All eyes have been on the UK in recent months as the Government’s decision to cut feed-in tariff (FIT) rates for installations greater than 50 kilowatts this summer threatens to destabilize the country’s fledging solar industry’s On April 2010, the Department of Energy and Climate Change (DECC) launched a suite of renewable energy FIT’s including solar PV and thermal, wind and renewable heat, for installations up to five megawatts. Both FIT incentive schemes and renewable obligation certificates (ROC) – a subsidy pot intended for large-scale renewable energy installations – were developed and introduced under the Labour government in power at the time.
Following a fast-track review under the current Conservative-Liberal-Democrat coalition government, as of August 1 2011, all solar installations between 50 kilowatts (kW) and five megawatts, qualifying, will have FIT rates cut by up to two-thirds.
The present government’s mission to cut the deficit as part of Britain’s recovery from the recession is commendable, but the FIT rate cuts have constrained growth and employment in the solar industry. Businesses are by and large conservative creatures and in most cases only take the decision to expand if they can be assured of clear, solid long term growth prospects for the industries they operate in. Many solar businesses, such as installers, are specialist companies and cannot simply turn their hand to something else.
Says Peter Creasy, Chairman of Applied Sustainable Energy (ASE), which designs, supplies and installs large-scale solar photovoltaic installations, “the main drawbacks of this decision by the government, if it goes ahead, are the lost jobs, redundancies and hire freezes”. Like many solar businesses, Creasy’s company has been forced to revise all plans to recruit and hire after, as he puts it, “having been encouraged by the last government to get into this industry”
A DECC spokesperson says “We did of course take the impact of jobs into account. The decision to reduce the tariffs for large-scale solar is not is not one that has been taken lightly…Without urgent intervention, the scheme would have been completely overwhelmed within a very short period of time, hence the need to act now.”
While many UK solar industry entities do not argue with the government’s decision to come up with a preventative measure to curb large-scale PV investments from overwhelming the scheme, the cap at 50Kw is arbitrary, defining any installation above this amount as large-scale. Community housing projects, those types of projects the government is seeking to protect with its decision, are jeopardised unless they concern installing panels on 15 properties at most, which is about how many houses 50 kilowatts equates to. Few would deny a one or two-megawatt solar park is large-scale, but is 55kW, 60kW, 100kW or 250kW really in the same league?
There is also the possibility of the governments deciding that solar projects could be eligible for subsidy under the ROC scheme.
