INDUSTRYPOLICY
n April last year the UK government introduced a FiT scheme to stimulate growth in the UK solar industry and market place. The underlying aim was to help reduce fuel poverty by enabling domestic users to reduce their bills and dependency on national energy supply. Since that time an election saw a new government elected and promises related to the FiT introduction overturned and industry fears ignored. The new government is a coalition of two parties that have no lost love despite their similar origins. At first hand it would appear a mighty error by the government but there was more to the process than just money saving.
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The original Bill passed by the government was not a solar Bill per se, in fact was not even a renewable energy Bill. The decisions that allowed the UK FiT scheme were pushed onto an energy Bill that mainly focused on Nuclear Power and intense lobbying by some UK based companies and organisations saw a departing government pass through an expedient Bill that was subsequently revealed as one the most generous feed in tariffs in the world.
In fact the level of generosity, despite a finite money pot being announced, should have raised alarm bells for industry veterans as similar subsidies in other regions had led to a glut on subsidies and then a collapse of market potential with too many industry players and limited local consumption. Spain has been going through this in the last couple of years and it is telling that Spanish commentators were admonishing the industry for not learning from Germany’s similar errors. Despite the precedents the UK industry behaved as if they had scored the jackpot and despite government warnings as early as September that the level of proposals were unsustainable there has been a continued global push suggesting the local market could grow to as much as 500MW this year. This unlikely figure now looks disingenuous in light of details of the process that have been revealed.
The impact of the introduced subsidy was immediate to see and overseas companies began to flock to the region and collectively poured millions of pounds into setting up UK operations with the promise of easy profits from large scale solar projects. Plans were drawn up for solar farms, councils signed contracts and farmers eyed up idle land. All were encouraged by companies keen to expand into the UK market and the promised level of subsidy and the promise of time before review saw increased activity across the country with the UK tipped to become one of the key global markets.
What a difference a day makes From the moment Climate Change Minister Greg Barker announced that the UK Government was proposing to slash feed-in-tariffs (FiTs) for larger solar power developments up to a massive 70% the response from the solar and PV industry was immediate and unfavourable. Both the previous and incumbent Government had led investors to believe that the tariff would not be tampered with before a review planned for 2013.
“The future of Britain’s development of solar energy has been totally destroyed,” said Ken Moss, the CEO of mO3 Power, a UK solar developer. “At a stroke, all solar developments above 50kW have been rendered totally non- financeable. We had an opportunity to develop another renewable of low-carbon energy alongside wind and nuclear. That opportunity has been wiped out,” he said.
Under the Government proposals, which are subject to an eight week consultation, FiTs payments for solar developments over 50kW will be cut back and the drop off is steep from the outset. The largest reductions will apply to solar development between 50kW to 5MW. The standard size for a factory or farm-based scheme. These new recommendations could become law as early as 1st August. The fast track review leaves little time for industry or community response and there is no doubt that the review mishandling by the government has left a sour taste for investors and creates a danger of scaring foreign investment out of future renewable schemes if the rules can change so readily and with such impact. At the recent Solar UK Conference held in London, James Beale of UK Trade and Investment commented that investors were likely to lose millions of pounds because of the changes. The response and commentary from industry personalities was fast and furious claiming the
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www.solar-pv-management.com Issue V 2011
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