We all lose after the FIT changes

4th August 2011


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  • Renewable

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IEMA

Following the dramatic cuts to the feed-in tariff, Sarah-Jayne Russell considers the damage caused by the government's approach to large solar.

I joined the environmentalist the day before energy minister Greg Barker launched the public consultation on the government’s unscheduled first review of the feed-in tariff (FIT). The same fateful day he announced proposals to cut subsidies under the scheme for large solar photovoltaic (PV) installations by 40–70%.

The effects of the government’s decision in this case, whether motivated by a genuine desire to ensure funding for sustainably-minded homeowners or a Treasury cap on DECC’s budget, have rippled out like a tsunami across the solar sector and beyond.

Without the support of the FIT scheme, the finances for bigger solar projects just don’t add up, overnight hundreds of projects were dead in the water.

It was a shock for many to see the government exclude large-scale solar installations from the UK’s future energy mix, especially when it openly admits that the country is facing difficult challenges in ensuring a secure, low-carbon electricity supply in the coming decades.

Germany installed 7.4GW of solar PV in 2010. In the UK we managed less than 100MW. And now, without the FIT, there will be very few, if any, installations of more than 250kW by schools, businesses, communities and, of course, solar farms, because they simply cannot repay investors.

And that’s where we come to the real damage of the whole FIT debacle: investor and sector confidence. I don’t think the government could not have undertaken these changes in a way that would have hurt the renewables sector more.

In a time where the economy was struggling to come out of recession and the government promised a move to a green economy in the future, the FIT scheme offered certainty for investors in new technology.

By initiating a review of the scheme a year ahead of schedule, announcing massive cuts beyond any of the sector’s predictions, holding an open consultation and then not making even the smallest concession to their plans, the government has revealed it will run roughshod over previous policy commitments if it feels it has to.

While I heard Barker tell the BASELondon event that creating consistency of policy was a key aim moving forward, it’s too little too late. In rounding on large-scale solar the government has burnt the fingers of the whole renewables sector and their potential investors.

If we are to meet our commitments to source 15% of our energy renewably by 2020, these fledging technologies and sectors need to be supported, and their investors need to be able to trust that the government isn’t going to change its mind about that support.

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