The UK solar industry is on tenterhooks as the Court of Appeal hearing for DECC (Department for Energy and Climate Change) is scheduled to be heard this Friday.
Following the announcement last year of drastic reductions in the solar Feed-in-Tariffs (intended to be implemented by 12th December 2011) a successful legal challenge was mounted against the DECC – the court ruling branded its plans to rush through cuts to solar feed-in tariffs as unlawful. So DECC in-turn have mounted their own appeal against this legal challenge.
The future direction of the UK solar industry is potentially on hold as the court hearing takes place, it is impossible to predict the outcome of the hearing and it is uncertain as to how long the legal battle will continue thereafter. Our analysis of the situation is that:-
- DECC is likely to enact a consultation period regardless of the legal battle, this consultation period will not give enough time to most installers to construct and operate new projects
- The proposed tariffs will drastically reduce the level of new installations, some players may be able to install <4kW at the confirmed tariff of 21 pence per kWh until April, but with multi-site discounts and EPC category C requirements, other projects will struggle to make an economic return at current capex levels
- The cost and complexity of then appealing the Friday 13th decision if DECC are successful is substantial, allied to the costs is the feeling of a sense of futility in pursuing it any further, as it seems increasingly inevitable that the tariffs will be reduced as proposed
We believe Solar is an attractive form of distributed generation which is visually unobtrusive, has low environmental impact and a minimal carbon footprint, it is reasonable to assume given falling capex prices, that Solar power could have potentially reached near to “grid parity” in some areas of the UK within a couple of years. Meaning that solar could have become cheaper than many other renewable sources after taking into account distribution costs, retailing costs and energy price inflation.
The Feed-in-Tariffs did require a reduction as the initial tariffs had become too high, but the new tariff levels proposed essentially “kill-off” a nascent industry that was growing and employed a large number of people and contributed to the exchequer through tax receipts and skilled employment. We hope that DECC reconsiders the future tariff levels to encourage schools, local authorities and other bona-fide users of locally produced energy that can allow the more efficient industry players to continue to prosper without large scale job.
Jeremy Thomas, Renewable Consulting Practice, Isosceles
P.S. Decision delayed for at least a week – solar industry remains in limbo
The ongoing cold weather means the UK gas system was short of natural gas supplies this Monday, despite healthy Norwegian imported gas flows. Daily demand was forecast at 396.6 million cubic metres, about 20% above the seasonal average, according to National Grid. The UK’s Met Office issued a severe Cold Weather warning stating, “There is a 100 percent probability of severe cold weather and icy conditions between Sunday and Thursday in parts of England.”
