The government’s decision to contest the ruling that their plans to slash solar subsidies are illegal has sent the solar PV industry back into turmoil. Solar PV businesses have warned that this latest appeal will cost jobs and potentially risk businesses failing as they simply cannot tell their customers what their return would be.
An executive from Spirit Solar, Erica Robb, challenged David Cameron at a small business event today over the “weeks of chaos” that have resulted from the government’s proposals to cut feed-in tariff incentives for solar installations. She branded the decision to give the industry just six weeks notice of the tariff reductions as “disgraceful”. Confronting the Prime Minister, Miss Robb said: “Before Christmas we employed 80 people. We made 30 people redundant in the week before Christmas. This was following weeks of chaos caused by the short-notice cut done by your government to the feed-in tariffs.
“The High Court has ruled that the way you did that was unlawful and (the chairman of the Commons Energy and Climate Change Committee) Tim Yeo has said it has undermined confidence, which you yourself have said is fundamental. Yet yesterday you lodged an appeal against the High Court decision twenty-five thousand people’s jobs rely on. How can you justify the appeal?”
Cameron replied “I’m afraid the government and the taxpayer and the bill-payer faced a really big problem which was that there was a feed-in tariff system set up under the last government that had very generous payments for people fitting solar panels to their roofs. I think that was a very good idea.
“The prices fell quite radically, in terms of the cost of solar panels, and so suddenly what was a reasonable tariff and a reasonable return for householders was looking like something that was much too generous – a 10% rate of return – and that was going to use up all the money that was set aside for years of this feed-in tariff.”
The reality is that the FIT scheme for solar is already in the red and the government has no choice but to act if they are to keep the scheme up and running. One solar company, Leeds Solar, have analysed the latest installation figures and calculated that the scheme will be over £100m over budget in 2012 based on today’s installations alone. Even the proposed cuts will not address this shortfall and the industry warns that the government must increase this budget.
The high court ruled just before Christmas that it would be unlawful for the government to cut feed-in tariff rates for Solar PV installations completed after 12 December on the grounds that the changes pre-empted the close date for the consultation. The government was also warned that any appeal was unlikely to be successful and were denied permission to lodge an immediate appeal.
Climate Minister, Greg Barker, is now waiting for permission to appeal the ruling and hopes to have a resolution by the end of January. He has also confirmed that the review of the consultation process over the FIT scheme is still on track for the end of January, with one key factor being to align the falling cost in technology with the level of subsidies. This should make any future changes to the FIT levels across the renewables industry much more transparent to all concerned and allow businesses to track and plan for these changes.
