UK prepares for bitter battle with solar developers
The war of words over the UK government's decision to slash subsidies for solar power has grown increasingly bitter, with developers accusing ministers of having "lost the plot", while ministers have told developers, if you want to stoke demand - lower your prices.
Earlier this month, climate change minister Greg Barker said that the government was proposing a cut in the feed-in tariff (FiT) for photovoltaic (PV) developments of over 50kW in capacity (see table).
Projects of between 250kW and 5MW would be hardest hit, with subsidies cut from 30.7p/kWh to 8.5p/kWh, a drop of 72% (see EDEM 21 March 2011).
The proposals have enraged the nascent sector across the country. "Quite frankly, [Greg Barker] has lost the plot and should resign," said mO3 Power chief executive Ken Moss.
The government has defended its move on the grounds that the cuts will bring the UK in sync with many of Europe's larger economies.
"Such changes are in line with amendments made to similar schemes in Europe where in Germany, France and Spain tariffs for PV have been reduced sharply over the past year," the department of energy and climate change (DECC) said in a statement.
But developers were unrepentant. "The minister is simply incompetent and how can he pretend that he is learning from Germany's feed-in tariffs?" Moss said. He went on to point out that Germany has developed 18GW of solar capacity in the last 10 years. By comparison, Britain had installed 45MW by the end of last year.
'Reduce the cost'
The introduction of the FiT last spring (see EDEM 1 April 2010) gave rise to a burgeoning solar power development industry, with companies offering free panel installation in suitable locations. Instead of charging upfront, developers signed contracts to guarantee themselves a large slice of the subsequent FiT income.
This is the root of the industry's anger - the economic models drawn up by the private sector will be in tatters once the tariffs are cut, effectively sweeping the financial support away.
But according to Barker, it is now up to developers and manufacturers to lower their prices if they want to ensure that demand remains entrenched.
"We should be competitive with Europe, and the pressure should be on manufacturers to reduce the cost of their products rather than to provide bonuses," Barker told parliament last week.
The tariff cuts would not be applied retroactively, and the government has repeatedly stated that its proposals are intended to safeguard the longevity of the scheme by redirecting the available cash to smaller-scale household projects.
DECC cited evidence that there is 169MW of large-scale solar capacity in the planning system. If the FiT system remains unchanged, the capacity would be equivalent to funding 50,000 domestic solar panels.
"Such projects could potentially soak up the subsidy that would otherwise go to smaller renewable schemes or other technologies such as wind, hydro and anaerobic digestion," DECC said.
The proposed changes would take effect from 1 August. The industry has until 6 May to respond to the government's consultation. A comprehensive review of the entire FiT scheme is also underway. DECC is seeking views on this by 12 April. JS
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