Government threatens to close the Feed-in Tariff scheme for solar energy

by Search Gate staff. Published Thu 27 Aug 2015 12:07, Last updated: 2015-08-27
DECC consultation threatens to end the Feed-in Tariff scheme
DECC consultation threatens to end the Feed-in Tariff scheme

UK Energy Ministers have threatened to close the Feed-in Tariff (FiT) scheme to all new solar applications from January unless a sweeping package of cost-cutting rule changes are agreed.

The threat was contained within another Department of Energy and Climate Change consultation, published today, that it says will align the FiT “more closely… to other Government policy objectives”.

The proposed changes include a fresh set of reduced generation tariffs and a cap on new FITs expenditure of between £75-100m by 2019.

The consultation warned: “Government proposes that the only alternative would be to end generation tariffs for new applicants as soon as legislatively possible, which we expect to be January 2017, while keeping the export tariff as a route to market for the renewable electricity they generate."

Other planned changes include:

• Default degression for all technologies will be quarterly. Contingent degression will now be 0%, 5% or 10% for all technologies depending on deployment rate, and will be in addition to default degression

• Move from RPI-linked tariffs to a CPI-link for new installations

• FITs should not be extended to any other technologies

• Prevent extensions to existing installations from claiming FITs.

The REA warns the planned reductions means the rates for domestic solar are to be cut by 87% and commercial rooftops cut by up to 82%. It says the plans will savage an industry and drain demand for the technology.

The REA recently released a report on how the Government could achieve subsidy free solar and says today's policy announcement goes against all the recommendations and will have significant impacts to the future direction and damages the huge potential this technology has in the UK.

With these changes expected to take effect in January, the REA said the industry will now see a surge in deployment over the next four months as consumers and installers seek to avoid the cliff edge of cuts.

Head of Policy and External Affairs, James Court (REA) said: “Rooftop solar has to been seen as one of the key technologies for a decarbonised future, with consumers and businesses also gaining control over the centralised energy market, this is a phenomenally damaging and short sighted decision which sets back this goal significantly and will lead to higher costs in the medium to long term.

“87% is beyond the worst fears of many of our members, it is hard to see how homeowners or businesses could see solar as an attractive option for the foreseeable future following these disproportionate cuts.

“Solar has come down in cost so dramatically in the past five years and has grid parity in its sights, the industry feels like it’s having it’s legs cut away metres from the finishing line.”

Today’s announcement is the third damaging consultation in a summer of shock policy announcements that have thrown the British solar industry into turmoil.

Frans van den Heuvel, CEO at Solarcentury: “The proposed solar FIT cuts announced by DECC add to the calculated turmoil that the new Government has unleashed on the solar market since the election.

"In little more than three months, the Conservative Government has literally turned upside down the certainties which had characterised the UK renewables market and the cross-party consensus that underpinned it.

"If the consultation is enacted, we can expect to see a wholesale collapse in solar take up by homeowners and businesses – just at a point in time when most other countries are escalating their solar deployment having seen the dramatic impact the technology can make in tackling climate change.

"So much for Amber Rudd's promised "solar revolution" and the former Conservative energy Minister's pledge to put "rocket-boosters" under the non-domestic roof sector."

The Solarcentury chief added: "The rushed announcement of retroactive changes to solar support schemes, including the Renewables Obligation, since the election have been shocking and damaging, all the more so, since the Conservative Party's Election Manifesto was silent on these issues.

"Today's threat to close the feed-in tariff scheme altogether from 1st January 2017 trumps even all of those. At least our colleagues in the onshore wind industry knew what was coming from the clear Manifesto commitment to end support for onshore wind. But the truth is that remarkably, solar, by far the country’s most popular renewable technology, is being treated even worse than onshore wind.”

The DECC consultation explains: “We have already met our projections for 2020, as set out in the 2017 FITs Review, for deployment of anaerobic digestion, wind, and hydropower (including projections currently pre-accredited but not generating) and, we expect to be within our projected deployment ranges for solar PV by the end of 2015/16.

“Furthermore, the 2010 Impact Assessment on the Feed-in Tariff projected that we would reach 750,000 installations by 2020: by the end of July 2015, we had already reached over 730,000.”

However, the proposed changes were greeted with shock and disappointment by others in the renewable energy industry.

