The solar industry was left reeling – and 30,000 jobs thrown into jeopardy – when the Government announced plans last year to abruptly cut payments for any solar scheme completed after 12 December 2011 - 11 days before an official consultation into the proposals had even closed.
Shortly before Christmas – following a legal challenge by Friends of the Earth and solar firms Solarcentury and HomeSun – the High Court ruled that the Government's plans were illegal, saying Ministers could only alter the payments after going through Parliamentary procedures – allowing industry time to plan for change. Last week the Government challenged the ruling in the Court of Appeal, and a decision is due within the next few weeks.
On 31 October 2011, the Government published a consultation on Feed-in Tariffs (FITs) for solar photovoltaics (PV). This was in response to a substantial increase in deployment of PV, prompted by falling prices, with levels at nearly double the original projections for the first two years of the scheme. The consultation set out proposals for responding to these developments, which were putting unsustainable pressure on the budget available for FITs.
In a ministerial statement issued today, the Energy Sectretary, Chris Huhne, said: “We continue to stand by our original proposal. However, I know that the uncertainty while we await the Court’s decision is difficult for the industry. A retention of the 43p tariff could also create substantial risks to the FITs budget if our appeal is unsuccessful. For these reasons, we believe it is prudent to bring forward our decision on one aspect of the consultation: the proposals for new solar PV tariffs”.
Huhne revealed that DECC was laying before Parliament today some draft licence modifications which, subject to the Parliamentary process set out in the Energy Act 2008, makes provision for a reduced tariff rate (from 1 April 2012 onwards) for new PV installations with an eligibility date on or after 3 March 2012.
“If the Court finds in favour of the Government’s appeal, we intend to stand by all our consultation proposals, including an earlier (December) reference date, subject to the Parliamentary procedure and consideration of consultation responses. It is very important that we reserve this as an option because these 43p payments will take a disproportionate share of the budget available for small-scale low-carbon technologies. We want instead to maximise the number of installations that are possible within the available budget rather than use available subsidy to pay a higher tariff to a smaller number of installations,” he said.
The new generation tariffs set out in the draft licence modifications being laid today are set out in the table below and would apply for all installations with an eligibility date on or after 3 March 2012.
“At last the Government is taking steps to sort out some of the uncertainty that's crippling a thriving UK industry – planned cuts will at last allow solar firms to start planning for the future,” commented Friends of the Earth's Executive Director, Andy Atkins. "Solar payments should be cut in line with falling costs – but by trying to rush through payment before the consultation closed Ministers created a shambolic mess that threatens 30,000 jobs and the future of the industry.”
Atkins’ view was shared by Seb Berry, head of public affairs at Solarcentury, who called on the Government to rethink the spending cap for the feed-in tariff scheme.
"The Government is taking an important step today to restore some certainty to the PV market in the short-term, but it is no more than that," was quoted as saying by Business Green. "The elephant in the room for all FIT technologies, not just PV, remains the Government's decision to impose an unrealistic cap on the FIT scheme in 2010. Until that fundamental issue is addressed by the "greenest Government ever" what we have today is no more than a temporary albeit welcome step forwards."
Friends of the Earth is also calling on Ministers to boost certainty for solar by using the multi-million pound tax revenues generated by solar firms – enabling more homes, businesses and communities to switch to clean British energy. "Minsters must urgently use the millions of pounds in tax that solar firms generate to safeguard this industry and the jobs and businesses it has created. We must do more to protect cash-strapped families from soaring fuel bills - that's why we're campaigning for the Government to fix our broken energy system and enable more people to plug into clean British energy,” Atkins added.
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