The Coalition Government makes horrendous strategic mistake over Solar

The nervously-awaited Fast Track consultation on the Feed-In Tariffs (FITs) was published today.  There have been impressive cost reductions in solar PV since the policy was introduced, last April, but this was in the context of a significant new industry establishing itself.  Critical size is needed to achieve price reductions, and that had been happening.  Before the announcement of the review, the REA estimated that 17,000 new solar jobs would be created by the end of 2011.

Solar PV is the fastest growing technology in the world, and the dominant renewable installed across Europe last year.  The proposals published today reduce the tariff schemes for roof-mounted schemes of over 50kW by 39 – 49%, making them totally unviable.  Many of these are community and SME projects with tremendous popular support.

The tariff for standalone schemes has been reduced by over 70%, with no transition arrangements. 

There is disbelief within the industry that the Government has totally undermined the PV sector without having first properly understood its potential.

Gaynor Hartnell, Chief Executive of the Renewable Energy Association said

“Larger PV projects are cheaper, and have a major role in driving down costs.  We don’t want boom and bust in this sector either, but pulling the rug out from under the feet of those that have ventured into this market was precisely the wrong response. The UK will return to the solar slow-lane.  It’s as good as a retrospective change and that does untold damage to investor confidence.  It’s not acceptable and we will fight it.”

Ray Noble, the REA’s PV specialist said

“This is far worse than anticipated.  This industry has been strangled at birth”

Howard Johns, Chairman of the Solar Trade Association said

“The solar industry is one of the genuine good news stories in the UK today, providing both jobs, a new green industry and importantly some hope.  Crushing it at this time is a serious strategic mistake but inevitable when it appears to be Treasury, not DECC, dictating energy policy.  Not only is solar very popular, it is fast to deploy and inherently safe.  We know that DECC can be visionary – it has been on renewable heat – it is in the public interest to apply similar vision to solar to reap the huge benefits of this technology.”

REA released a briefing today showing the exceptional cost reduction pathway of solar PV over 20 years.  The briefing also shows that DECC’s fossil fuel price projections are unrealistic.  By over-estimating the cost of solar and underestimating the cost of fossil fuels the value of investing in solar has been seriously miscalculated.

REA and STA represent over 350 solar companies many of whom are already in difficulty following a destabilising and messy review process.  The announcements today will damage the business plans of many members. 

REA’s briefing sets out 8 key reasons why the UK’s policy of sitting back and letting other countries take the strain of investing in solar wrong.

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