Reaction: ‘Absurd’ feed-in tariff changes ‘hugely damaging’ to solar sector

The government is proposing to slash the feed-in tariff rates for solar by as much as 87% come January 2016 – a move the industry has widely condemned:

Finlay Colville, head of market intelligence at Solar Intelligence:

The industry had been bracing itself for DECC's proposed FiT changes, with most anticipating the worse-case scenario from a government that appears to be seeking to distance itself from the solar industry. If bad news comes in three's, then perhaps the FiT review simply concludes DECC's ROC/FiT double-whammy. With ground-mount being left to cling onto CfD's, it is now becoming very hard to see any silver lining to DECC's current anti-solar crusade that would see any meaningful capacity allocated to the next auction round.”

Mike Landy, head of policy, the Solar Trade Association:

The proposals put forward by the Government today, which will now undergo a period of consultation, would be hugely damaging for the UK solar industry and we are now consulting quickly with our member companies as to how to respond.

We will provide a detailed response shortly, once we have considered the proposals in more detail. However, we regret that proposals to suddenly cut Tariffs combined with the threat of closure of the scheme next January will spark a massive market rush. This is the antithesis of a sensible policy for achieving better public value for money while safeguarding the British solar industry.”

Alasdair Cameron, energy campaigner, Friends of the Earth:

From California to China, the world is reaping the benefits of a solar revolution, yet incredibly in the UK David Cameron is actually trying to shut rooftop solar down.

These absurd solar cuts will send UK energy policy massively in the wrong direction and prevent almost a million homes, schools and hospitals from plugging in to clean, renewable energy.

Of course the feed-in tariff should fall as solar becomes cheaper, but the government clearly plans to remove support entirely. This is politically-motivated, and will take away power from people and hand it back to big energy firms.

Instead of championing fossil fuels, the government should focus on developing the UK’s huge renewable energy potential. Policies like this will further undermine David Cameron’s credibility on climate change. World leaders meeting in Paris later this year will have every right to call him a hypocrite.

James Hoare, partner, LHW Partnership LLP:    

Today’s news is a call for all the renewable energy trade associations and members to pull together and work collegiately to protect the industry and jobs within. Now is the time for teamwork.

Zara Glew, commercial manager, Environmental Energies:

I presume the government has thought about the job losses when this comes in to effect, surely savings on FiT payments will just go to the unemployed so where is the saving?

Maf Smith, deputy chief executive, RenewableUK:

It’s important that we all work to manage costs, but it looks as if the long term vision has been lost.

The small and medium wind sectors are at one with Government in their desire to cut carbon at lowest cost to the consumer. But they can’t do this when Government makes sudden and damaging changes which undermine investment.

What we needed in this Review was a clear vision for how we get to a point where cost effective, small-scale renewables are common-place, with all homes and businesses able to be part of a productive, vibrant low carbon economy. This Review is not about how we build that prosperous future but simply about short term politics and accounting.

We’re also concerned about the timing of this review. Only last month Government consulted on ending pre-accreditation. Now they are consulting on reducing tariff rates, and capping deployment. But such significant changes can’t be introduced within the proposed January 2016 deadline without hurting many businesses and individuals who have been investing in new projects. The next four months will turn the British energy market into a wild-west market with energy consumers stuck in the middle.

James Court, head of policy and external affairs, the Renewable Energy Association:

Rooftop solar has to been seen as one of the key technologies for a decarbonised future, with consumers and businesses also gaining control over the centralised energy market, this is a phenomenally damaging and short sighted decision which sets back this goal significantly and will lead to higher costs in the medium to long term.

87% is beyond the worst fears of many of our members, it is hard to see how homeowners or businesses could see solar as an attractive option for the foreseeable future following these disproportionate cuts.

Solar has come down in cost so dramatically in the past five years and has grid parity in its sights, the industry feels like it’s having its legs cut away metres from the finishing line.

Jonathan Bates, director & general manager, Photon Energy Ltd:

On initial reading there are some sensible proposals relating to moving to metering for export tariffs and even a move to link to CPI rather than RPI. The revision of banding levels is also sensible.

However, the proposed tariff level reductions are severe in the extreme but could just about be lived with for the >10kW,although the investor market will not be able to operate under the FIT scheme and will have to operate under PPAs.

The really scary thing is the proposed caps! My understanding is that they are proposing to limit the PV market to 171MW per year under FiTs. If the proposals in this consultation are implemented in full, then the industry is in for some very serious challenges and a lot of businesses will not be able to continue in the sector.

Merlin Hyman, chief executive, Regen SW:

Today's announcement puts at risk thousands of jobs and will undermine the opportunity for local people, businesses and communities to take control of the way we generate, use and supply energy”.

Because of the Feed-in Tariff communities and businesses up and down the country have had the opportunity to harness their own natural energy resources, helping to reduce and localise energy spend, tackle fuel poverty and generate an income to re-invest in the local area. The government’s focus should be on supporting this ‘people power’ and reducing consumers' exposure to volatile fossil fuel prices – not simply cutting costs.

