Feed-in Tariff stalemate is costing UK renewable industry £25k a day

With the future shape of the UK solar industry on the line and at least £500,000 of taxpayer’s money in the balance, the government faces an anxious few days as it awaits the outcome of Friday’s legal bid to the Court of Appeal. Lawyers for the Department of Energy and Climate Change (DECC) argued for the opportunity of a full appeal hearing in an attempt to overturn last month’s High Court judgement that the proposed cuts to the Feed-in Tariff (FiT) was unlawful.

According to industry analysis, the current stalemate is costing the UK renewable industry around £25,000-a-day in cancelled and deferred orders compounded by increasing sales costs, uncertain wage bills and the depreciation value of redundant stock. A study of the latest installation figures for the first week of January reveal the devastating toll of draining consumer confusion and lack of confidence in the market.

Yesterday’s latest episode added to the uncertainty that has plagued the industry since the initial announcement back in October of a proposed cut for household solar PV installations from 43.3p to 21p – backdated from April 1 to the 12th of last month. Writing for GreenWeek, David Hunt of renewable firm Eco Environments, said the solar industry remains in “total limbo” following the latest developments, and added: “The government has not covered itself in glory during this whole sorry saga, 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.

“The major issue is the possible outcomes of the appeal which will now be heard. 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 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. “To compound the issue the state of total limbo is likely to continue, with either side going 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.”
Mr Hunt said that he and colleagues within the renewable energy sector still have their guns on a number of other aspects still out to consultation.
Perhaps the most serious issue surrounds Ministers’ plans to insist from April that all homes must achieve a C-rated energy efficiency standard in order to qualify for the full feed-in-tariff subsidies.

Nine in ten homes do not currently meet this rating and bringing homes up to the required standard would cost between £5,500 and £12,000 according to industry experts – an investment well beyond the majority of people.
Hunt added: “It is vitally important that the government steps back from the brink and removes the requirement that says every home must achieve the C-rating for energy efficiency in order to qualify for the maximum feed-in-tariff incentive. That is if we still have any feed-in-tariff left after the High Court judgement!” A statement by DECC following Friday’s court hearing, said: “The Court of Appeal has not yet decided whether to give permission for an appeal or made a judgement on the FiTs case. The Court will wrap up the decision on permission for an appeal and a possible judgement if an appeal is allowed in the next few weeks. Once the outcome is known we will consider our options and make an announcement on the way forward to provide clarity to consumers and industry.”