, we need to tread carefully in order to safeguard a future for the UK solar industry as we travel (far slower than others) on the road to grid parity.
Where we stand today
While the high installation figures leading up to December 12 are a worry budget-wise, they are also extremely encouraging. They showcase just how passionate the UK is about solar technology (and here I don’t just refer to those making a profit from the installations, I also allude to the energy-conscious consumer).
The Government
This coalition has touted itself from the outset as the ‘greenest Government ever,’ and claims to have done everything in its power to support the UK solar industry (regardless of whether that point can be agreed upon). Unfortunately this eagerness has been hindered by the presence of the infamous budget, and as the Minister of State for Energy and Climate Change Greg Barker has recently explained, DECC is unable to go back to treasury for more money while the return on investment is so high. DECC argues that with the falling cost of solar technology producing such generous profits the new, far lower FiT rates are of paramount importance, and must be implemented as soon as legally possible.
Government wants to work with industry to create a sustainable future for solar in the UK, but within the finite budget it has been provided with.
The industry
However, as has been ruled by Judge Mitting, Government’s move to cut the tariffs weeks before the end of the consultation period was not above-board – in fact, it was deemed “unlawful.” And, while industry is understandably angry about this, what we must remember is that they are not overly concerned with the newly proposed tariff rates, as most agree that the falling costs of solar technology make cuts almost unavoidable – it was Government’s 12/12 deadline (which effectively rubbed salt into the wound) that caused the controversy.
The UK solar industry needed to fight back against this deadline, as many looked to lose customers, huge wedges of profit and most importantly, jobs. The recent installation figures prove that the industry commitment is there, Government just needs to support it more effectively.
Reading back over these two stances, it is abundantly clear that we have reached stalemate, and neither side is showing any signs of backing down.
So what happens now?
Well, the latest graph published on the DECC website is poignant. If this situation can’t be resolved, we may find ourselves in a position where solar in the UK becomes a distant memory. The once flourishing technology is now synonymous with court cases and quarrels instead of renewable energy and a cleaner and greener future. Of course, solar has become a fantastic profit-making business, but does that really mean it should be viewed by the British public as a greed-fuelled industry?
Today, by 4pm, Government is expected to appeal against the High Court’s decision. Let’s hope that in the spirit of New Year, a sensible middle ground is met so that we can all go back to actually enjoying working in this industry.
