Cuts to solar will damage public revenues and hinder green innovation
ClickGreen
15th September 2015
The Renewable Energy Association has released data showing that cutting the Feed-in Tariff for the UK’s renewables industry could result in a net loss to the Treasury, and to the UK taxpayer equal to the entire proposed budget for supporting the scheme in the next three years.
The analysis was released at the same time as the REA and other leading trade associations express deep concern about the “short-sighted cuts” imposed by Government.
The REA has estimated that if the proposals are adopted and the Feed-in Tariff cuts to the solar industry result in 15,000 job losses then this will represent a net loss to the taxpayer of £94 million in terms of lost tax and National Insurance revenue, and welfare payments, which is as much as proposed budget cap until the end of the incentive.
This figure does not include loss of Business Rates for local councils and VAT and Corporation Tax income to the Treasury. The 15,000 job loss assumption is conservative given the projected 25,000 job losses expected by some in the sector.
The REA says it agrees with the Government’s intentions that the UK solar industry should be able to deploy without Government support. A joint REA and KPMG report this year indicates that certain solar installations will reach grid parity before 2020, provided there is continued support under the Feed-in Tariff scheme.
However, the REA says it is disappointed that after a decade of Government support leading to dramatic technological improvement and cost reduction, the solar industry is now in danger of being tripped at the last hurdle when it is so close to standing independently.
Additionally, the development of the solar industry spurs the development of other sectors. The UK is a growing market for storage technologies at the household, commercial, and grid levels. The ongoing cost reduction and efficiency improvements in battery storage make it a substantial growth market in the UK in the coming five years. Industry chiefs argue that slowing the installation level of solar slows the introduction and development of this market.
James Court, Head of Policy & External Affairs at the REA, commented: “The Government’s sudden reversal of support for solar and other emerging renewables technologies ignores the substantial benefits that a healthy renewables industry provide to UK employment and the public purse.
“Our recent solar report shows how the technology can reach gird parity but this relies on continued Government support.”
Frank Gordon, Senior Policy Analyst, REA: “Not only do the Government proposals risk a damaging boom and bust scenario which might see the scheme shut early, but they also damage the prospects for energy storage, which ministers have said they support. Storage and renewables together will aid local communities to make independent decisions around their energy supplies and save money. Cutting government support now jeopardises this innovative future.”
The REA has estimated that if the proposals are adopted and the Feed-in Tariff cuts to the solar industry result in 15,000 job losses then this will represent a net loss to the taxpayer of £94 million in terms of lost tax and National Insurance revenue, and welfare payments, which is as much as proposed budget cap until the end of the incentive.
This figure does not include loss of Business Rates for local councils and VAT and Corporation Tax income to the Treasury. The 15,000 job loss assumption is conservative given the projected 25,000 job losses expected by some in the sector.
The REA says it agrees with the Government’s intentions that the UK solar industry should be able to deploy without Government support. A joint REA and KPMG report this year indicates that certain solar installations will reach grid parity before 2020, provided there is continued support under the Feed-in Tariff scheme.
However, the REA says it is disappointed that after a decade of Government support leading to dramatic technological improvement and cost reduction, the solar industry is now in danger of being tripped at the last hurdle when it is so close to standing independently.
Additionally, the development of the solar industry spurs the development of other sectors. The UK is a growing market for storage technologies at the household, commercial, and grid levels. The ongoing cost reduction and efficiency improvements in battery storage make it a substantial growth market in the UK in the coming five years. Industry chiefs argue that slowing the installation level of solar slows the introduction and development of this market.
James Court, Head of Policy & External Affairs at the REA, commented: “The Government’s sudden reversal of support for solar and other emerging renewables technologies ignores the substantial benefits that a healthy renewables industry provide to UK employment and the public purse.
“Our recent solar report shows how the technology can reach gird parity but this relies on continued Government support.”
Frank Gordon, Senior Policy Analyst, REA: “Not only do the Government proposals risk a damaging boom and bust scenario which might see the scheme shut early, but they also damage the prospects for energy storage, which ministers have said they support. Storage and renewables together will aid local communities to make independent decisions around their energy supplies and save money. Cutting government support now jeopardises this innovative future.”
Like this story? Please subscribe to our free weekly e-newsletter at the top of the page for more content like this.
