Solar installation business Solarlec has been placed into liquidation by its directors, becoming the latest company to have done so following last year’s feed-in tariff review.
Solar Power Portal understands that as many as 170 jobs could be lost as a result of the liquidation, losses which the company has squared solely with the government’s retraction of subsidies.
SPP understands that employees of the firm were gathered last Thursday to be told of the decision and an internal email was later distributed to those not present.
Solarlec employees were instructed that last Thursday was their last day of work, however liquidators were present at Solarlec offices on Friday to recoup company-owned equipment.
SPP understands that between 100 and 120 full-time staff working from the company’s offices in Burnley, Exeter and Carlisle will now lose their jobs, as well as up to 50 self-employed energy advisors who conducted surveys, audits and installations in the field.
Customers that had paid a deposit but had not yet had any work completed stand to be refunded, while those who have had initial surveys completed will have their systems installed.
The email, signed by Solarlec directors Simon Bland, Nick Keighley and Ged Rowbottom and seen by SPP, thanked employees for their work over the course of Solarlec’s five years of operations but explained that the company had “struggled to adapt and generate enough sales” under the new feed-in tariff.
“Unfortunately with the decline in sales and the losses we have sustained since January means that the company has become technically insolvent.
“We have looked at every possible way of restructuring the business and ways in which we can safe guard jobs and have done our upmost these past few months to save the company.
It is therefore with great sadness we have had to shut the business,” the email stated.
The directors continued by stating how the government’s alteration of the feed-in tariff, enacting a 66% reduction to 4.39p/kWh from 16 January this year, had significantly impacted on its business model.
“Please remember that the company was set up and now closed in response to the Gov. FIT scheme. In the last 5 yrs. you have all been part of a success so please hold your heads up high and be proud of what you have achieved,” the directors wrote.
However in a statement issued to SPP, the Department of Energy and Climate Change argued that subsidies should not be used to prop up industries.
“We continue to support the renewables industry, but for this to be sustainable long-term it needs to be driven by competition and innovation, not subsidies. As the renewables sector advances, the cost of technologies such as solar has fallen and therefore so has our consumer funded support,” a department spokesman said.
But the extent at which Solarlec’s sales are said to have declined will lend weight to detractors of the new feed-in tariff regime who argue that the rates were cut too swiftly for businesses to adequately prepare.
SPP understands that prior to the FiT cuts the business was installing an average of 180 systems per month, and Solarlec is understood to have even recorded one of its strongest Januarys to date as consumers rushed to complete systems prior to the cuts. By April however monthly installs had fallen to around 30, an 83% collapse indicative of the figures seen across the industry.
Solarlec had too been highly regarded within the industry and reported impressive growth in previous years. The latest accounts filed on Companies House for the year ended 31 December 2014 showed revenues had risen by around 24% year-on-year to more than £11 million, resulting in a total group profit for the financial year of almost £390,000, a significant increase on the £23,000 profit recorded in 2013.
The company’s average monthly headcount had also risen from 75 to 84, resulting in the expansion of its office in Exeter in August 2014.
Most notably Solarlec was one of 14 installers to successfully win damages from DECC after a long-protracted court battle over cuts to the FiT in 2011. DECC unsuccessfully challenged the verdict last year, and it is understood that damages are due to be finalised later this year.
Speaking to Solar Power Portal this morning Rowbottom said that while 2015 was a more competitive year in the industry, the impact of the feed-in tariff cuts would be greater felt in the communities in which it operated in.
“The problem for me… is what is not seen is that in this five or six year period we have built up an infrastructure, trained people that enjoyed the job and we’ve put our time and investment to train these people up, only for [the government] to cut it [the feed-in tariff] so drastically.
“They just haven’t got an energy policy. If they could set it out with some clarity and give it a longer-term view it would help everyone run their businesses,” Rowbottom added.
The loss of 170 jobs from an already beleaguered residential solar industry will also be strong felt. It was understood in April that at least 2,000 installers had lost their jobs as a result of subsidy cuts, however this figure is widely anticipated to increase markedly as more businesses struggle to adjust to the reduced run rate of installations.
Back in April DECC insisted that solar must “stand on its own two feet” over job losses, representative of a marked change in tone when compared to more sympathetic treatment afforded to the UK’s domestic steel industry when confronted with the purported closure of Tata Steel’s facility in Port Talbot.
Meanwhile the Solar Trade Association and PwC continues to gather input from the industry on activity and job losses ahead of a report on the state of UK solar the two intend to publish later this summer. Today is the last day in which companies can contribute to that report, and feedback is encouraged here.