UK solar industry rallies to seek way round FIT cuts30. June 2011 | Top News, Markets & Trends, Global PV markets, Industry & Suppliers | By: Sara Ver-Bruggen
A call to arms by the UK solar industry in the face of the government’s decision to cut feed-in-tariff (FIT) rates for installations larger than 50 kilowatts (kW) gathered momentum yesterday as politicians, solar businesses, and a diverse mix of supporters and would-be users of photovoltaic technology met in London.
Ostensibly the discussions, organised by the Solar Trade Association (STA), which has recently beefed up its presence by joining forces with the Renewable Energy Association (REA), attempted to focus on opportunities in the UK, highlighting that rapid price fall trends in module costs means that grid parity could be reached in the country as early as 2017.
In her opening remarks, Gaynor Hartnell, CEO of the Renewable Energy Association (REA), stated: "Today we are looking at going forward rather than focusing on the fast-track FIT review process."
But the message from first speaker, Murray Cameron, on the board of the European Photovoltaic Industry Association (EPIA), really set the tone: "The train is leaving the station. Big names are entering the global photovoltaic industry. Now is the time to seize the opportunity."
Only by supporting the growth of a domestic solar industry with strong, clear long-term policy can the UK hope to develop a sufficient skills base, which can then be exported to exploit the emerging global opportunities in photovoltaics, according to Cameron, also an executive board member of Phoenix Solar, which recorded a €630 million turnover last year.
A recent report by Ernst & Young, the findings of which were presented by Jim Fitzgerald, an assistant director in the consultancy firm’s renewable energy practice, was praised by STA’s photovoltaic specialist Ray Noble for being bang-up-to-date in terms of accurately reflecting the real cost of photovoltaics.
Scaling up of production capacity in China, mainly, in the last few years, has helped to drive down module prices to such an extent that grid parity is likely in a matter of years. "By 2013 to 2014, solar should start to fly as parity to electricity retail price is achieved, and by 2017 full grid parity is achieved," said Fitzgerald.
Even with the FIT rate cuts, taking effect from August 1, 2011, the UK photovoltaics industry could find a way, just by focusing on small-scale projects below 50 kW.
Chris Witte, of construction firm Kingspan Group, explained how the cuts will impact the firm’s business: "The 3.1 megawatts (MW) installed prior to August, will generate about £7 million in revenue for Kingspan. The 15 MW August to December pipeline is now lost, which included a three MW project with Arla Foods, which would have produced enough electricity to power all of Arla’s cold storage.
"We’ll need to do 60 or so 50kW projects to equate with the Arla one, but even with solar costs coming down it is more expensive to do many small micro-generation type projects to make up for the larger commercial installs."
The Kingspan case study served to underpin the crux of the issue: either the UK solar industry can scrape through the next few years by relying on the falling price of photovoltaic technology to get to grid parity or, with long-term targets and policy supported by subsidy for all types of photovoltaic installations as part of the wider clean and renewable energy mix, it can generate confidence by investors and industry, and invigorate manufacturing to ensure the UK is a choice destination for factory investment.
In turn, this would create a substantial green-collar job market, as many as 140,000 by 2015 according to the STA, all of which will provide a substantial source of tax revenue for the government coffers in the long-term.
In the UK, about 40 percent of a photovoltaic installation is the price of the module itself and the remaining 60 percent is the installation and other costs. But only with scalability can the installation costs be brought down too.
Germany, the largest photovoltaics market in the world, also claims the lowest photovoltaic installation costs, and now boasts more solar energy workers compared with either its nuclear or coal industries.
According to one of the speakers, Alan Simpson, working for Greenpeace, "this isn’t a complicated issue, but it is being made complicated to frustrate change."
Meanwhile, Green MP Caroline Lucas suggested the government’s short-term stance of waiting for further reductions in solar costs is missing the bigger opportunities the industry can afford, if honoured with a clear long-term policy and support.
For a meeting that began with the intention of focusing on opportunities ahead in light of the government’s fast-track solar FIT cut decisions, the mood from the floor towards the end was tinged with dissatisfaction, frustration and also cynicism.
The National Trust, one of the UK’s largest private landholders, would like to use ground-mounted photovoltaic panels to meet its sustainable energy criteria as neither wind turbines nor heavy panels on Grade I listed roofs are options.
But the FIT cuts put in place, arguably to discourage the proliferation of ground-mounted panels which are equated with the utility-scale multi-megawatt installations that threatened to gobble up the FIT subsidy fund, have stymied every type of installation, apart from micro-generation projects, often where solar is the most suitable and, in cases like the National Trust, the only option for producing clean, renewable electricity.
One attendee remarked near the end: "We’ve heard it all before," a reminder that UK solar, which for so long has operated as a cottage industry, will have its wings clipped if the government continues with its FIT rate cut decision in its current form.
At the end of the meeting, the stark reality of the government’s fast-track FIT review and cuts to the tariff above 50 kW was spelt out by Stuart Brannigan from the European business of Yingli Solar, one of the largest photovoltaic producers in the world.
"We’ve just announced a production facility in the U.S., but won’t in the UK - though ideally we’d love to as a location in Europe - because there is no future here and we don’t want headlines like 'Chinese company slashes jobs', which is highly possible when there is no long-term certainty and you can’t see beyond 2012.
"It’s not just about the next couple of years it’s what you do over the long term - five, 10, 15 years - that counts."
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