Industry condemns ‘short sighted’ changes to solar subsidies

The solar industry has reacted furiously to recent governmental proposals which will heap uncertainty onto developers looking to proceed with solar projects, both roof- and ground-mount.   

Caroline Lucas, Green Party MP:

This proposed cut to support for solar is utterly short sighted. While the government continues to subsidise fossil fuels and nuclear it's undermining investor confidence in clean, renewable energy generation.

This cut would further undermine Britain's commitment to meeting our climate change targets and deepen our addiction to dirty fossil fuels.

Angus Macneil, Scottish National Party MP and Energy and Climate Change Select Committee chair:

I am disappointed that the Government has made these announcements after the House of Commons has risen for the summer recess, as proper scrutiny in Parliament will now not be possible until after the consultation deadlines.

The measures announced by the Department of Energy and Climate Change today raise more alarming questions for investors in low carbon, renewable technologies who are already struggling to finance projects after a series of sudden policy changes. The latest changes remove the current certainty for the lowest cost renewable technologies whilst failing to provide any indication of the future investment landscape. DECC has stated that it will set out totals for the Levy Control Framework beyond 2020 but has given no indication of when it will provide this information leaving industry in limbo.

Energy developers seeking support under the Contracts for Difference will now be left waiting for DECC to announce its plans for future CfD allocations. It is important that value for money is at heart of decision making on energy, but removing this certainty today actually risks raising the cost of capital and thus slowing down the steep cost-reduction pathway of technologies that will be needed in the next decade. Removing support for the lowest cost renewable technologies calls into question once more the Government's commitment to meeting out medium- and long-term decarbonisation targets, sending out a worrying signal in the run up to the Paris climate change conference.

Caroline Flint, shadow secretary for energy and climate change:

This announcement creates further uncertainty right across the renewable sector. Renewables should move towards being free of subsidy, but retrospective changes that cost jobs and cut investment will make that harder to achieve.

Since taking office the Government have undermined two of the cheapest forms of clean energy, onshore wind and solar. Hampering the development of cheap forms of clean energy will see bills rise, not fall.

Environmental costs make up far less of household bills than wholesale energy costs and while those wholesale costs are at a five year low, that still isn’t being reflected in consumer bills. The Government have done nothing to tackle that despite households being overcharged by the Big Six by more than a billion pounds a year.

Ray Noble, owner, Solar BIPV Ltd and Solar Power Portal outstanding achievement award winner:

I have been saying for some time that the Solar Industry should go for everything they can now with the certainty that no changes would occur until 1 April 2016 – this has proven to be right with proposals to stop ROCs for solar (as the Conservatives did for Onshore Wind but that was for more political reasons).

The decision to stop supporting the fastest deploying energy generation technology seems like madness to me. Especially when you consider that we are short of electricity, that solar has the biggest support of the the population; yet at the same time still giving 2 ROCs to other technologies that are creating the largest drain on the budget. Seems like winners are not liked and losers are preferred!

Tomorrow UK Solar will launch a KPMG report on the transition from tariffs to grid parity. I will be personally lobbying the Minister for a transition period, a mistake that other countries’ governments have made as solar neared grid parity, resulting in a collapse of their markets.

The UK can get it right with a tiny bit of support, something I feel we deserve as the soon-to-be-lowest cost electricity generator, not only in the UK, but in the world. With 35,000 jobs hanging in the balance as an industry we need to work with government to find an acceptable solution.

Reza Shaybani, chairman, British Photovoltaic Association

In a general sense any action which undermines the growth of renewable energy technologies has an adverse effect on our industry. It seems to me that the UK solar industry is being punished for its success and not rewarded. From day one we were told to bring the cost down which we have managed to do so by as much as 75% in the past 5 years. Both innovation and large deployment will result in cost cutting. On the innovation side we are well into introducing more efficient and higher powered panels and components at a lower cost. Energy storage is catching up quickly and it will be a natural part of the solar installations in not too distant future. On the deployment side, we have had to reach a critical mass in the UK to lower the cost down. That critical mass has obviously triggered the overspend on the budget.

The Government has made it very clear on a number of occasions that they want solar on the roof and not on the ground however solar on the roof specially on the mid-size market is not quite there and in the meantime supporting sensibly positioned solar parks particularly on brownfields is necessary. It is also important to mention that if the Government wants the public to benefit from the financial incentives, crowed funded projects must be  ring-fenced.

