The move comes only weeks after Chris Huhne, the UK’s Energy Secretary, slashed the subsidy homeowners get for installing solar photovoltaic panels and generating their own power. As we reported last month, under the Department of Energy and Climate Change’s new regime, the subsidy will more than halve on 12 December.
Perhaps more damagingly for the sector, however, is that homeowners will also not be able to benefit from the new subsidy unless their homes have an A rating for energy efficiency. Most of the UK’s housing stock is old and many homes do not even reach a C rating, meaning that homeowners will have to first spend large sums on insulating their homes, before even entertaining the idea of installing a solar array to generate income from the feed-in tariff.
According to the Sun newspaper, one Carillion insider said: "We're being screwed over."
The Guardian newspaper, meanwhile, reported today that the company had begun a statutory 90-day consultation period in its energy services division, as the company fears the change in tariff could pose it problems.
Seven months ago, Carillion bought the energy services specialist, Eaga, which was managing Homesun, and since then had been investing considerable sums to develop its solar panel operation. The company envisaged installing arrays on around 30,000 homes this year, for local authority and social housing. Carillion employs 50,000 staff around the world, and while the figure of 4,500 was banded about yesterday, Carillion is now saying it is too early to speculate on what the final figure would be.
The Guardian quoted Carillion today as saying: "As a result of the government's changes to feed-in tariffs for solar photovoltaic installations, Carillion Energy Services proposes to accelerate and widen [its restructuring] programme. Our solar business was growing strongly, but we expect the government's plans for much larger and earlier than expected cuts to feed-in tariffs to reduce the size of the solar PV market significantly. In order to react to the effects of this on our business, we have launched a statutory 90-day consultation process with our people on how we can reshape our business.”
"Until the consultation process is complete it is too early to speculate on how many people will be affected, especially as we will explore all opportunities for redeployment,” added the statement.
Thousands of jobs at risk
Industry experts estimate the decision to slash the tariff, which Homesun described in a press release last month as “poorly thought-through”, has put between 11,000 and 25,000 jobs across the country at risk overnight. HomeSun has filed an injunction against the coalition government to force them to turn the decision around.
Daniel Green, CEO of HomeSun, said: “There is a desperate need for jobs in the UK and feed-in tariffs has created 25,000 jobs and 3,000 enterprises. These jobs are nationwide and performed by young and old. It seems madness to be cutting this growing industry off at the knees and we are going to fight it all the way to court on two counts:
1. that the government consultation is a sham because it has already decided to change the tariff from 12th December. Making decisions before the end of the consultation period on 23rd December indicates that the decision is a foregone conclusion and makes a mockery of the consultation process.
2. that the 12 December cut-off date is irrationally short, since it fails to provide the industry with reasonable time to re-orient their businesses to a reduced tariff.”
“The coalition government’s argument is that at current levels the feed-in tariffs budget will run out too soon, but feed-in tariffs generates in excess of £280 million from taxes and VAT, whereas the cost has only been £220 million. That’s a net profit of £50 million but it seems that the Treasury and DECC are not talking.”
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