UK's Solar Trade Association labels FIT cuts 'self-defeating'

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The U.K’s leading solar organization has attacked proposals published yesterday by the government’s Department of Energy and Climate Change (DECC) to drastically slash the feed-in tariff (FIT) for small-scale solar installations in the country.

The Solar Trade Association (STA) has labeled the proposed cuts – which could be as high as 87% for some solar PV arrays – as ‘self-defeating’ and argues that they make little economic sense that will only serve to exacerbate the boom and bust culture of solar and threaten the industry’s long-term stability.

As of January 1, 2016, DECC’s new proposed FIT rate will see the tariff for standard, sub-10kW installations slashed from 11.30p/kWh – 12.47p/kWh to just 1.63p/kWh – a cut of 87%. Larger installations are also set to suffer swingeing cuts, while a forced degression each quarter will see the acceleration of tariff reductions that could spell the complete end of the FIT for some bands as early as 2019.

Further, deployment-based degression will also be maintained, with the rate increased from 5% to 10% cuts. These changes, says the STA, are far too severe and knee-jerk, and overlook the body’s own suggestions of how to reduce the FIT in a sensible manner that would support further installations and add just £1.70 ($2.25) per year to people’s energy bills between now and 2020.

"We don’t agree with these self-defeating proposals and will be urging DECC to take up our alternative [outlined in the STA’s Solar Independence Plan for Britain]," said STA head of policy Mike Landy. "A sudden cut combined with the threat of scheme closure is a particularly bad idea – it will create a huge boom and bust that is not only very damaging to solar businesses and jobs but does nothing to help budget constraints.

"We really are astonished at how self-defeating these proposals are. Instead, we are calling on the government to work with the solar industry to deliver our plan for a stable glide path to subsidy-free solar."

Leonie Greene, STA’s head of external affairs, called on the government to back the momentum that has gathered in solar in the U.K. over the past 24 months, rather than "push the industry off a cliff when it is so near to being able to repay public investment through lower and more stable bills".

Good Energy’s chief executive Juliet Davenport joined the chorus of dissenters attacking DECC’s proposals, stating: "The FIT has transformed the way the U.K. generates its power over the last three years, with more than 21% of the U.K.’s power coming from renewables in the early part of 2015, and over 700,000 homes generating their own power."

Friends of the Earth’s Alasdair Cameron labeled the solar cuts "absurd" and stressed that the proposals will serve to send U.K. energy policy "massively in the wrong direction".

DECC had feared that its £7.6 billion ($11.7 billion) renewables budget would be dramatically overspent if solar had been allowed to grow at current rates, and has moved to suppress the expansion of an industry that has proven popular among the general public and increasingly affordable thanks to technological improvements.

"We are taking urgent action to get a grip of this overspend and protect hardworking bill payers," said a DECC spokeswoman. "Our support has driven down the cost of renewable energy significantly. As costs continue to fall and we move towards sustainable electricity investment, it becomes easier for parts of the renewable industry to survive without subsidies."

However, DECC’s own calculations contain an admission that the proposed rate of FIT cuts will likely reduce the level of solar installations deployed, and will certainly suppress the pace of development that saw the U.K. grow into Europe’s most dynamic solar market in 2014 and so far in 2015.