Reaction to Government response on fits consultation

Coalition Government’s announcement effectively kills solar industry above 50kW in the UK

The Coalition Government changes to FITs announced today, due to come into effect in August, effectively kill the UK solar industry for all installations over 50kW in size. 

Investments in major UK manufacturing opportunities, like Kingspan's insulate and generate solar roofing, are now in jeopardy, as investors move away from UK.  Cost-effective and accessible public schemes, in leisure centres, supermarkets and schools will be severely limited in future.  Innovative projects, like Enfinity's solar rail scheme in Belgium powering 4,000 trains, will be impossible in the UK without urgent intervention. 

STA Chairman Howard Johns said;

"The Coalition Government have got it seriously wrong on solar and given recent statements in the press DECC Ministers are waking up to this.   But Treasury have crippled DECC's ability to respond to major developments in solar and DECC itself hasn't got to grips with this technology. 

"Ironically crushing solar makes zero economic sense for UK plc because it will lose us major manufacturing opportunities, jobs and global competitiveness.  It also risks locking us in to more expensive energy options in future.  It is inexplicable that the Treasury can be allowed to damage energy and industrial policy by taking decisions without taking into account the bigger picture.  The Prime Minister urgently needs to intervene to prevent this calamity."

The UK Government is derailing solar, just as other major economies including China, Japan and Germany are moving solar to the heart of energy policy.  Recent research shows that solar will be competitive with grid electricity in major EU countries in less than five years and solar could easily generate more than 30% of electricity in the UK. 

Solar modules are now being produced in Asia for less than $1/W - and prices are forecast to continue to decline sharply.  Solar Trade Association is confident, given drops in polysilicon prices, that UK manufacturers can compete if they are given a strong and stable domestic market.  Solar Trade Association had forecast that 17,000 new jobs, mostly in installation, would have been created by the end of this year since the start of the scheme.

As a result of Solar Trade Association’s campaigning there has now been clear DECC acknowledgement that the role of solar needs rethinking - Energy and Climate Change Minister Greg Barker said in the Guardian last week;  "there is one clear message that I do agree with: that solar has far more potential than has previously been thought."

Responding to Solar Trade Association's alternative Solar Revolution Strategy the Minister went on to say, "we now need to think creatively about how we can engage commercial-scale solar as a more important part of the energy mix … we've got to find additional pathways – and that means changing the way that solar is perceived in the department."

However the current UK approach is to sacrifice the emerging solar industry and sit back while other countries invest in solar module price drops. There are several reasons why this represents poor decision making;

  1. -module costs are only around 50% of installed costs. Whatever the price of modules, UK companies must invest urgently in skills and installation infrastructure, or companies from overseas will do this for us losing UK jobs and tax revenue

  2. -delay means the UK risks missing out on major manufacturing opportunities, including in integrated solar roofing systems.  We are confident that with a stable UK market, UK manufacturers can compete with even Asian module producers

  3. -failing to anticipate a transformative technology like solar means the UK investing in more expensive long-term centralised infrastructure, with the risk of stranded assets as consumers switch to cheaper onsite power including solar in future

  4. -the damage inflicted on the solar industry has had serious knock-on consequences for investor confidence in renewables and the cost of borrowing

  5. -the UK needs to pull its weight in meeting EU renewable energy targets – last year electricity production from renewables fell as a proportion of total electricity in the UK

Howard Johns said;

"The FIT scheme has been hugely successful and it should be increased, not rolled-back. At least one Minister appears to be facing facts and for looking for solutions even though he's been boxed in by the Treasury. 

Solar Trade Association will take every available opportunity to work constructively with DECC.  But solar is now in a mess.  Many investors and project developers are walking away badly burned, and current Renewables Obligation support for solar is too low to prevent collapse.  We want to meet with Ministers to find a way forward as a matter of urgency."

A report by the Solar Trade Association last week showed that a UK solar revolution was affordable and could potentially provide savings for consumers, compared to the anticipated £110 billion spend on new centralised networks and power generation. 

Solar has been excluded from the government's Electricity Market Reform proposals, yet solar has the potential to be one of the cheapest power generation options and it can transform competition in the UK electricity sector.  The instability created by the FIT proposals has had a knock-on effect on investors confidence across the renewables sector.  [See CBI Report launched 8 June 2011].

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