The solar industry has reacted furiously to news that the Feed-in Tariff rate for solar PV could be slashed as low as 13.6p from July 1 as payments begin to be scaled down.
But the wider renewables sector has given a mixed welcome to today's overall package of changes, which include the relaxation of the qualifying requirement of a “D” grade Energy Performance Certificate instead of the original “C” plan.
Energy Minister Greg Barker told the House of Commons he was giving the Feed-in Tariff scheme “plenty of TLC”, which he described as transparency, longevity and certainty.
But Jeremy Leggett, chairman of Solarcentury, said in response to the new details: "The new Liberal Democrat Secretary of State had an opportunity today to reassure 30,000 solar workers - but he's blown it.
“The near permanent review afflicting this industry since the 2010 Comprehensive Spending Review goes on.
“Further swingeing cuts to tariff levels from 1 July with the prospect of tariff cuts more often than once every two months beyond that mean that the PV industry now faces ongoing turmoil.
“It's really time for Ed Davey to do something that Chris Huhne stubbornly refused to do. Sit down with the industry, work with us, and demonstrate your commitment to saving tens of thousands of UK solar jobs.
“If he's serious about green growth and green jobs, that's the least that he can do."
And David Hunt of Eco Environment said the “devil was in the detail” of the Phase 2 consultation, which could result in lower prices, the removal the RPI-linked payments and a reduction from 25 years to 20 years for solar PV.
He added: “There is simply no way that product and installation costs will drop that much in such a short period of time to make such a low tariff rate economically viable.
“Together with a dramatic slashing of FIT rates in July, Ministers are also proposing ongoing six-month reviews, a reduction from 25 to 20 years for the FIT rates being applicable for Solar PV and the removal of RPI-linked payments.
“These cuts and proposals fly in the face of Greg Barkers declared ambition to encourage the installation of 22GW of solar before 2020, with the changes recommended there will be no one willing to buy and no one left to install it.
“Yet again the Government, even with a newly appointed Energy Secretary in Ed Davey, seem happy to watch the solar industry lurch from one crisis to the next.
“It is crucial that Ministers listen properly to the industry this time and ensure that the consultation process on future tariffs is a robust process rather than last time’s sham.
“Rather than looking to encourage consumers to embrace renewable energy technologies, you would think the Government was trying to turn people away from them.”
Mr Hunt added that he was pleased that the Government had relaxed the need for homes to achieve a C grade Energy Performance Certificate (EPC) from April this year, instead confirming that grade D or above would be satisfactory in order to secure the highest FIT rate.
Gaynor Hartnell of the Renewable Energy Association, said: “For solar power, the FITs have an important role in tiding us over to the point where solar panels no longer need subsidy.
“On present trends this won’t be far away, but it will be delayed if we go backwards and starve the industry by reducing the tariffs too fast. These new tariff rates will be very challenging as the reductions seen over the past 12 months are unlikely to be repeated, because of global trade trends.
“The government has backtracked on energy efficiency requirements requiring an energy performance certificate of D rather than C. This will constrain the market less, but even so, it isn’t really a particularly logical thing to do. It makes perfect sense to do this for renewables for heating, but not when it comes to power generation.”
Juliet Davenport, CEO & Founder of Good Energy, said: "Overall, this is a step forward. The industry has been asking for more clarity, and the government has moved to provide that that.
"The rate changes proposed for solar PV are a reflection of the well known problems with the FIT budget and it will take time to fully digest what they mean. The important thing is we now know how tariffs are going to change in future, helping give investors greater certainty.
"It's good that the government has listened on the level of the proposed energy efficiency standard and tariffs for community sites with multiple installations, such as social housing. Good Energy's research shows that micro-generation actually encourages people to improve the energy performance of their home, so these changes will allow a greater number of people to benefit from that."
Phil McVan, managing director of Myriad CEG Power, said: “We welcome the increased transparency which this announcement now gives us but the implementation of the new regime will undoubtedly change the landscape of customer purchases.
“The six monthly reviews of the tariff rate will accelerate the industry in the short term but could well result in a reduction in uptake in the long term.
