The Government’s proposed halving of Feed in Tariffs and their deadline of 12 December created mayhem in what has been one of the very few burgeoning UK industries in these austere times. Our grumpy old man is seething at yet another example of the government having holes in its think tanks
If somebody in our business gets involved in dodgy dealings or incompetency, they could stand to end up on TV’s Rogue Traders or Cowboy Builders. When then can we expect Dominic Littlewood to be paying a call at the house of the holy that is the Department for Energy and Climate Change? That the government went flat out promoting a 43p Feed in Tariff (FiT) in order to propagate its green energy remit only to, just a few months later, halve that sum to 21p smacks of gross incompetency to me. If one of us did that with a customer’s quotation, we’d be hauled before a Trading Standards officer.
Don’t get me wrong, I understand the 43p tariff was unsustainable. But, how come I thought that from the outset and yet DECC’s experts didn’t? From my point of view it is the rate of change that is shocking. The FiT is/was too high, but only a fool would fail to see that slashing it in one fell swoop was going to cause panic in a young industry.
The outcome of this blundering is that a rapidly growing industry that already accounts for 30,000 jobs in Britain, faces an uncertain marketplace. This, just as the corner had been turned in terms of winning the hearts and minds of UK households about investing in solar PV energy.
Even Friends of the Earth, alongside two solar companies, threw its hat into this ring by challenging the government’s actions and forcing a hearing in the Court of Appeal. Friends of the Earth executive director Andy Atkins said: “These botched and illegal plans have cast a huge shadow over the solar industry, jeopardising thousands of jobs”.
There is a darker facet to this whole sorry episode. One of the aims is to ultimately achieve grid parity in pricing. Paradoxically, the FiT cuts will delay this by about three years. Cambridge Modelling, which has recently completed a report into the cuts, contests that at the 43p rate solar PV installations were set to attain grid parity with residential prices as early as 2016.
Cambridge Modelling also questions why the development of the UK’s solar PV industry efficiencies has not been considered by DECC in its consultation report. As a result of this omission, areas of savings for UK electricity consumers under the existing tariffs (more than £57m in 2020 alone) have been overlooked.
The level of reduction in national solar PV uptake under the new FiT will have a considerable impact on learning within the UK solar PV industry – in relation to installation costs, commercial efficiencies and labour force development. Therefore, the Cambridge Modelling study recommends that accounting in the government’s Comprehensive Review be corrected to include the cost savings associated with the domestic component of learning behaviour for solar PV. This is a key to sustainability for solar PV.
DECC cites the reduction in the price of solar PV installations as the key reason for FiT reductions. For this to be true, the cost of solar PV must have fallen by 50%. I accept in some circumstances this may be true, but the prices may be transient. Yes, global growth of solar PV has enabled equipment manufacturers to begin to gain cost advantages in mass production. But, this has mainly been the case in relation to the panels. The most commonly used panel technologies (thin film and polycrystalline types) rely on polysilicon material, which experienced an unprecedented drop in prices during 2011. Will the price of this material increase in future? That is almost certain. By how much will it increase? Well, that’s anybody’s guess! Hence the premise for the FiT cut is founded on uncertainty about the future pricing of solar PV installations – genius!
Dr. Mark Hughes of Cambridge Modelling concluded: “Our report recommends a more comprehensive approach to the determination of Feed in Tariff reductions, based on long-term price trends, to ensure steady and sustainable levels of growth in the UK solar photovoltaic industry.”
I agree Dr Hughes, but surely that requires a few patches to be applied over DECC’s leaky think tank.