I think what is extremely important now that unlike the 2011 cut, the industry must not talk itself down as this will be more damaging that the cuts. We must put emotions into one side and look at this in the context of LCF budget. It almost feels like the industry has been asked “The House is on fire and we must decide which part of it we want to save”? We are concerned about today’s announcement and we will continue to work closely with our members on the response to the announced consultations, to ensure that the correct framework is put in place to guarantee a sustainable solar industry. Any future policies must safeguard consumer and  investor confidence which is key to maintaining  the growth of the UK solar industry

David Hunt, managing partner, Hyperion Executive Search:

We saw in the last Renewable Energy Association/PwC report that jobs growth in the renewable sector was over 8%, far higher than the national baseline. But recently whilst we've had a number of UK roles for manufacturers, developers have already been turning their attentions overseas. Knowing the trajectory of this government many developers and EPC's are discussing downsizing or closing UK operations. One developer in particular, with over 200MW in the UK, cancelled assignments for Head of UK Wind, (post the last wind RO cut), and is now recruiting for overseas markets.

We risk losing significant numbers of jobs post April 2016, and the talent, experience and tax income that they bring.

Daisy Sands, head of energy campaign, Greenpeace:

The government is set on destabilising the booming but young solar industry. If the proposals to the consultation are implemented the government will be choosing to protect subsidies to EDF whilst withdrawing support for the communities, businesses and households’ efforts to install solar panels. No-one should be getting easy money at a time of financial stress, but this is a moment where a huge opportunity to deliver subsidy free clean energy exists,

Cutting the subsidies now will see businesses go bust and investment dry up. The timing couldn't be worse as the sector is on [the] transition to subsidy free and is cheap form of renewable energy. It is galling when tax breaks and subsidies have propped up the oil, gas and nuclear industries for decades.

Jobs will go and emissions will stay higher at a time when policies and funding should be in place to ensure that people can participate in contributing to the UK’s diverse energy mix.

Leonie Greene, head of external affairs, the Solar Trade Association:

This is damaging for big solar rooftops as well as solar farms, both very cost-effective ways of generating solar power. This contrasts with repeated commitments from Government to boost the commercial solar rooftop market.

The possible removal going forwards of the guarantee on a set level of support throughout a project’s lifetime once built is a real blow to investor confidence.

There is no pledge in the Conservative manifesto about cutting support for solar, so we are disappointed by this move. Solar is the nation’s most popular form of energy, as the government’s own opinion polls have shown.

We recognise that Government wants to shift the emphasis to larger solar rooftops, but we have explained to the Department that these are just 5% of the UK market. More work is needed urgently to unlock larger solar roofs. There is a danger if Government pulls the rug on the solar farm industry too early, the market will have nowhere to go. This could be further compounded by changes to the Contracts for Difference auctions. What we need is a bridging strategy and we are very keen to work with DECC to achieve that.

We also regret this move because solar farms are close to competitiveness with new gas generation and they account for a very small proportion of expenditure on the Renewables Obligation. We're hearing a lot of big figures from Government, but they should know it is just a few quid more on energy bills to deliver nothing less than a solar power revolution in the UK.

We're very close, but we're not there yet. We think the British public would support that. Support for solar under the Renewables Obligation currently costs just £3 per year on each household bill, and solar only makes up only 6% of the Renewables Obligation budget.

Maria McCaffery, chief executive, RenewableUK:

This announcement is yet another hand brake turn on energy policy. It will cause dismay in Britain’s medium-scale wind energy sector. Removing certainty will worry energy investors and can only increase the cost of developing renewable projects. Government knows this, but is pressing ahead regardless.

The Feed-in Tariff is a British success story, but continual rule changes and policy swerves will hurt. Local communities, farmers and small businesses will be hard hit by today’s announcement, and are being denied their opportunity to generate their own clean power and cut their energy bills.  

The renewable energy industry is ahead of the Government in its desire to bring down costs  these have fallen dramatically and will continue to plummet. Onshore wind is already cheaper than new nuclear power and is on course to be cheaper than new gas by 2020. Offshore wind costs have fallen by 11% in the past five years.

We need the industry and Government to agree on a long-term strategy with financial support being reduced gradually and appropriately over a clearly set out timescale – not short-term changes coming out of thin air.   

Philip Wolfe, chairman, Community Energy England:

The proposed removal of pre-accreditation was unexpected and highly unwelcome. The government has previously accepted that this is necessary for the community energy sector, and even today’s announcements acknowledge that.

The government has not made the case that this change would have any material impact on consumer bills. Furthermore on the very day after the Chancellor has called for massive government savings, it cannot be efficient to propose a regulatory change and then “later this year, we may consider whether there is a case for reintroducing pre-accreditation and pre-registration for communities” (i.e. reverse it again!).

Michael Grubb, Professor of International Energy and Climate Change Policy at University College London:

The entire energy industry is now concerned about the risk of a capricious and politicised UK energy policy, driven more by Treasury intervention than by the Department responsible.

The falling costs of both renewables and gas create the ideal opportunity to build a modern energy system that combines both at scale without driving up overall energy bills from present levels. The major risk for the energy sector is uncertainty and instability sharply driving up the cost of doing business in UK energy. Stability cannot be delivered by ignoring the realities of climate change, the global Paris negotiations, or existing legal commitments on renewables and the UK carbon budgets.

