Dear Secretary of State
Proposals to support roof-top solar under FiTs – an open letter to Amber Rudd MP
I am writing this open letter to you with the very worrying backdrop that several solar companies have already closed down due a lack of confidence in Government’s commitment to solar in the UK.
Despite the FiTs review still being at a consultation stage, the proposed 98% reduction of support for roof-top solar has sent the investors into a tailspin. With the removal of LECs and pre accreditation, the closure of >5MW RO and a consultation to close <5MW RO and a lack of clarity around the affordability of CfDs, business leaders are understandably pessimistic on the future of solar in the UK.
We have been told by DECC that we are a victim of our own success, and yet industry has consistently challenged the 10-12GW 2020 PV Strategy range showing we can reach 20GW of deployment – our STA Solar Independence Plan targeted 20-25GW with volume growth and economies of scale that would drive down UK supply chain costs, efficiencies in installation and achieve zero subsidy for roof-top solar by 2020.
That is really achievable, but we need one more push from your Government to achieve that goal. The STA has a compromise solution, which we are calling our £1 plan – a pound on consumers’ bills in 2019. We presented this to your officials last week and it is backed up with realistic modelling assumptions, forward visibility of tariffs and volumes to encourage investment and retain the UK supply chain. In summary this would deliver:
– 2,745MW rooftop and community solar by April 2019 for <£100m on the LCF
– £4bn of investment, 60% of which accrues to the UK
– Retention of the majority of the 27,000 jobs at risk
– A path to zero subsidy for rooftop solar, with growth beyond 2018/19
– Savings of £150m over DECCs ‘Do Nothing’ scenario
– Electricity equivalent to the annual consumption of 830,000 homes saving 1.2m tonnes of CO2
In addition, when we met last month, I gave you an early draft of the Good Energy report which investigates the impact that wind and solar has on reducing the wholesale electricity price – the “merit order effect”. This report is now published and I attach a copy. In summary the conclusions are:
– Wind and solar together reduced the wholesale cost of electricity by £1.55bn in 2014
– The value of the merit order effect will increase with further renewable deployment
– Every additional GW of solar installed saves £35m/year on the wholesale cost of electricity
This £35m/GW/year of additional solar offsets the <£100m the STA is asking for with its £1 plan to deliver 2.745GW of rooftop and community solar. The net effect of this support is therefore zero as the cost added via the LCF is offset through the benefits of a lower wholesale electricity price. This demonstrates the value of solar as providing value for money for the hard working British consumer.
We will submit our proposals as part of the evidence you have requested within the consultation. Our industry needs volume, not caps, to ensure we can continue to bring down costs and reach the goal of zero subsidy. To do that, we cannot progress with £7m over 3 years – it will shut down the solar industry. We need this minimum £100m investment to ensure a sustainable solar industry, providing investment in the UK, promoting export opportunities abroad whilst encouraging the support for innovative technologies such as storage.
Please don’t give up on your solar revolution – look beyond the apparent limitations of the LCF for what solar can deliver to the UK’s energy system. Decisions made by you this Parliament will be crucial to both the future evolution of our energy system and the UK’s potential stake in global technology markets. I am confident, with our latest evidence, that DECC and the solar industry can deliver what are surely shared objectives: value for money, stable policy support allowing the removal of subsidies, greater energy security and successfully tackling climate change.
Yours sincerely,
Paul Barwell
CEO
Solar Trade Association