Business interest in solar falls after cuts

21st January 2016

Related Topics

Related tags

  • Mitigation ,
  • Renewable ,
  • Management/saving


Marlene Vella

Businesses are dropping plans to install solar photovoltaic (PV) panels on the roofs of offices and factories after the government confirmed cuts to renewable energy subsidies on small-scale schemes.

In December, the energy and climate change department (Decc) published new rates for feed-in-tariffs (FITs) for small-scale PV, wind and hydro installations. Although the cuts were not as severe as originally proposed in the August 2015 consultation, the solar industry said the changes would challenge the viability of commercial rooftop schemes.

From 8 February, projects with a capacity of 10-50kW will receive 4.59p/kWh instead of the current rate of 10.9p/kWh. Those over 1MW will receive 0.87p/kWh, down from 5.94/kWh. The rates target a return on investment of 4.8%, Decc said.

The department is also introducing a quarterly cap on the capacity of new solar projects installed from 8 February. The cap will limit annual government spending on FITs to £100 million. Those who miss out will have their FITs applications frozen until the next cap opens, Decc said. However, pre-accreditation, which allows applicants to pre-book their FIT rate, will be reintroduced from 8 February after Decc recognised that removing it created too much uncertainty for businesses, which may need a few months to make investment decisions.

Renewable energy advisers said that the changes were already having an impact on business interest in solar projects. Chris Jennings, strategic development manager at energy and carbon consultancy Sustain, said: “We have observed a distinct drop in demand for our solar PV modelling services since the cuts were announced – particularly in our stockwide PV capacity studies.”

One of the consultancy’s largest clients had shelved all plans for solar PV as a result of the cuts, he added. Payback times for housing association schemes had increased from 11 to 17 years, the firm estimated.

Phil Horton, managing director at renewable energy firm Dulas, agreed the changes would increase the payback times for solar projects, so firms would now need regard any subsidies they receive as bonuses. “We’re still quoting for large, blue-chip clients as their drivers, such as meeting their own CO2 reduction targets, tend to differ from those of smaller firms,” Horton said. Solar projects were also important for businesses that wanted to guarantee their future price of energy.

The annual cap in particular has caused great uncertainty, said James Robinson, an energy specialist at consultancy Carter Jonas. No-one will go ahead with new projects until they see how the cap works in practice, he warned. “The fear is that the caps will be met immediately. If there’s a big rush in applications then you’ll be on the waiting list,” he said. Commentators agree that solar schemes might still be viable for energy intensive industries.

Transform articles

Water companies fail to hit environmental targets

None of England’s water and sewerage companies achieved all environmental expectations for the period 2015 to 2020, the Environment Agency has revealed. These targets included the reduction of total pollution incidents by at least one-third compared with 2012, and for incident self-reporting to be at least 75%.

30th July 2021

Read more

The UK’s pipeline for renewable energy projects could mitigate 90% of job losses caused by COVID-19 and help deliver the government’s ‘levelling up’ agenda. That is according to a recent report from consultancy EY-Parthenon, which outlines how the UK’s £108bn “visible pipeline” of investible renewable energy projects could create 625,000 jobs.

30th July 2021

Read more

Billions of people worldwide have been unable to access safe drinking water and sanitation in their homes during the COVID-19 pandemic, according to a progress report from the World Health Organisation focusing on the UN’s sixth Sustainable Development Goal (SDG 6) – to “ensure availability and sustainable management of water and sanitation for all by 2030”.

30th July 2021

Read more

The oil and gas industry is set to burn through its allocated carbon budget 13 years early unless decisive action is taken immediately, new analysis has found.

22nd July 2021

Read more

The UK will no longer use unabated coal to generate electricity from October 2024, one year earlier than originally planned, the Department for Business, Energy & Industrial Strategy has announced.

2nd July 2021

Read more

The UK government is not on track to deliver on its promise to improve the environment within a generation and is failing to stem the tide of biodiversity loss, a damning new report from MPs has revealed.

1st July 2021

Read more

Renewable energy will account for nearly 40% of the world's power mix by the end of this decade, overtaking coal within the next few years, according to research by GlobalData.

24th June 2021

Read more

The UK's solar energy capacity must treble over the next decade for the country to achieve net-zero emissions by 2050, but is only set to double under a business-as-usual scenario.

18th June 2021

Read more

The Taskforce on Nature-related Financial Disclosures (TNFD) has today been launched to support financial institutions and corporates in assessing and managing emerging risks and opportunities as the world looks to reverse biodiversity loss.

4th June 2021

Read more

Media enquires

Looking for an expert to speak at an event or comment on an item in the news?

Find an expert