Can the DECC really afford not to pay for solar power?

If the past few months have proved anything about renewable energy, it’s that solar power, under the direction of the feed-in tariff (FiT), is the fastest-growing source of green power in the UK. According to the latest figures from Ofgem, since the introduction of the FiT on April 1, 2010, the total installed capacity of solar was almost 40MW (39.241MW) while wind reached 13.021MW and hydro and micro CHP only managed 7.666MW and 0.014MW, respectively.

So, if the solar power industry is taking off at such a great rate, why is the Government so keen to put the kybosh on its growth?

The recent Spending Review saw the first industry wobble as we all waited with bated breath to see whether the very same Government that gave us the FiT with one hand was about to take it away with the other. A collective sigh of relief followed this review as it was announced that there will be no changes to the (41.3 pence per kilowatt hour) tariff until 2013.

It wasn’t long, however, before the next blow was delivered, this time in the form of Greg Barker at the Department of Energy and Climate Change (DECC). On November 11 Barker revealed that, “We inherited a system that failed to anticipate industrial field arrays. While we will not act retrospectively, large field arrays should not be allowed to distort the market for roof mounted and other PV or other renewables.” At a closed industry meeting later that week,  Barker confirmed my suspicions that the Government plans to reduce the subsidy for large-scale solar in order to boost the market for microgeneration technologies.

To top all of this off, the Renewable Energy Association (REA) reported last week that the Government plans to effectively ‘cap’ the amount of money set aside for renewable energy. The total amount spent on FiTs during the period 2014–15 cannot now exceed £360 million, which is a 10% reduction on the previous estimate of £400 million.

All of these elements together have significantly shaken investor confidence in the UK solar sector, with many large-scale developers already turning their backs on the industry. Not only that, but it seems that the Government is for some reason trying to slow the escalation of solar power, which is something that has been baffling me in light of a recent Public Accounts Committee report on ‘Funding the Development of Renewable Energy Technologies.’

This report leaked onto the wires yesterday, shining light into some very dark, but very interesting corners of the DECC. The main point outlined by the report was that the Energy Department had actually admitted that it was not going to reach its target of 10% renewable energy generation in the UK by the end of 2010. In fact, it doesn’t expect to meet the 10% target until 2012, from its starting position of 2.7% in 2000.

In light of this disclosure, it seems an ambitious move for the UK to agree to the legally-binding EU target of supplying 15% of the country’s energy from renewable sources by 2020, despite having no “clear plans, targets for each renewable energy technology, estimates of funding required or understanding how the rate at which planning applications for onshore wind turbines were being rejected might affect progress.” Nevertheless, the country has agreed to this, and if these targets are not met, the UK could face huge fines.

As if these points weren’t enough, it has also emerged that between 2000 and 2009 the DECC and its predecessors failed to use nearly half of the resources available to it to encourage innovation in renewable energy. Chair of the Public Accounts Committee, Margaret Hodge, said that “some £180m of the funds allocated to support renewable energy technologies had gone unspent. This is a wasted opportunity for providing investment that could have helped increase the supply of renewable energy.”

Now, while the DECC is the body responsible for ensuring a series of targets are met over the next 40 years, the direct Government funding for developing renewable energy technologies is delivered through a complex web of organisations that the Department does not control. So, the Energy Department does not in fact have a clue as to “how much has been spent or what has been achieved,” the report said.

Despite all of this, Energy Secretary Chris Huhne said the coalition Government, or ‘the greenest Government ever,’ was determined to “deliver on the low-carbon economy”. Yet he blames the previous Government for the slow progress:

“The last 10 years have been a lost decade for renewables. Labour’s tragic legacy is that we are 25th out of 27 EU member states on renewables. We have been playing as amateurs when we should have been in the Premiership.”

While I agree to some extent, it was Labour who put the FiT policy in place, and it clearly works. If we want to climb up from 25th spot, then the Government needs to leave the successful technologies’ subsidy alone, promoting a reasonable growth rate which can reach EU targets.

To wrap up: in the same week that the DECC announced that it will ‘cap’ the feed-in tariff for the most successful renewable energy source in the country and cut subsidies for large-scale plants, it also admitted that it has no hope of reaching its legally-binding energy targets.

Is anyone else confused?

The Public Accounts Committee report states in response to these points that the Department needs “a greater sense of urgency and purpose” when thinking about these targets. “Given the urgency and importance of the issue, progress in meeting renewable energy targets has been unacceptably slow over the last decade,” said Hodge.

In order to reach these targets, the DECC must ensure a proper balance between providing effective incentives and a stable framework for private investors whilst minimising the cost to bill payers, the report says. The Committee points towards the Renewables Obligation (RO), which provides the major subsidy for renewable energy by placing an obligation on licensed electricity suppliers to source a specified and annually increasing proportion of their electricity sales from renewable sources, or pay a penalty, to help solve this problem. “The Department needs to get the best value and impacts from this funding framework.”

Working with industry bodies, including the REA, Friends of the Earth and Micropower council, the Solar Power Portal will continue to support lobbying action against the DECC threats. By highlighting the strict targets that must be reached, as well as passing on your comments, together we can begin climbing our way up the league table, one day reaching Huhne’s Premiership goal.