The absurdities of the feed-in tariff review
I have met a number of officials from the Department of Energy and Climate Change (DECC) over the years and hold them in very high regard. Make no mistake, these are smart people we’re dealing with.
Which makes the recent Feed in Tariff (FiT) review all the more perplexing.
Government is proposing to place a cap on the cost of any future deployment of solar under the FiT. If events over the course of the consultation period indicate that this cap will be breached, government proposes to close the generation tariff to new entrants.
But at the same time it has created the perfect conditions for a ‘gold rush’ by announcing that the tariff payments will be cut by up to 87% in four months time (January 2016).
A kind of self-fulfilling prophecy has been formed.
It doesn’t matter if industry provides evidence to support less draconian cuts to the proposed levels of the tariffs. The cap has been set at such a low level that even a modest spike in solar installations during the consultation will ensure it is all spent.
They say the definition of madness is to repeat the same actions again and again and expect different results. Well, back in 2011, DECC did almost exactly the same thing. It announced a 50% stepped reduction in the FIT. Installation rates exploded. Within six weeks the industry was installing solar at a rate nearly 16 times higher than in the run up to the announcement.
The same thing has already started. The dogs are already running. And this time there’s four months for people to get their installations registered on the FiT and claim the current payment levels. Naturally, this is what the press has focused on, with headlines stressing that people need to get in now if they want to make money from solar panels.
If we rule out stupidity, and assume that the big brains at DECC are able learn from past experience, then there’s only one conclusion to draw: DECC deliberately set things up for a gold rush, thereby creating an excuse to close the scheme entirely (or at least the generation tariff part, the export tariff appears to be slated to continue).
The most dismal part of this whole sorry episode is that under the guise of ‘controlling energy bills for hard working families’ the government has manufactured conditions to ensure that the costs of the FiT will be higher than ever, the country will get less solar installed, but at a far, far higher cost to those hard working families.
There was an alternative: the Solar Trade Association, published its Solar Independence Plan in the run up to the FIT review. Clearly no-one at DECC read it. It proposed a glide path to zero subsidy over the next four years by reducing the level of FIT payments to new entrants little and often. This would have avoided the inevitable spike in installations that will now occur. Because more of the installations would have occurred in the future (at low levels of feed-in tariff) it would have ensured that the country got more for its money.
Government should act quickly to prevent the boom and bust and protect consumers from the higher energy bills this ill-considered proposal will inevitably produce. The solar industry should demand the immediate withdrawal the consultation. DECC should try again.