We’re disappointed to report that it’s been a rather downbeat quarter for the renewables industry, with a myriad of policies reducing or removing support and threatening to immobilise the historically attractive UK renewables market.
The proposed removal of support for solar schemes is the second blow to the industry following the Government’s recent decision to end onshore wind farm subsidies.
Under the proposals announced on 22nd July, small-scale solar projects of between 1MW and 5MW of generating capacity will cease to be eligible for support under the renewable obligations (RO) regime as of April 2016, a year earlier than planned. In addition there will be a reduced level of support for projects seeking eligibility up to that date.
These proposals were closely followed by a further announcement proposing to cut the feed-in-tariff for new rooftop solar panels generating power by almost 90% from January 2016.
The main reason cited for the proposed cuts is affordability - specifically the cost to consumers’ energy bills. Yet recent research by the Solar Trade Association indicates that it would add only £1.70 to household bills in 2020 to deliver over a million more homes with solar. Furthermore, onshore wind and solar have been reported as being among the cheapest UK energy sources.
This comes just months after Energy Secretary, Amber Rudd, called for a solar revolution, “I want to unleash a new solar revolution - we have a million people living under roofs with solar panels and that number needs to increase."
The news has left the solar industry reeling whilst many consumers are also baffled by the sudden U-turn in policy.
Renewables are generally popular, with a poll by the Cooperative this month revealing that almost 8 out of 10 (78%) of British people want Government to enable investment in local renewable projects within 2 miles of their homes. Solar proved the most popular form of electricity generation with 30% saying it would be their preferred source of energy and 65% saying they would support a local solar farm. In addition to businesses, it is clear that local communities and farmers will also be hit by the announcements, with many being prevented the opportunity to generate their own renewable power and cut their energy bills.
The predicted impacts will be significant and include:
- An estimated 20,000 job losses (DECC)
- Collapse in investment in Britain’s renewable industry – Ernst and Young have reported that the UK has dropped out of the top ten of its renewable energy country attractiveness index (September 2015) for the first time.
- Estimates that more than 1GW of solar power would be prevented from being installed each year to 2021 (Friends of the Earth). The Government’s own impact assessment indicates that almost a million renewable installations will be prevented from happening over the next five years.
Pressure is mounting on the Government to rethink its plans to cut support. A coalition of energy firms, investors and trade bodies representing the energy sector, including Panasonic, Energy UK, the Solar Trade Association, IKEA, the National Union for Farmers and the Cooperative have published a statement calling on the Government to urgently reconsider the proposed changes.
In addition, Amber Rudd has faced widespread criticism from MPs across all parties, who are worried about the effects on their communities in terms of job losses. This includes Boris Johnson who has rebelled against his own Government party message stating that he is ‘very concerned’ about the impact the FIT cuts will have on the solar industry.
The second reason cited by the Government for the proposed cuts is that they consider that falling costs means that many renewables projects can survive without subsidies.
However the industry disagrees. Whilst many companies predict that onshore wind and solar PV could have been cost effective and subsidy free within the next few years, they consider that the proposed cuts are premature and will stall or prevent projects that would have helped get the market to that point and seriously damage the industry. We’ve already seen that effect first hand at Barton Willmore.
The jury’s still out on whether the proposed cuts will go ahead as currently planned, however it appears that Government has shifted its renewable energy policies for the foreseeable future. Gone are the references to renewables which are now replaced by ‘a low carbon future’, a subtle difference in wording which is likely to have a major impact for UK energy policy, strategy and investment. Yet again the UK is left without a long term, consistent and clear strategy.
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Renewables, Renewable Energy, Energy Mix, Solar Subsidies