Seb Berry, Head of Public Affairs at Solarcentury comments on the lack of certainty in the solar sector brought about by the government’s recent proposed policy changes, and the damage it is causing to home-grown solar businesses.
“Since the summer Ministers have repeatedly emphasised the importance of providing “investor certainty” to the energy sector. On 25th November for example, Energy Minister Andrea Leadsom told MPs that “investors need clarity on our strategy for clean energy, and that is what we have now given them”. At the heart of the new government’s “clean energy” approach is new nuclear of course and no doubt EDF with its eye-wateringly generous Hinkley strike price would agree with the Minister. The reality for cheaper renewables is very different.
Since the election the solar industry in particular has been subjected to a series of policy u-turns and shock decisions, which taken together have thrown business plans up into the air and already destroyed thousands of jobs. The last seven months has been the complete opposite of the solar policy “TLC – transparency, longevity, certainty”, once promised by the former Conservative Energy Minister. Nor could the full extent and rapidity of the political assault against solar since 7th May have been predicted or factored into any realistic business planning scenario for this financial year.
Although Solarcentury is protected to a large degree by being an international company active on four continents, we are also not immune to the effects of these policy shocks in our domestic market. The ongoing uncertainty surrounding the future of the feed-in tariff scheme for example, has cost us at least £16m of turnover from cancelled social housing schemes.
Nor can UK solar companies yet plan their businesses properly in the UK for FY 2016/17, since they do not know what feed-in tariff regime (if any) will be in place next year. The government consulted on changes to the feed-in tariff scheme from January and here we are on the 8th December, awaiting the outcome of that particular consultation, with the threat of total scheme closure next year, still not ruled out. And yet incredibly Ministers tell MPs that they have provided investor “certainty.”
Although we are also still awaiting the outcome of the Renewables Obligation consultation which closed on 2nd September, it is surely inevitable that the solar RO will close next April, a year early. We are being hit by the double whammy of solar, uniquely being singled out for “special” treatment, with the threatened end to grandfathering under the RO from 22nd July 2015. If the government confirms that policy, that will amount to a retrospective policy change. It is hardly surprising that the government is already facing several legal challenges on different aspects of solar and wider renewables policy, such is the level of anger and shock across the industry at the government’s tactics and the pace and scale of change since 7th May.
Unlike onshore wind, nor can the Conservatives claim a “mandate” for this action against the solar industry, since their Manifesto was completely silent on the issue.
The 2014 Solar Strategy launched with great optimism by a Tory Energy Minister from a party that not so very long ago was proud to champion decentralised energy is an obvious casualty of the new political realities facing our industry. Frankly, it is now not worth the paper it is written on. The Impact Assessments accompanying the summer’s consultations spell out the policy intention to severely restrict solar deployment to 2020/21. In that context, Conservative commitments to putting “rocket boosters” under commercial solar and Amber Rudd’s enthusiastic post-election support for a “solar revolution” now ring hollow.
It’s not too late of course for ministers to see sense and pull back from the extreme positions that they have adopted since the election. It makes no sense for a government committed to bearing down on consumer costs to penalise the only technology that has a realistic plan to be support free by the end of this Parliament. Nor does it make sense for the Prime Minister to welcome India’s initiative in setting up the International Solar Alliance while simultaneously taking the axe to the very same technology at home. The fact is that ministers have a very affordable and actually rather modest Solar Trade Association plan on the table, that would cap solar spend under the feed-in tariff from January and add at most £1 pa to typical domestic energy bills from 2018/19.
The alternative is stark, but even this ideologically driven pro-nuclear pro-fracking government cannot really want to preside over thousands more solar job losses in hundreds of UK SMEs can it? Can it? How will the Prime Minister explain that to his grandchildren?”