Phil Powell, director, Gwent Energy CIC

As a community organisation that operates 20 renewable energy systems for not for profit community organisations such as community centres this is appalling news.

We rely on loans from local people that are repaid over 20 years at 6%. We need an income of 12% to pay these loans and cover costs so the community has the benefit of cheaper energy bills.  We were struggling with current FIT rates to develop new schemes.

This model is now dead as the proposed tariffs will barely cover the administration costs alone. With reviews of other technologies possible, we - with most other community organisations - do not have a future.

Whatever the government has professed on supporting community energy it is now dead in the water. With the new rates solar will become a rich man's toy again as in the early days, unless we expect power prices to rise very rapidly to justify the installation costs.

There will be massive job cuts in the industry and, contrary to reports of price falls on equipment, the EU minimum price regime is that we pay the same for panels now as 2 years ago, inverters are unlikely to fall in value price much more.

It is hard to see where innovation will help unless batteries can have a big price fall.

Michael Gadd, Gadd Systems:

As a solar professional that's been in this industry since the early 2000’s, I was witness to the introduction of the FIT. Many will argue that the initial rates were over-inflated resulting in damage to the industry that we all are now seeing. Firstly, although these initial rates (circa £0.40p/kwh) are now now seen as too high, back then many consumers were still nervous about a technology that was not well understood, with a financial risk and payback of 10 years that was still seen as risky.

Therefore I would argue these early rates, were correct in order to get a newly born industry in this country rolling. This was an exciting time for the UK renewables sector, a buzz in this country to create a new green industry of growth and employment that was desperately needed in order for the UK to take climate change its obligations in Europe more seriously.

How sad is it now to see ROs and FiTs being retracted so quickly by this new government!

Globally, as solar subsidies were being slashed, manufacturers were responsible to respond by decreasing costs of components, resulting in the loss of any new local manufacturing start-ups in the UK, and forcing most of the production of cells and modules to Asia. The UK, and indeed Europe, did very little to protect the potential of a manufacturing industry to support its own capacity (as Ontario did with its local content rules). Aside from some advanced or custom made modules made in Europe, most product now comes in from Asia, and as China begins its own financial struggle, I am wondering where that will lead in the future considering that one in six UK companies are now re-shoring elements of their production back home. I am not sure that we can rely on further cuts in manufacturing.

With the proposed FiT of 1.63p/kw/h and the proposed degression rates, this will effectively end subsidies for domestic solar. Unlike Germany who reached grid parity in 2011, I am failing to see figures from DECC that support grid parity in the UK. Only when you have grid parity will you have an energy source that can support itself. So I'm failing to see what this government is planning to do with renewables, climate change and green issues whilst it pours money into other technologies such as Nuclear energy. If you were to take the total cost and resulting subsidy of Nuclear Energy (for the full life cycle of the plant including the disposal of waste), then this far out-ways any subsidy ever given to renewables in this country. So these cuts, are only political from a government, and therefore a country that is clearly not wishing to support renewable energy and climate change, which is an issue that is strangely out of the focus of the press these days.

DECC say that the industry is "resilient to previous significant changes to FIT's" but what is the effect on manufacturing? Our own solar manufacturing industry had already been killed off, so I guess we can rely on product supply from China just adapting and getting cheaper - or can we??

Juliet Davenport, chief executive, Good Energy:

The proposed cuts mean that installing solar panels at home will no longer be attractive to British families.

The Feed in Tariff has transformed the way the UK generates its power over the last 3 years, with over 22% of the UK's power coming from renewables in the early part of 2015, and over 700,000 homes generating their own power. It's helped to take us away from the old-fashioned fossil fuel companies to a cleaner, local, more democratic system.

We hope the government will re-think the value that renewables bring to the market, if you do the calculations you'll see that solar actually brings down wholesale prices of energy. China and Germany are leading the way in investing in renewables, and we hope that the recent announcements by government don't see the UK fall behind again.

It's also going to put the brakes on innovation in the battery storage market, a game-changing technology which would enable households to store their own electricity.

Alan Ring, commercial director, Just Energy Solutions

Another decision announced - if true - by highly educated people that have spent their whole lives in academia and are tragically removed from real people.

This is catastrophic and will - not for my business as we diversify - send many into bankruptcy. I have worked with DECC and don't underestimate their lack of connection and understanding of the subject.

Axel Puttkammer, Projektentwicklung, Energy for the World GmbH
 

Facing these FiT cuts, no CfDs this year, upcoming changes to the ROC and a government creating massive worries for investors, we will stop our UK development activities after installing the current projects.

There is NO way ahead for solar with these changes, other than before this cannot be compensated by installation costs.

Colin Calder, CEO & founder, PassivSystems:

It is extremely disappointing to see government once more targeting the rooftop solar PV market with tariff changes that are so extreme they will destroy an entire industry overnight, putting thousands of jobs and many businesses at risk.

