Solar industry fears over FIT review

The UK government’s plan to review the scope of its feed-in tariff looks sensible. The scheme is there to stimulate small-scale solar energy production, the reasoning goes, so we should stop large corporations from soaking up subsidies meant for householders with panels on their roofs.

But the review is in danger of giving the renewables industry and its investors very mixed messages.

For a start, the review talks about:

growing evidence that large scale solar farms could soak up money intended to help homes, communities and small businesses generate their own electricity

But where is this evidence, and what does “large scale” mean? In its report on Saturday, The Telegraph talked of DECC concern “about giant photovoltaic farms springing up across the countryside”. But where are these giant PV farms? No one I have talked to has ever seen any in the UK.

The thing that is really worrying the solar industry is the signal this sounds out for the future. DECC has always made it clear that it will not change incentive schemes retrospectively, so any changes will only apply for future projects. But when Spain announced changes to its future solar subsidies, investors took fright.

Robert Groves, CEO of SmartestEnergy, which trades electricity from independent producers (much of which is from renewable sources), illustrates the problems this could cause using the example of one of its clients:

The Westray Development Trust switched at the first opportunity to the FITs from the Renewables Obligation and by doing so, significantly increased the income from their community based project, which benefits the entire 600-strong island population.  The FIT offered an index-linked and guaranteed price for 20 years.

Groves says that without the support of the FIT, Westray and others could scrap their plans for future projects. He says:

Encouraging professionally developed, renewable generation is one of the core aims of the FIT. It would therefore be disappointing if the changes limiting the Feed in Tariff mechanism’s support for such large scale, commercial projects were to be implemented thereby making the FIT less attractive to the very investors and independent generators we need to deliver our renewable ambitions.

And its not just solar companies, who have skin in the game, which are complaining. Friends of the Earth’s energy adviser Alan Simpson said today:

FITs have been a huge success – the government should be planning to expand the scheme, not holding a knee-jerk review aimed at applying the financial brakes.

DECC is of course right to try and ensure that its subsidies are as well-targeted as possible. But if the overall game is to reduce carbon emissions, why discriminate against large-scale providers, which can do this in the most efficient and effective way?

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