Solar companies have reacted with dismay at Government plans to impose on-going cuts to the Feed-in Tariff (FiT) for solar electricity this year, saying they will be too deep and too frequent for the industry to be able to cope with.
The
Department of Energy and Climate Change (DECC) published a series of measures yesterday which it said would improve the
FiT and mean nearly four million homes across the UK would benefit from
solar by 2020. But to meet this target, DECC is cutting the FiT from April this year to 21 pence per kilowatt hour from 43 pence for domestic-scale solar photovoltaic and proposing to cut it to 13.6 pence in July. There would then be on-going six-month reviews, it proposed yesterday in a new consultation exercise.
But David Hunt, director at Northwest-based
renewable energy solutions firm Eco Environment, warned the cuts would be disastrous for the solar industry.
"A reduction to a tariff as low as 13.6 pence in just a few months’ time is the equivalent of Armageddon for the solar industry," he said. "There is simply no way that product and installation costs will drop that much in such a short period of time to make such a low tariff rate economically viable."
Howard Johns, managing director of Southern Solar and spokesman for the solar industry added: "It’s another smashing of the tariffs for an industry that is already shaky […] It will mean a massive drop in the size of the industry. Ministers are saying they will create jobs – maybe in three or four years’ time –but right now we are facing redundancies."
"Tall order"
And Gaynor Hartnell, chief executive of the Renewable Energy Association (REA), which represents many solar companies, welcomed the Government’s step to try and "stabilise" the FiT, but questioned whether the Government had got its figures right.
"The ultimate aim should be tariffs that deliver a reasonable and stable rate of return and which fall in line with cost reductions in technology," she said. "Whether the Government has got those calculations right, is another matter. The solar tariffs fall so steeply that by July this year they could be lower than those for wind and hydro. It is a tall order."
'Free' solar
Other solar firms have raised alarm at changes announced yesterday that affect the tariff for 'multi-installation’ solar PV, suggesting they will kill off 'free’ solar provision for householders that can’t afford the upfront cost of solar kit.
DECC said that from April 1, new 'multi-installation’ tariff rates set at 80 per cent of the standard tariffs will be introduced for solar PV installations where a single individual or organisation is already receiving FiTs for other solar PV installations.
"The new so called 'aggregator’ (multi-installation) tariff includes companies who provide free solar to individual, private home-owners," HomeSun ceo, Daniel Green, said.
"DECC justified this new lower tariff by saying that companies who own many installations have economies of scale – only having to deal with one multi-home owning landlord and being able to install several homes on the same street on the same day. However, this is simply not true for free solar for private, individual homes and DECC knows it."
Companies offering households and businesses 'free solar’ make their money from the returns on investment from the FiT by installing and maintaining systems on people and businesses’ roofs and premises free of charge while enabling their customers to get green energy and to cut their energy bills without any upfront costs.
"We agree with DECC and accept multi-home owning landlords should have a lower tariff but why punish the majority of the population who don’t have multiple homes and don’t have thousands of pounds to invest for years in a solar purchase" said Green.
Step forward
But Juliet Davenport, ceo and founder of green energy supplier Good Energy, said overall the FiT changes were "a step forward.
"The industry has been asking for more clarity, and the government has moved to provide that.
"The rate changes proposed for solar PV are a reflection of the well known problems with the FIT budget and it will take time to fully digest what they mean. The important thing is we now know how tariffs are going to change in future, helping give investors greater certainty."
Robert Goss, managing director of renewables firm Conergy UK, said yesterday’s announcement by DECC was "a very good day for British solar.
"There will be a boom in May and June as people look to complete installations before the June tariff reduction, with returns of seven to nine per cent. As material costs are going up, panel prices can't come down any further, but there is capacity for efficiencies in installation that will ensure good returns thereafter."
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