Wednesday, 20 June 2012

The new solar war
By Robin Whitlock

Some people doubt the economic importance of renewables, particularly solar PV, but you only have to look at what’s starting to happen in the relations between China and America to realise that converting to solar PV makes very sound business sense indeed. 

Every government in the world now recognises the importance of solar PV to the emerging global energy market, writes Emma Hughes of Solar Power Portal. That is very true indeed and it has effectively resulted in a bit of a trade war between certain players in the global solar sector, particularly China and America. The reason for this is that each nation is now determined to maintain their market share and there have been accusations levied against China that they are seeking to dominate the market by artificially lowering the prices at which they sell solar PV equipment to the wider world, a practice known as ‘dumping’. 

America claims that China has been able to do this through state subsidies which make their products increasingly attractive to installers, and therefore also to the consumer. As the Chinese market grows accordingly, it is effectively contributing to the failure of many American and European manufacturing companies. This has been going on for some years, but now America has had enough and the US government has now introduced laws which levy tariffs on Chinese crystalline solar panel imports, termed ‘anti-dumping tariffs’, ranging from 31.14 percent to 249.96 percent. Chinese companies in turn are gathering together to discuss what can be done about this and so a political battle has started between the two countries over solar. 

“This proposal is tough, but it’s needed to successfully counter China’s unfair trade practices” said US Senator Charles Schumer recently. “This hard-hitting plan will level the playing field for US solar producers so that they can compete, create jobs and become a global leader in this rapidly-growing industry.”

However, Chinese Commerce Ministry spokesman, Shen Danyang, has hit back, saying: “The US ruling is unfair, and the Chinese side expresses its extreme dissatisfaction.” In effect, China is saying that the US ruling is unfair and that it will seek ways in which to fight it. But this is not the end of the squabble, in fact it could be just the beginning, because the same group of industry executives that lobbied the US government to introduce anti-dumping legislation is now intending to approach the EU in Brussels. We could therefore see similar anti-dumping tariffs introduced across Europe, particularly as the EU has already considered suing China with regards to dumping back in March this year. 

While consumers to an extent may favour a reduction in costs for solar PV it also means a reduction in Feed-in Tariffs in order to preserve state budgets for solar PV incentives, and that has also meant less accessibility to solar PV for lower income households, given the sharp reduction in companies prepared to offer free panel deals with Feed-in Tariffs taken as payment. More seriously, Chinese competition threatens domestic solar PV manufacturing. The introduction of anti-dumping tariffs could therefore raise costs and extend current payback periods which means that the government would have to look again at Feed-in Tariffs in order to maintain a reasonable rate of return on investment (ROI).  

So there are two aspects to this issue which need to be considered. The government needs to support manufacturing but at the same time it also needs to maintain growth in the sector. Anti-dumping tariffs make sense from the point of view that the renewable energy industry is a key part of measures to reduce our dependence on fossil fuels, particularly foreign oil, the industry therefore needs to be supported as much as possible. The Catch-22 however is that such tariffs will invariably mean higher prices for solar PV, which in turn will affect the numbers of installations with accompanying impacts on jobs in the sector. In effect, the outcome of this emerging political battle is far from clear but one thing is certain, it’s a dispute that will affect the industry for years to come.


Solar Power Portal

Thursday, 7 June 2012

DECC predicts stability in solar market over next 3-years
By Robin Whitlock

An announcement recently made by the Department of Energy and Climate Change (DECC) recently predicted that the UK solar market will remain stable for at least the next three years, despite the commotion caused by the recent range of government cuts and the forthcoming subsidy cut from 21p per kWh to 16p, due to take effect from August. 

Feed-in Tariffs (FiTS) were never intended to be an everlasting subsidy or to generate profits for speculators, however the new round of subsidy reductions has been introduced with particular modifications to the process which should bring a measure of stability back to the market and therefore we should also see a return in consumer confidence. There are two particular measures which are intended to encourage stability, which are:
  • A multi-installation tariff for organizations installing more than 25 systems consisting of 90% of the standard tariff (increased from 80%)
  • An increase in the export tariff, for installations with an eligibility date on or after August 1st, from 3.2p per kWh to 4.5p
The life of the tariff will also be reduced from 25 to 20 years for those systems with an eligibility date on or after August 1st and tariffs for installations that do not meet the energy efficiency requirement will be set at the same rate as stand-alone systems. DECC have also detailed the manner in which the tariff will be reduced over the next three years, a decrease of 3.5% every 3 months commencing on October 1st 2012. Over the course of a year the subsidy will therefore be reduced by around 2.24p, much better than the 27.3p reduction experienced by the industry since December 2011. 

“There have been a lot of gloomy headlines about solar power but the fact is the returns on offer are far better than anything you can get in the bank” said Carl Bennett, the Managing Director of Trade Skills 4U. “The smart money is on solar PV. And by investing in solar power not only do householders protect themselves from rocketing electricity bills; they help local businesses and employment. Our business has enjoyed growth as result of our investment in solar. Last year we built a first storey training roof, which is the only one of its kind in the UK, in order to train solar installers and in the environment they will be working in when they qualify. Our dedication to ‘real life’ scenario training as seen a steady rise in business and helped to drive us forward in the recession when many have cut back. Now that government have announced future stability for the Feed-in-Tariff, we can only predict a steady and stable future for solar which is of course great news for everyone.”

Martin Gebbett, Director of DPS Renewable Technologies, had this to say: “The announcement by the DECC signals an end to the uncertainty that has prevailed in the PV solar industry since September 2011. We believe the new set guidelines allow us to plan move clearly for the future and drive our business forward. We have seen a noticeable increase in enquiries over the last few weeks and see a positive outlook.”

Environmental groups such as Greenpeace have long been urging people to invest in solar. The reason why they are so much in favour is because solar is a truly sustainable technology which can play a real part in helping to reduce climate change. However solar can also offer attractive rates of returns to investors and so is of interest to consumers as well. 

Since the introduction of the Feed-in Tariff in April 2010 there have been over a quarter of a million installations across the country with the solar industry employing at least 25,000 people with the potential for further growth, even in the face of one of the worst recessions the country has experienced since the end of the Second World War. Both the government and the industry expect to see 22 GW of solar installed by 2020 benefitting both the economy and the environment.