Fast-track feed-in tariff fate to be finalised

Members of the Micropower Council, the Building Council for Sustainable Energy UK, the British Photovoltaic Association, the Anaerobic Digestion and Biogas Association and the Combined Heat & Power Association will today appeal to the House of Lords to seriously consider the fast-track feed-in tariff adjustments.

In what may be considered by some as a controversial move, the Group will today speak out against blocking the feed-in tariff review for solar photovoltaics systems over 50kW.

Listed for Lunch Break Business debate in the House of Lords, two motions will be put forward, expressing regrets at the Government’s recently announced decision to impose FiT cuts of up to 70%. The Micropower Council will lead a motion to let these changes go ahead as planned, while the other, an Early Day Motion backed by Leader of the Opposition Ed Miliband, calls directly for the Commons to block the changes.

Under the Energy Act 2008, changes to feed-in tariffs are effected by modifications to relevant Conditions of Electricity Supply Licences. Any changes to these have to be laid before Parliament for 40 days under the negative resolution procedure, and the changes cannot therefore be implemented if either House resolves not to approve them. These were laid before the House of Lords on June 9, 2011.

Although many in the solar industry agree with Miliband’s action against the tariff cuts, the Micropower Council and others named on the letter believe that if the changes were blocked, Government would move rapidly to protect the spending constraint for feed-in tariffs laid down in the Comprehensive Spending Review, and its likely reaction will be an immediate rapid review of the whole feed-in tariff.

The Group believes that this would in turn cause an instant collapse in investor and customer confidence, with many jobs lost as commercial deals currently under negotiation are put on hold. It claims further that businesses already established will find themselves unable to sell amid the uncertainty, leading to many inevitable and quite unnecessary company failures.

“In short, the entire industry for which feed-in tariffs are relevant would likely come to an abrupt halt in much the same way as it did some months ago for those affected by the fast-track review,” states the letter composed by the Group.

However, while the Group is lead to believe blocking the changes will cause ‘irreparable damage’ to the UK renewables industry, others conclude that letting the changes go ahead will have exactly the same effect.

The Renewable Energy Association (REA) will use this debate to draw the Lords’ attention to the benefits that PV can bring, and the impressive downward cost trajectory the technology is following.  The REA supports tariff cuts across the board, not just at the larger scale, reflecting the fact that panels have come down in cost by some 30%.

At the announcement of Government’s intention to cut the tariffs, 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 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 the Group sympathises with this point of view, it remains adamant that the cuts should now be allowed to go through, claiming that “the damage has already been done.”

At present, the feed-in tariff scheme as a whole is scheduled for review in April 2012, when all aspects of the feed-in-tariff will be considered, with proper evidence, under the Government’s Comprehensive Review. The Group believes that this is the proper way to consider and conclude how to take tariffs forward, and urges the Lords to allow the changes to go through in order to prevent an earlier-than-expected review.

“This gives the wider industry a period of stability until then – stability which would not exist if the overturning the fast-track changes disrupts this. We therefore strongly believe it is in the best interests of the wider industry to draw a firm line under the fast-track review, implement these changes and move on, as any further uncertainty would destroy any remaining investor or customer confidence to an irreparable degree,” continues the letter.

The opposition is expected to agree that further uncertainty will destroy any remaining investor or customer confidence to an irreparable degree, but that this will arise from letting the cuts go ahead. The outcome of the debate is expected to be announced by the end of this week.

The letter was signed by Dave Sowden, Chief Executive, Micropower Council, David Green, Chief Executive, Building Council for Sustainable Energy UK, Charlotte Morton, Chief Executive,Anaerobic Digestion and Biogas Association, Reza Shaybani, Chairman, British Photovoltaic Association and Graham Meeks, Director, Combined Heat & Power Association.