Possible changes to the recently introduced feed-in tariff (FiT) in the UK are being muted, according to media reports, including the Financial Times. The fear is that the coalition government could cut the incentives for solar installations as adoption rates have soared to over 10,000 since the FiT was introduced in April, 2010, according to OFGEM figures. The Solar Power Portal has for some time heard rumours of a possible early review of the feed-in-tariffs. An article written by the Financial Times, “Solar power subsidy under review” claims that unnamed sources have confirmed that in back rooms at this weeks LIb-Dem Conference early revisions to the FiT were discussed. It appears that there might be more to those rumors then we at SPP first thought.
According to the FT report, cuts could be made before the proposed March 2012 review. In a phone call to DECC on Thursday, Ray Noble, REA Solar Power Group, was able to ascertain that DECC is not reviewing the FiT. Unfortunately they did not rule out that changes may still be made early as apparently the treasury is looking at the FiT.
It should be noted that the UK FiT is not a levy on taxpayers, rather via a small increase over time to electricity prices that consumers pay so why a review would be undertaken by the Treasury department rather than the Department of Energy and Climate Change is unclear at this time.
There are obvious benefits to the FiT scheme that should be pointed out, not least of which is the significant and continuing growth in employment in the installation side of the Market. It should be remembered that almost two thirds of all jobs created in the solar industry world-wide are based around the installation and not the manufacture of the solar products. This creates real opportunities for local, regional and national employment stimulation. In addition the since the FiT two of the UK's primary manufacturers, Romag and Sharp have announced expansions. Any premature cuts could put all of these additional employment opportunites at risk as companies will see any wavering from government as a sign that the legislation in the UK is too unstable to sustain long term growth.
Chris Huhne announced on Tuesday that his “Green Deal will be a revolution”. He stated clearly that the current government will be the greenest ever and will create 250,000 jobs by retrofitting Britain's aging building stock to be more energy efficient. He goes on to say “I make you this promise now: by the end of this parliament, we will be Europe's fastest improving pupil when it comes to renewables. No more second best”
From that speech at the conference to the FT article today in the main stream press it would seem that cutes to the tariff could be possible. However what is clear is that if the government did make changes it would risk it's green credentials and could hamper the emerging UK solar PV market. It needs to be remebered that the UK has aggressive renewable energy generation targets, is not on the same scale as Germany in terms of installations (60MW as opposed to 15GW), and is a fledgling insdustry that needs the current tariff levels in order to kick start the market.
We will not know for sure until the comprehensive spending review is announced on the 20th of October exactly what the governments position is. Alan Whitehead, MP and chair of PRASEG, the parliamentary body that looks at renewables in the UK and David Wagstaff, Head of Distributed Energy at DECC will both be speaking at an upcoming industry conference, Solar Power UK on the 18-19 October in London.