Mike Landy, Head of Policy at the Solar Trade Association commented: “The proposals put forward by the Government today, which will now undergo a period of consultation, would be hugely damaging for the UK solar industry and we are now consulting quickly with our member companies as to how to respond.

“We will provide a detailed response shortly, once we have considered the proposals in more detail. However, we regret that proposals to suddenly cut Tariffs combined with the threat of closure of the scheme next January will spark a massive market rush. This is the antithesis of a sensible policy for achieving better public value for money while safeguarding the British solar industry.”

Friends of the Earth energy campaigner Alasdair Cameron added: “From California to China, the world is reaping the benefits of a solar revolution, yet incredibly in the UK David Cameron is actually trying to shut rooftop solar down.

“These absurd solar cuts will send UK energy policy massively in the wrong direction and prevent almost a million homes, schools and hospitals from plugging in to clean, renewable energy.

“Of course the feed-in tariff should fall as solar becomes cheaper, but the government clearly plans to remove support entirely. This is politically-motivated, and will take away power from people and hand it back to big energy firms.

“Instead of championing fossil fuels, the Government should focus on developing the UK’s huge renewable energy potential.

“Policies like this will further undermine David Cameron’s credibility on climate change. World leaders meeting in Paris later this year will have every right to call him a hypocrite.”

Dr Doug Parr, Greenpeace Policy Director commented: "The government cannot pretend cuts to subsidies for the nascent solar industry are necessary to save families money whilst throwing much more money at propping up polluting coal stations.

"The timing couldn't be worse as the young and potentially booming solar industry is on track to go subsidy free but if these cuts happen, it will be too sudden, too soon and too dramatic. It is highly likely to irrevocably damage the domestic solar industry.

"The Treasury needs to get out of its 20th century mind set about backing coal and instead support new technologies and the sector that will provide jobs, lower emissions and create a secure future."

RenewableUK’s Deputy Chief Executive, Maf Smith, said: “It’s important that we all work to manage costs, but it looks as if the long term vision has been lost.

"The small and medium wind sectors are at one with Government in their desire to cut carbon at lowest cost to the consumer. But they can’t do this when Government makes sudden and damaging changes which undermine investment.

"What we needed in this Review was a clear vision for how we get to a point where cost effective, small-scale renewables are common-place, with all homes and businesses able to be part of a productive, vibrant low carbon economy. This Review is not about how we build that prosperous future but simply about short term politics and accounting.”

RenewableUK is also expressing concern about the speed at which Government is making these changes. Maf Smith continued: “We’re also concerned about the timing of this review. Only last month Government consulted on ending pre-accreditation. Now they are consulting on reducing tariff rates, and capping deployment.

"But such significant changes can’t be introduced within the proposed January 2017 deadline without hurting many businesses and individuals who have been investing in new projects. The next four months will turn the British energy market into a wild-west market with energy consumers stuck in the middle.”

Joss Blamire, Senior Policy Manager at Scottish Renewables, which represents more than 300 green energy businesses, said: “The proposals in the Comprehensive Feed-in Tariff Review are, quite simply, terrible news for homeowners, businesses, communities and those local authorities which have plans in place to develop renewable energy schemes.

“The levels of reduction in support announced today will severely curtail development of small-scale onshore wind and solar projects and endanger jobs and investments across the country.

“The cuts could also spell the end for much of the hydro industry, which has enjoyed a recent renaissance but relies more heavily on Government support because of the length of time taken to develop projects and the sector’s high capital costs.”

Mr Blamire told how renewables developed under the Feed-in Tariff scheme have brought multiple benefits – all of which are now in jeopardy.

He added: “Support for small-scale renewable energy has enabled the public to share in the recent success of the green energy industry, saving on their energy bills and doing their bit to mitigate carbon emissions from our power sector.

“FiT-scale renewables have allowed both rural and urban businesses to grow by taking control of their own energy use and insulating them from the volatile, uncertain costs of imported fossil fuels. Reducing that support so far, and so quickly, could be hugely damaging.”

The deadline for consultation responses is October 23, 2015.

Sign up to receive Search Gate's FREE weekly newsletter with a review of all the latest green news and views

Comments about Government threatens to close the Feed-in Tariff scheme for solar energy

There are no comments yet on Government threatens to close the Feed-in Tariff scheme for solar energy. Be the first to leave one, enter your thoughts below.

Post a comment

Alert me of replies

You have characters left


Latest issue of GreenWeek

Powered by SEO Rockstars
© All Rights Reserved.