Friday, 20 January 2012

Tariff’s stalemate costs UK solar industry £25k a day

By Robin Whitlock

The latest on the legal debacle over Feed-in Tariffs: while the country is waiting with baited breath to see if the government is granted leave to appeal, it has since emerged that the current stalemate is costing the UK solar industry rather a lot of money. According to analysis, the current stalemate is costing the industry some £25,000 per day, largely in cancelled and deferred orders, exacerbated by increasing sales costs, uncertain wage bills and depreciation of redundant stock. The situation has been made worse by lack of consumer confidence and considerable confusion.

In an article for GreenWeek, David Hunt of Eco Environments described the industry as being in ‘total limbo’ and criticised the government for their handling of the whole affair. “The Government has not covered itself in glory during this whole sorry saga” he said “and today’s outcome further exacerbates the negative impact of their actions. The industry needs to move forward without the prospect of months of continued uncertainty hanging over it. While the reduction in the feed-in-tariff to 21p/kWh for domestic customers is greater than we would have wanted, the industry now accepts that we have to work with the new rate which still offers a fantastic return on investment for homeowners.”

He went on to state that the major issue is the possible outcome of the appeal. “If the Government wins its appeal, the industry is spared the return to a 43p domestic FIT rate which will blow an already overspent budget, causing a short boom, and a catastrophic bust for the renewable energy industry, not just solar. The FIT budget is not separated by technology, if it is all spent on solar PV, then Wind, Hydro and other eligible technologies will lose the FIT subsidy too. However, it would cause long term uncertainty for the industry, having created a precedent that Government can make retrospective changes to FIT and other subsidies, giving major concerns to any potential investor, domestic or commercial, now and in the future. If on the other hand the Government loses the appeal, then we will end up with the boom and bust, wiping out the FIT budget at a stroke. This will result in a nightmare for all renewable installers with short term ‘cowboy’ selling and long term job losses and company closures.

Hunt believes that the present state of limbo is likely to continue given that either side could elect to go to the Supreme Court if they lose. “The only certainty is seems will be ongoing uncertainty which is already costing jobs and creating a crisis of confidence among potential investors. This will not help to secure the futures of many companies which simply will not survive another few months’ of paralysis.”

Meanwhile an even more serious issue threatens to follow hot on the heels of the FiTS debate. In April Ministers plan to insist that only homes rated Grade C with regard to energy efficiency will be eligible for full FiTS subsidies. At present 90% of homes in the UK do not meet this requirement and industry experts predict that upgrading to the required standard will cost somewhere between £5,300 and £12,000. Such a figure is likely to beyond the capability of most ordinary people. Hunt believes that it is absolutely imperative that the government abandon this policy.

“That is if we still have any feed-in-tariff left after the High Court judgement!” he said.


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