Axing Solar Incentive Could Decimate Industry Warns Solarlec
Plans to slash and possibly scrap a Government "cashback" incentive for homeowners installing solar panels have been described as "extremely disappointing" and "short sighted" by the boss of an award-winning Lancashire company.
Ged Rowbottom, director of Solarlec, said the proposals in a consultation just released by the Department of Energy and Climate Change (DECC) could seriously damage Britain's solar industry and remove a key incentive for people to install clean, green, renewable energy for their homes.
But he stressed that as energy prices reach all-time high levels, solar panels would continue to be a sound long-term investment, and there is still time for new installations to benefit from the existing incentives.
Currently home owners installing solar panels to their property qualify for the "Feed-In Tariff", meaning that their energy supplier will pay them for every unit of electricity their panels produce. Although the tariff rate has reduced steadily since the scheme was introduced in 2010, it is still at 12.92 pence per unit (plus an extra 4.85 pence per unit for any surplus energy generated and exported back to the National Grid). The tax-free payments last for 20 years and are guaranteed at the rate they were when the panels were installed and certified.
It means that homeowners with solar panels benefit in three ways - first through cutting their energy bills by producing their own electricity to run their home, second by generating an income through the Feed-In Tariff, and third by selling any surplus energy their system generates back to the National Grid.
With such clear benefits, it is not surprising that Britain's domestic solar panel market has boomed in recent years, with an estimated 640,000 homes now having panels installed. But that boom meant the cost of providing the Feed-In Tariff - now estimated at more than £800m. per year - has been much higher than the Government first anticipated.
The new DECC consultation proposes to slash the Feed-In Tariff rate from the current 12.9p per unit to just 1.63p from January 1st 2016 - a cut of 87%. And with another proposal to cap Government spending on the Feed-In Tariff at between £75m. and £100m., it could be scrapped altogether for new installations if that cap is reached. That could well happen as people rush to have systems installed and benefit from the Feed-In Tariff before the January 1st cut-off point.
Burnley-based Solarlec was established in 2009 and has installed around 5,000 solar panel systems for delighted customers across the UK, earning a 99% independent customer satisfaction rating. As a Government-accredited company its customers have benefited from the Feed-In Tariff scheme and will continue to do so - the new proposals will not affect homeowners with existing systems, whose payments are guaranteed for a 20-year period.
But Solarlec director Ged Rowbottom said he was both surprised and disappointed at such drastic cuts outlined in the DECC consultation.
"We knew the Feed-In Tariff was under review but no-one in the industry expected a cut of almost 90%, or that it could be scrapped altogether as early as next year," he said.
"It is particularly disappointing since the Energy Secretary, Amber Rudd, vowed to "˜unleash a solar revolution' when she was appointed just after the election in May, suggesting millions more homes should have solar panels on their roofs. Now her department is proposing to remove a key incentive to achieving that goal.
"If this goes ahead it will certainly have a negative impact on the solar power industry, which employs an estimated 340,000 people across the UK, and on the move away from non-sustainable fossil fuel energy supplies.
"People will still fit solar panels because of the big savings on their energy bills - especially as energy costs continue to rise while the cost of installing a good quality solar panel system is coming down. But removing the Feed-In Tariff incentive will put the brakes on what has been a growth industry."
The DECC consultation, which ends on October 23rd, has also drawn strong criticism from environmental groups. Alasdair Cameron, from Friends of the Earth, commented: "Of course the Feed-In Tariff should fall as solar becomes cheaper, but the Government clearly plans to remove support entirely. This is politically motivated and will take away power from people and hand it back to big energy firms."
Now the industry is bracing itself for a rush of new customers keen to have solar power systems installed under the current arrangements and to secure their 20-year Feed-In Tariff payments before they are drastically cut or even removed from the beginning of next year.
Ged Rowbottom added that in itself would be very bad and "nonsensical" for the industry, which could struggle to cope with a huge rush of customers over the next four months then experience a sudden drop-off in the New Year