This is a pivotal moment in UK energy policy, on which it is beginning to look like the UK has two Governments. One is that pressing for strong international action on climate change, which signed an unambiguous cross-party pledge to phase out unabated coal, reiterated its carbon targets and which committed in its manifesto to deliver clean renewable energy as cost-effectively as possible. The other is a Government which has moved to prematurely end supports for the cheapest of the UK’s main renewable resources, which has injected fear and uncertainty into renewable energy investors – and which seems set to also scrap energy efficiency programmes which have helped to cut consumer bills and avoided the need for billions of pounds of new fossil fuel investments.

Sooner rather than later David Cameron must clarify which Government he is really leading.

Seb Berry, head of external affairs, Solarcentury:

This morning the Secretary of State told the BBC Radio 4 Today programme that the solar industry couldn't have a "blank cheque," before saying that the total cost this year of the solar RO was just £3 per household on energy bills. After delivering price falls of 80% since the introduction of the feed-in tariff, no-one is asking for a blank cheque, just a sensible, transparent and predictable transition to "subsidy-free" solar by 2020/21, as set out in the Solar Trade Association Solar Independence Plan.

Frustratingly, the announcements today undermine that process, by yet again removing the policy stability on which investors depend. We get that the government doesn't like solar farms but we simply don't understand today's shock proposal to remove FIT pre-accreditation for mid-scale rooftop solar projects. This is the sector that the former Minister used to say should receive "rocket-boosters" from government. Today's announcement will do the opposite.

Juliet Davenport, CEO, Good Energy: 

Ending support for solar power makes no sense at all. On one hand the government says it wants to keep household energy bills down by removing support for clean solar power, yet on the other promises massive subsidies to nuclear.

The energy market currently has a wide range of subsidies and tax allowances in place, across all the technologies – renewables, nuclear and gas - and not all of these are transparent when it comes to the consumer.

We’d like to see the government looking at all forms of support, not just renewables, and creating a more transparent and fair regime across the whole market.

Our research shows that solar reduces wholesale prices by displacing high cost gas fired power generation during the day - the government is taking a one-sided approach by not taking this into account.

Solar power met 15% of UK’s energy demand on the afternoon of Friday 3 July. With continued support from the Government over the next 5 years, solar would soon be one of the cheapest forms of electricity generation.

Killing support for solar means that schools, farms, homes and indeed whole communities will find it much tougher to generate their own clean, local electricity and will be reliant on the same old-fashioned utility companies that they should be moving away from.

We’re also worried about the knock-on effect this could have on innovation in the battery storage market, which is led by solar. Stifling support could bring an end to a truly game-changing technology which would enable households to store their own electricity.

Paul McCullagh, CEO, UrbanWind:

This continued withdrawal of support for renewable technologies is a complete backwards step in our transition towards a low carbon economy.

Amber Rudd has previously stated her commitment to securing a binding decarbonisation agreement at the United Nations Climate Change Summit in Paris later this year. However, she has since then continued to withdraw support for onshore wind and solar, undermining an industry that is both one of our cleanest and readily-deployable options and one that enjoys widespread public support. I would like to see her show her colours by truly demonstrating her green credentials.

Gavin Factor, director, Earth, Wind and Hire:

Earth Wind & Hire anticipates that DECC’s announcement to scrap the RO for large scale solar could have huge repercussions for job creation in the UK solar market.  In the short term we expect to see a surge in demand for Project Managers; Site/Construction Managers and Grid Connection personnel as the industry battles to get projects connected by next year’s April deadline.  UK solar developers will face a “fork in the road” moment, whereby they will either focus on emerging, international PV markets or look to recruit UK based staff to develop commercial rooftop projects. In recent months we have  seen increased demand for commercial rooftop experienced professionals, however with the government’s surprise removal of the FIT pre-accreditation for mid-scale rooftop solar, future job creation here is now more uncertain. We anticipate the biggest prospect for job creation within areas such as O&M and Monitoring, as the UK moves more and more into an asset management solar economy.

Rhian Kelly, Business Environment Director, CBI:

The consultation into changes to solar subsidies will give industry the chance to make its case.

Ensuring consumers’ bills remain affordable is rightly a priority for the Government, but it must work with industry in order to provide consumers with long-term value.

That means getting the policy right from the outset, and having in place a clear and transparent framework to give investors the certainty they need.

Nina Skorupska, chief executive, REA:

The industry is at a critical point as it seeks to reach grid-parity as quickly as possible yet retain the size and scale necessary to become a key contributor to the UK economy.

We will be working with Government to ensure that the sector remains of a sufficient size, capable of delivering cheap, low carbon electricity up to 2020 and beyond

 

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