Inquiry into UK PV FIT cut proposals launched

It has been a long week for Britain’s solar industry. On Monday, the DECC announced its proposal to halve the current photovoltaic FITs for small scale installations and introduce December 12 as the new date that sub-50 kilowatt (kW) photovoltaic installations can qualify for the current rate of around 40p/kWh.

This contentious deadline has left the industry falling over itself to squeeze a pipeline of projects until April 2012 into a six week window.

As such, Martyn Williams, parliamentary campaigner on environment issues who works with the Solar Trade Association (STA), welcomes the inquiry. "We’re urging the industry and those who planned to invest in solar PV panels to use this as an opportunity to get across how DECC’s proposal affects them, whether it means project cancellations, lay-offs, lost investments," he told pv magazine. The sheer volume of responses could have an impact, believes Williams, even if they don’t all get read.

Inquiry themes

According to the ‘Joint Call for Evidence: Solar Feed-in Tariff’ announced on www.parliament.uk, areas the committees will examine include:

  • The way in which the Government has managed the photovotaic FIT; and
  • The balance between affordability and delivering the objectives of the photovoltaic FITs.

The deadline for written submissions to the inquiry is November 23, 2011, to be followed by a hearing.

Howard Johns, chairman of the Solar Trade Association (STA) and managing director of U.K. installer, Southern Solar, has been invited to speak at the hearing. Concerning DECC’s proposal he comments, "The December 12 deadline means all projects cannot be completed. The legal and contractual stress stemming from this will be extensive."

The DECC could have let the current tariff run through until April, says Williams, at a rough cost of 13 pence on every energy bill. "Instead millions of pounds worth of projects will be scrapped. This is a government that foregoes massive amounts of tax revenue from duty levied on fuel to keep prices stable."

Those that stand to be most affected by the DECC’s decision to implement the December 12 deadline for sub-50 kW photovoltaic installation to qualify for the current FIT will be community, housing association and school projects, which take longer to plan than residential installations.

"There is the case of a school that spent £10,000 on upgrading its electricity in readiness for a solar PV installation and now it will not make the December 12 deadline. Meanwhile, we are meant to wait while the government’s proposal says it will come up with a plan for ‘genuine community projects’," says Williams.

Punished for its own success

Johns says the cuts will force the industry to put an uncomfortable truth to the government. "It couldn’t have knee-capped the industry more effectively. Do they want the UK solar industry to continue?"

Williams observes the UK photovoltaic industry does seem to be being punished for being successful by the government.

Chris Hopkins, founder of Ploughcroft Solar in Yorkshire, who acknowledges that the deep cuts to the tariff are needed in the face of falling panel and installation costs, believes the six week period is too tight. He told pv magazine "They could have implemented the tariff from January, which would have given more time to complete projects by."

Hopkins, like most installers, has had to shut the door on new business that can get the current photovoltaic FIT of around 41p/kWh. "Today if you buy a PV system from us, you can make a 15 percent return, based on the current module prices and the installation time taking half of what it used to. That return is too much. It’s unsustainable."

He hopes the cuts will shake out many of the companies that have moved into solar in the past 12 months, attracted by the returns photovoltaics can afford. "Those of us who are serious about this industry and have been in it for a long time, have planned for the cuts occurring at some point."

He also says lower module prices are anticipated soon and will ensure that photovoltaics is still a good investment. "By Q1 next year, prices on panels we’re sourcing will be lower, coupled with shorter installation times, so that with the new tariff a return of eight to 10 percent is still possible."

Rates of return for photovoltaic installations should be addressed in a document to be published by the STA in the coming days, says Leonie Greene, spokesperson for the association, based on input from companies across the U.K. solar supply chain.

This clarity should be welcomed, as the falling cost of modules and balance-of-system costs, rising prices in electricity, and the changes in the FIT currently make the real value of solar in Britain very difficult to ascertain.