It was a bit of an inauspicious day at 3 Whitehall Place yesterday. Not long after the Department of Energy and Climate Change’s actions were roundly condemned by the ECC select committee had Matthew Hancock and Lord Bourne rubber-stamped reforms of how the department interacts with the energy industry.
Since the election 10 months ago DECC has, according to the government’s ‘Cutting Red Tape’ report, sparked “significant opportunity costs and lost investment” by almost relentlessly swinging George Osborne’s axe at pretty much every renewable energy support framework the chancellor could spy.
This is an approach that the report warns must and will be reined in before too long but not, it transpired yesterday afternoon, before the secretary of state had one last parting shot.
With the Renewables Obligation shuttered and the domestic feed-in tariff for solar PV trimmed to highly restrictive ribbons, Amber Rudd saw to it yesterday afternoon that solar thermal was given the same treatment. It’s very much the continuation of an onslaught against all technologies sun-related. Manufacturers of parasols beware, you could be next on the chopping block.
Rudd’s renewable heat incentive overhaul proposes to remove support for solar thermal installations completely from 1 April 2017. The surprise move sparked incredulity from trade associations and installers alike, most in disbelief that a relatively unassuming and inexpensive support framework had been trimmed.
The accompanying impact assessment states that just £690,000 of funding has been committed to the technology to date, and a department spokeswoman confirmed that by the end of January 2016 just 207 non-domestic and 2,202 domestic solar thermal installs had been accredited.
DECC’s reasoning for the cuts appears to centre solely on its perceived lack of “strategic value”. At 19.51p/kWh, the tariff is indeed the highest under the RHI but is evidently still insufficiently attractive enough for the technology to take off in a big way. The impact assessment also alludes to this, citing that even when the tariff is combined with bill savings installations could be “unlikely to pay back over the technology lifetime”.
The impact assessment further cites the fact that “around half” of applicants said they would have gone ahead with the install without the tariff and blamed the above-expectations popularity of solar PV for a near cannibalisation of its thermal cousin.
But those reasons should offer no bearing on the future of subsidy support. That some households could afford to install solar thermal without the need for support is no justification for denying other households the chance to do the same, and cutting what is clearly a vastly inexpensive support mechanism simply doesn’t hold much weight in the wider argument of it holding little strategic value.
What DECC is essentially attempting to argue is that whilst solar PV was too expensive and too popular to support further, solar thermal is just not popular enough to warrant the funding. It’s as if Amber Rudd is emulating Goldilocks, only selecting technologies which are ‘just right’.
What’s worse is that the cut comes amidst a dire need for the UK to decarbonise as much of its heating as possible. The warning signs have been on the cards for months now – and Rudd should know this, they originated from her Outlook – yet the department is intent on stripping support for an unobtrusive technology that would stand to have a tangible effect on our heat targets.
It’s precisely the kind of inconsistent policy making that caught the ire of industry, financiers and politicians alike when the select committee was compiling its report into investor confidence, and precisely the kind of tinkering that comes across as cutting for cutting’s sake.
As a complementary technology to PV, many installers would have eyed solar thermal as an ideal diversification opportunity. DECC’s tinkering has slammed that door shut just as it had creaked open, catching many an installer’s fingers in the process.