More government grey skies for solar power?

  • 3 November 2011
  • From the section England
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Photovoltaic panels Image copyright Science
Image caption Photovoltaic panels provide a way of converting the sun's rays into electricity

Geothermal Engineering's receipt of £6m from the Regional Growth Fund this week was the second bit of good news for Cornwall's renewable energy community in less than a fortnight.

A few days earlier the government doubled the financial support available for English tidal and wave energy projects to match that offered in Scotland.

The pioneers behind the Wave Hub off the north Cornish coast entirely share the Energy Secretary's view that the technologies they are developing "desperately need help to reach the market".

FiT system

Chris Huhne and his department have been very much less popular with the solar industry over the last 12 months.

Cornwall Council's much trumpeted £1bn solar power gold rush was strangled at birth earlier this year when the government announced drastic pruning of the Feed-in Tariff (FiT), the financial support mechanism on which it depended.

The solar industry had previously heaved a collective sigh of relief last autumn when the government eventually decided to retain the FiT system inherited from Labour.

But it quickly became clear that ministers were determined to reduce the FiT levels applicable to larger scale installations capable of generating 50KW or more (precisely the kind of developments that Cornwall Council had based its grandiose predictions on).

The government argued that take-up had been greater than expected and that the FiT had never been intended for large commercial outfits (which is disputable given that the rules clearly made them eligible).

In short, as the Energy Secretary told me bluntly in February, he simply wasn't having "subsidy farmers" gobbling up the lion's share of the FiT.

The planned reductions were put out for consultation in the spring, with some hoping that the government might at least revise the 50KW threshold upwards.

Having duly considered the responses, though, the ministers stuck to their guns.

By June it was clear the Cornish gold rush was going nowhere fast.

Which brings me back to this week.

Grey skies?

On the very day that the government committed £6m to Cornwall's geothermal pioneers, ministers also announced (though with rather less of a fanfare) that the solar industry should brace itself for further substantial cuts to the FiT.

The latest proposals - subject to consultation between now and 23 December - would see further reductions to the tariff for installations generating 50KW or more.

But they would also take an axe to the smaller schemes - the worthy and rightful recipients of FiTs (as opposed to the commercial big boys) according to the government's script so far.

All of the smaller installations would see their tariff levels cut by around half.

Image copyright PA
Image caption The latest proposals would see further reductions to the tariff for installations generating 50KW or more

Energy Minister Greg Barker insists urgent action is needed to stablise the solar industry and to protect the wider Feed-in Tariff scheme:

"My priority is to put the solar industry on a firm footing so that it can remain a successful and prosperous part of the green economy, and so that it doesn't fall victim to boom and bust.

"The plummeting costs of solar mean we've got no option but to act so that we stay within budget and not threaten the whole viability of the FiTs scheme.

"Although I fully realise that adjusting to the new lower tariffs will be a big challenge for many firms, it won't come as a surprise to many in the solar industry who've themselves acknowledged the big fall in costs and the big increase in their rate of return over the past year."

Solar surge

According to the government a recent surge in households installing solar PV has threatened to break the budget.

It says there were over 16,000 new solar PV installations in September alone - nearly double the number installed in June.

The Minister claims that - left to their own devices - FiTs for solar PV would be costing consumers £980 by 2014-15 whereas this intervention will cut that cost by around three quarters. (It's worth remembering that the Feed-in Tariff is subsidised via our electricity bills).

Barker is right to say these cuts won't have come as a surprise to people working in the industry, some of whom feared they might be even more severe.

That hasn't made the news any more palatable to most of them though Gabriel Wondrausch, managing director of Exeter-based SunGift Solar, offers a dissenting judgement:

"The current Feed-in Tariff levels have been responsible for the huge growth in the number of solar panels we are seeing around the UK.

"They've helped companies like mine - and the solar PV sector as a whole - grow at an immense pace, which has been great for businesses, the economy, and even more importantly for the environment.

"However, I firmly believe that now is the perfect time to stabilize the industry and ensure that it doesn't grow out of control."

Speed of change

What he and a lot of other people are surprised and infuriated by, though, is the new deadline set for schemes hoping to qualify for the current tariff levels.

To receive the present much more generous subsidy, schemes will now need to be ticked off by December 12 - rather than 1 April 2012 as expected.

Potentially devastating news according to Merlim Hyman, the managing director of the renewable energy umbrella organisation Regen SW:

"The speed of these changes will be very damaging to businesses that have invested in good faith to meet the growing demand for renewable energy - thousands of jobs are at risk."

Regen SW cites well advanced projects in Cornwall and Dorset which now face abandonment if the deadline is brought forward.

The failure of the county council-led scheme in Dorset would apparently mean the loss of publicly funded pre-installation investment worth £100,000.

Mission impossible?

Parishioners at St Andrew's church in Plymouth say they face a similar problem.

Their project to install solar PV panels on the church roof meant negotiating a series of planning hurdles posed by the local authority, English Heritage and the Diocese of Exeter.

With this finally behind them - and £2,000 invested - they were hoping, with a prevailing wind, to make the original deadline.

Doing so by December 12 would, they say, be impossible.

They - and others - will now be lobbying hard during the consultation period to persuade the government to relax its timetable.

However, it won't have escaped their attention that the deadline for old-style applications falls 11 days before the consultation closes.

This may well underline the government's concern that solar FiTs are getting out of control and need to be reined in as a matter of urgency.

But it also looks slightly like putting the cart before the horse.