Following on from my last blog entry, it’s alarming to hear that the UK government is planning to reduce the feed-in tariff for solar energy from households from 43p per KWh to 21p from 1 April 2012. This will seriously reduce the attractiveness of adopting solar power for both investors and householders, as less will be paid for the energy generated by their solar panels.
Why, when we know that our CO2 emissions are reaching alarming levels and we’re potentially very close to the time when we will be unable to stop global temperatures from rising beyond 2 degrees C over pre-industrial levels is the government proposing to cut back on an subsidy to encourage renewable energy?
The answer from the Department of Energy and Climate Change (DECC) is in essence – money. It seems that solar energy generation has been too enthusiastically adopted by UK householders and that if the subsidies continued to be paid at the current rate, the money would simply run out. Bearing in mind that adoption of solar energy is supposed to be encouraged and that the fact that the money is running out is symptomatic of a success story (some 90,000 households have installed solar energy since the scheme started in 2010), would it not be better to make more money available, so that even more people are encouraged to make the change?
The solar industry is still in its infancy in the UK and to cut off this funding may cause some companies to fail, simply because less people will see the reason to invest in solar power if they’re not going to see a financial reward for it. In an ideal world, people would feel compelled to make the change for the sake of the environment alone – and indeed, some probably do. But the majority will not invest in costly new technology if they can’t see the benefit in doing so.
And there’s a big argument at the moment about the way the tariff reduction has been handled. The new rate will start being paid to households installing solar energy systems after 12 December, yet the industry consultation on the tariff reduction does not close until 23 December. What’s the point in even having a consultation if the decision is being made before the results are known. Companies making and installing solar energy systems are very angry about this and I can see why. They have started legal action against the government.
There’s a real chance that a good news story for the planet (growth of solar energy companies, more investment in solar technology, greater adoption of solar generation by householders, domestic solar generating capacity increased to 321 megawatts, up from 30 megawatts before the start of the scheme) could be crushed by the proposed changes. I don’t think they make sense economically either. The feed-in tariff costs the UK £220M per year, but generates about £280M per year in jobs and VAT, according to HomeSun Chief Executive Daniel Green. Thousands of jobs could go if the cuts go ahead. So rather than making big cuts to the subsidies, why don’t we reduce the subsidies a little, increase the budgets a lot and ensure that the growth of renewables at household level continues in the UK?