“Ultimately the technology is going to have to stand on its own two feet in terms of the cost of electricity production and be able to generate power at the same cost as using fossil fuels, when at the moment it costs double.
“Linking eligibility to the Energy Performance Certificate regime also places an extra hurdle in front of potential customers who will now have to address efficiency before qualifying for financial support.
“It also provides a new challenge for new green technologies at a time when the likes of micro-combined heat and power and wind are set for greater support.”
In reaction to the wider detail of today's announcement, Gaynor Hartnell of the REA, added: “These proposals should help re-orientate the tariffs towards cost-effectiveness and greater predictability – which on principle is welcome.”
However, HomeSun CEO, Daniel Green, said: “In today’s announcement the new so called ‘Aggregator’ (multi-installation) tariff includes companies who provide Free Solar to individual, private home-owners.
“DECC justified this new lower tariff by saying that companies who own many installations have economies of scale – only having to deal with one multi-home owning landlord and being able to install several homes on the same street on the same day. However, this is simply not true for Free Solar for private, individual homes and DECC knows it.
“We agree with DECC and accept multi-home owning landlords should have a lower tariff but why punish the majority of the population who don’t have multiple homes and don’t have thousands of pounds to invest for years in a solar purchase? These people, who are struggling with their energy bills and are looking for some relief from the Big Energy companies have been deliberately excluded without reason.
“Solar will now become the exclusive plaything of the wealthy who live in the south of England.”
Clare King, a renewable energy lawyer at leading law firm Osborne Clarke, said: “It’s good to see the government providing some clarity for those involved in multi-site solar installations who will be encouraged that the reduced multi-site tariff provisions do not go as far as originally proposed.
“However, the added complexity and cost of achieving a pre-determined energy performance level for buildings powered by solar might prove a step too far for many potential developers.
“For struggling solar installers uncertainty is still the order of the day as the government remains determined to press ahead with its Supreme Court appeal.”
James Close, Government Services Partner at Ernst & Young, explained his thoughts: “DECC’s comprehensive consultation announced today proposes mechanisms for providing greater, long term clarity for the future of small scale renewables.
"The proposals reflect the encouraging trend that we have seen around cost reductions in the renewable technologies market - most notably in solar PV. This is good news for consumers and will result in more clean energy that can be deployed at a lower cost with the potential for lower bills for customers in the future.
“Moving the minimum energy efficiency level, required for an Energy Performance Certificate, to a 'D' rating or above is more in line with what we would have expected and is a much more realistic approach than previously proposed.
“The UK Government has the opportunity to follow international leaders in this area and could overtake, for example, Germany who are currently ranked 3rd in the Ernst & Young renewable energy country attractiveness indices.
"This will go down well with investors in the UK. Historically, Germany has very actively supported their renewables sector but recent speculation suggests their intention to reduce support more quickly by, for example, accelerating cuts to their feed in tariffs.”
Trade association RenewableUK has expressed high levels of concern over the Government’s proposed new levels for feed-in tariffs for small wind turbines.
RenewableUK’s Director of Policy, Dr Gordon Edge, said: “Government needs to work with industry, to lift barriers for manufacturers and to ensure that these cuts don’t take a scythe to Britain’s world-leading small wind manufacturing industry, which employs hundreds of people across the UK.
“It’s really important confidence is retained, and we’re keen to work with Government on progressing development rights and developing pre-registration to secure sector confidence..
“Household and business-scale wind turbines have been deployed in line with the Government’s predictions – if anything, deployment has not been as strong as we would have hoped because of the difficulty of securing planning permission for even small wind turbines.
"The Government points to capital costs for some turbines coming down – but overall project costs have been rising across the technology sizes and manufacturers will face real dangers with the proposed cuts – we want to work with Government to ensure lower costs for consumers and protection for our UK-wide industry”
Earlier in the House of Commons, Energy Minister Greg Barker, described the raft of changes as a “turning point for the Feed-in Tariff scheme”.
He said the new proposals would provide the FiTs programme with “plenty of TLC”, which he described as transparency, longevity and certainty.
“This is good news for consumers and good news for the sustainable development of the renewables industry,” he added.
“We are taking a huge stride in securing a bright and vibrant future for small-scale energy generation.”
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