In only a few short months the solar industry has gone from being the rising star of the renewables revolution to a sector under incredible pressure.
Following the UK government’s Department of Energy and Climate Change (DECC) planned review of the Feed-in Tariff (FiT), a consultation was launched in August setting out plans to slash the sub 10kW solar tariff by an astonishing 87% and stripping back the sub 50kW tariff (popular with many businesses) by almost 70% from January 2016. The ability to pre-register or lock into a tariff level will also be removed, from 2016.
The UK government’s proposed cuts threaten to dismantle all the work invested in creating confidence and stability for the industry and investors, which have driven growth in Scotland’s economy.
What does this mean for Scottish businesses?
With over 5GW of on-shore wind and barely 200MW of installed solar it is clear that solar combined with a growing energy storage industry can provide the necessary balance to help meet The Scottish Government’s renewable electricity aspirations.
It is clear that those installing solar in 2015 before the cuts, will benefit from the greatest return on their investment if they act now.
However from 2016 there is still hope for the future of solar. After the massive cuts to the FiT in 2011, we saw a 70 per cent fall in the cost of solar panels. And again we expect a similar outcome, as these final cuts are implemented. This could mean that a high energy using business could still see a 15 per cent+ annual return on their investment.
A further drop in costs will follow the planned removal of the Minimum Import Price (MIP) imposed on Chinese manufactured panels in 2013 which could well bring a further 25 per cent reduction in the price of panels.
With the International Energy Agency (IEA) predicting that solar could be the world’s largest source of electricity by 2050, we can be confident that irrespective of the Government cuts, solar will play an increasingly significant role in Scotland’s energy sector.
To speak to us about how to benefit from solar and how this will affect your business contact me on John.Forster@forstergroup.co.uk
On Thursday 27th August 2015, DECC announced plans to drastically cut subsidies through the Feed-in Tariff scheme which will have damaging effects on the solar industry. However in Scotland there remains strong support politically and commercially and there is still hope for solar to thrive.
The proposed Feed-in Tariff (FiT) reduction is unnecessary, unjustifiable, unmanageable and ultimately destructive for Scotland’s emerging solar industry.
Earlier this year in March, we launched STA Scotland, due to the growing interest from industry and the Scottish Government. There are approximately 500 solar related jobs in Scotland, and with solar set to play a significant part in meeting the Scottish Government’s 2020, 100% renewable electricity target we had predicted that the Scottish solar industry would add a further 3,000 jobs over the next five years. Energy Minister Fergus Ewing has already highlighted that Scotland is at the forefront of the renewables industry and that solar needs to play a key role in meeting this target.
This slashing of support in January 2016, set out in the FiT review, is completely unnecessary. When the Solar Trade Association (STA) published its Solar Independence Plan (SIP) to the new Government in June this year, it set out the solar industry’s own objective to become subsidy free by 2020. The SIP, sets out in detail how this could be achieved through a predictable and progressive plan. A plan that would deliver the essential confidence and stability for industry and investors, which in turn drives the growth, innovation and efficiency that leads to subsidy free solar.
The potential damage to our industry is completely unjustifiable. As we saw in the recent consultations announced by the UK government, for the removal of pre-accreditation and early closure of the Renewable Obligation (RO) scheme, the FiT review wrongly attributes projected overspend within the Levy Control Framework (LCF) to the solar industry.
Solar continues to be the most popular source of energy with more than 80% of the British public supporting solar power. The estimated cost of FiT solar on consumer energy bills this year (2015/16) is £7, with 80% of that money being spent on the solar FiT, attributable to domestic solar systems installed before 2011. Solar costs have fallen by 70% in the last five years making solar an increasingly cost effective renewable technology. An extra £1.70 on energy bills between now and 2020 would deliver over one million more solar homes by 2020 and achieve subsidy free, domestic, roof top solar. It will not only provide lower cost energy, but significantly reduce fuel poverty in Scotland.
The solar industry’s SIP shows how the UK’s solar ambition for 2020 could be doubled to 25GW (with current deployment at approximately 8GW) for just £13 on annual household bills in 2020. The Government’s stated justification for these destructive cuts, is the desire to reduce the impact on household energy bills, whereas the true costs demonstrate that this is no reason for abandoning our solar industry.
The Government has already seen the impact of sudden drastic cuts in 2011, and the results were unmanageable. The huge surge in demand that is the likely outcome of the FiT review, will deliver the worst possible scenario for solar installers and their customers. For an industry that has taken three years to rebuild itself from the previous cuts, there simply isn’t the capacity to deal with the inevitable demand. The proposals will lead to the cramming of installs into a diminishing window of time that includes a major holiday period and winter weather, putting installers at risk under time pressures to ensure customers don’t lose out on the higher tariff before January.
Prior to the drastic FiT cuts in 2011, registered installer business numbers surged to over 8,000, before plunging to around 2,000. The UK industry now supports around 34,000 jobs and yet the inevitable result of these astonishing proposed cuts in January 2016 could lead to the ultimate destruction of a large part of our industry. We are in touching distance of solar becoming subsidy free over the next five years. Just as the industry requires stability to reach its goal the DECC changes are causing unnecessary disruption and uncertainty to this being achieved.
The plans seem short sighted when increasing UK deployment will reduce carbon emissions, improve the UK’s energy security, reduce our trade deficit, provide significant new employment and contain the rising costs of energy.
The International Energy Agency (IEA) is predicting that solar could be the world’s largest source of electricity by 2050. India and China alone have committed to the install of 100GW each in the next few years. And just as British solar companies, with the benefit of their home grown expertise, have started to export their services in these rapidly expanding global market places, their foundations are set to be eroded by poorly judged Government policies.
To speak to us about how this will affect your business get in touch direct at John.Forster@forstergroup.co.uk