DECC estimates MIP impact to be ‘10 to 14%’ on solar prices

The Department of Energy and Climate Change has estimated that the European Commission’s minimum import price on Chinese solar panels is inflating construction costs by “10 to 14%”.

Energy secretary Amber Rudd confirmed the figure in a letter to select committee chair Angus MacNeil, published yesterday, responding to questions she was asked during a previous hearing.

Rudd was quizzed over her department’s actions regarding the MIP but at the time did not have specific details. Her letter confirms that DECC has collaborated with “leading engineering consultants” to estimate the price differential caused by the pricing.

While the energy secretary claimed that the exact percentage number could not be made public “given the proprietorial nature of the [consultants’] work”, she did reveal that DECC estimates “an indicative 10 to 14% example for a drop in prices” if the MIP were repealed.

DECC’s figures largely tally with those provided by industry figures to the select committee in December last year. Solar Trade Association chief executive Paul Barwell placed the impact at around 7 or 8% for domestic installations and 15% for large-scale projects, while NextEnergy Capital’s Abid Kazim estimated the impact to be between 10 and 20%.

Lightsource Renewable Energy chief executive Nick Boyle, speaking during the same session, stated the cost of the MIP to be at around €120,000 per megawatt.

While any potential repeal of the import price will have to wait until the EC’s ongoing expiry reviews have concluded, confirmation of DECC’s work on the subject is a further example of the department assembling an evidence base for future lobbying.

Rudd and the energy minister Andrea Leadsom remain the most outspoken energy officials of a European nation on the subject of the MIP, openly criticising the system as an “unwelcome drain” on solar and insisting their administration would do “everything” it can to remove it.

Rudd also suggested that the MIP conditions be suspended while expiry reviews are ongoing. In a statement to SPP's sister site, PV Tech, a spokesman for the German Federal Ministry of Economic Affairs and Energy described the UK's proposals on the MIP as "incomprehensible".

"During the expiry investigations of the EU Commission the EU antidumping law provides that the measures remain in force. Germany is in favour of the existing undertakings, which are mutually agreed between the EU and the Chinese sides. If the legal criteria are fulfilled a prolongation of the measures is probable," the spokesman said.

Meanwhile Rudd also disclosed further details on the government’s cross-departmental group which is working on decarbonisation. Although she confirmed the group’s existence during the aforementioned select committee hearing the secretary would not disclose further details. The group was established to focus on decarbonisation in the wake of leaks suggesting the UK is on course to miss binding EU emissions targets, paricularly on heat and transport.

However Rudd’s letter to MacNeil reveals that the group, dubbed the inter-ministerial group on clean growth, considers issues “relating to carbon budgets and decarbonisation” and its members include ministers and officials from DECC, the Department of Environment, Food and Rural Affairs (Defra), the Department for Transport and the Department for Business, Innovation and Skills.

The group is chaired by the chancellor of the Duchy of Lancaster Oliver Letwin.