The failure to deliver reliable and effective renewable energy policies is driving up costs for hard-working consumers showing the government’s inability to make long-term value for money decisions that benefit consumers.

Free rooftop PV was providing low-cost energy to tens of thousands of hard-working consumers categorised as living in fuel poverty.

Instead of incentivising the installation of battery storage technology with rooftop PV, this decision will destroy an entire industry and in the process it has wasted hundreds of millions of taxpayer’s money. Within 36 months the residential rooftop PV market could have become self-funding providing pensioners and fuel poor consumers with real hope of lower energy bills.

Jonny Williams, associate director, BRE National Solar Centre:

Industry needs a steady flight path to zero subsidy, which is where we want to be, but the cuts proposed in the consultation are too much of a cliff edge and will threaten jobs and livelihoods. While the revision of banding for commercial roofs is positive, the overall proposals are too much too soon.

Reza Shaybani, chairman, BPVA:

Today’s announcements are totally unacceptable and unnecessary. These are bad news for the UK solar industry but also very bad news for the country as a whole, as it eliminates an option for individual homeowners and businesses to save money and produce their own green energy and also makes the UK an unsafe place for investment. Cutting the FiT for rooftop solar which reduces the energy bills for millions of homes and businesses is not defendable. The government promised to support solar on the roof but have totally acted against what was repeatedly said by senior government figures, as proposed caps would limit new residential solar installations to around 22,000 per year and commercial installations to just over 100.

It very much looks like the government has not listened to the industry and have acted on the basis of bad advice! In my view, this is not just a simple case of reducing FiT to reflect the market situation, these proposed tariffs will wipe out 95% of the solar industry in the UK and will only make it viable for a very small number of independent electricians. Basically back to where we started in 2010!

We urge DECC and the decision makers at the Treasury to re-think their strategy, look at the proposed numbers and mechanisms which absolutely do not make sense and make the necessary adjustments accordingly.

Although we must take the proposed changes on face value due to the nature of the consultation process, we will take these very seriously and over the course of the next few weeks will work with our members to demonstrate to the government how wrong this proposal is. We will convey our messages to the Prime Minister and George Osborne directly and will seek their intervention.

Frans van den Heuvel, CEO, Solarcentury:

Today’s proposed solar FIT cuts announced by DECC add to the calculated turmoil that the new Government has unleashed on the solar market since the election. In ittle more than three months, the Conservative Government has literally turned upside down the certainties which had characterised the UK renewables market and the cross-party consensus that underpinned it.

If the consultation is enacted, we can expect to see a wholesale collapse in solar take up by homeowners and businesses – just at a point in time when most other countries are escalating their solar deployment having seen the dramatic impact the technology can make in tackling climate change.  So much for Amber Rudd's promised "solar revolution" and the former Conservative energy Minister's pledge to put "rocket-boosters" under the non-domestic roof sector.

The rushed announcement of retroactive changes to solar support schemes, including the Renewables Obligation,  since the election have been shocking and damaging, all the more so, since the Conservative Party's Election Manifesto was silent on these issues. Today's threat to close the feed-in tariff scheme altogether from 1 January 2016 trumps even all of those. At least our colleagues in the onshore wind industry knew what was coming from the clear Manifesto commitment to end support for onshore wind.  But the truth is that remarkably, solar, by far the country’s most popular renewable technology, is being treated even worse than onshore wind.

Jon Antoniou, CEO, eco NRG Solutions:

The UK solar industry is doing its best to come to terms with DECC’s consultation to review ROCs but the announcement on FiTs is simply unacceptable.

We get that the government does not want to utilise any more land for large-scale solar but to quite literally pull the plug on Rooftops after Greg Barker quite rightly promised to put “rocket-boosters” under the commercial and industrial solar sectors last year is utter madness!

Solar is perfect for rooftops as the space is dead otherwise.

Germany set the standard and our nation understandably followed suit but since the Conservative party has been in power they have done all they can to undo what Labour worked very hard to achieve. We simply cannot tolerate this.

We need to stand up against our government before we are labelled as a country that does not care about increasing renewable energies and lowering carbon emissions otherwise we will be labelled as the country that promotes nuclear power instead. What future do we hold then?!

Ged Rowbottom, director, Solarlec 

We knew the feed-in tariff was under review but no one in the industry expected a cut of almost 90%, or that it could be scrapped altogether as early as next year.

It is particularly disappointing since the Energy Secretary, Amber Rudd, vowed to ‘unleash a solar revolution' when she was appointed just after the election in May, suggesting millions more homes should have solar panels on their roofs. Now her department is proposing to remove a key incentive to achieving that goal.

If this goes ahead it will certainly have a negative impact on the solar power industry, which employs an estimated 340,000 people across the UK, and on the move away from non-sustainable fossil fuel energy supplies.

People will still fit solar panels because of the big savings on their energy bills - especially as energy costs continue to rise while the cost of installing a good quality solar panel system is coming down. But removing the feed-in tariff incentive will put the brakes on what has been a growth industry.