Jobs warning over solar energy changes
- 12 December 2011
- From the section Wales
For the past 18 months it has been a renewable energy success story.
Far more solar panels can be seen on homes and businesses now than a year ago, as companies and individual investors were attracted by the rate paid for solar energy converted into electricity.
The feed-in tariff was established before the last general election, and the current UK coalition government continued it.
But now it is halving the rate paid for small scale solar energy from 43.3p per kWh, to 21p per kWh.
Larger scale solar parks - under and above 50kW - were paid a different, less favourable rate.
Companies attracted by the 25-year guarantee saw it as a better investment than simply banking spare cash, and also as a way to offset increasing energy bills by selling green energy to the national grid.
Many companies will be affected after the Department of Energy and Climate Change (DECC) announced the tariff changes, which come into force on Monday - and BBC Wales has spoken to two of them.
Andrew Padmore, chief executive of Egnida, a Cwmbran-based green energy company, said: "The timing is very difficult and I think to take all the confidence away from the industry at this time and particularly from the small and medium sized enterprises, of which we have a large amount in Wales.
"Politically this is a difficult one because the industry has been crying for a reduction in subsidies for about six months, there's no disagreement there.
"But the way things are handled, and the timings, really do have the impact of making the industry struggle when it's a time when we should be trying to create jobs."
'Depth of cuts'
Filsol Solar Ltd specialises in solar photovoltaic (PV) panels and solar water heating.
The company has been based at Ponthenri Industrial Estate in Carmarthenshire for around 30 years, but now faces losing a sizeable chunk of its 22 staff.
"For our business, the biggest blow was the immediate loss of £2m of turnover," said managing director John Blower.
"The speed and depth of the cuts really kicks the legs away from businesses like ours and have left us with very little time to work this through.
"It's likely the changes in the size of the business will have to be fairly significant - perhaps 25% of the workforce we will have to look at losing."
Mr Padmore uses Egnida's website to criticise the UK government's handling of the consultation and says legal action is now in progress.
"It appears that most of the country has now joined in with sending a message to Cameron that the government's behaviour is completely unacceptable," the website says.
It adds that "strong representations have been made by companies .... as well as Friends of the Earth, the Town and Country Planning Association, The Federation of Small Businesses and a collection of Conservative, Labour and Liberal Democrat council leaders".
The Conservative-Liberal Democrat government has argued it inherited the feed-in tariff system from Labour.
It argues there are still incentives for individuals and companies to use solar panels - and be guaranteed a good return for 25 years.
The minister in charge of energy, Charles Hendry MP, said: "I think what we have done is to put right a bad system. This was based initially on a presumed right of return of 5%.
"Because the last of the technology has come down so much, people are getting a rate of return on the investment of over 10%, tax free for 25 years, put on everyone else's electricity bills.
"That's simply unaffordable."
Possibly, huge new solar farms - similar to Rhosygilwen in Pembrokeshire or the 5MW solar site at Llancayo near Usk - are less likely in future as both were opened before any changes to the commercial tariff last August.
But some companies are still interested in smaller sized solar parks of between 40 and a 100 solar panels, powering 30, 40 or 50kW of electricity.
And such has been the rush to complete deals before the deadline, several solar parks have been completed without planning consent.
These businesses will need to apply for retrospective approval.
Eifion Bowen, the Welsh Local Government Association consultant on planning, said: "There is a risk, if companies carried out development without planning permission.
"There is a provision for retrospective applications but it could be turned down, and each local authority will look at each case on its own merit... and balance the policies that support renewable energy against any impacts on sensitive landscapes."
Two weeks before Christmas, there is an all-out effort of companies such as Egnida and Filsol to supply and fit solar panels before the tariff changes.
They now have to plan for a less certain future.
Egnida says up to 50 apprentices will not be taken on, while Filsol says it will have to lose between five and 10 people and will no longer recruit 10 staff.
The Renewable Energy Association says the biggest impact of the change will be on employment, with an estimated 11,000 and 29,000 jobs either at risk or likely to be lost across Britain.