Axeing feed-in tariff expected to devastate solar sector

The solar sector will see widespread job losses and company closures if the government proceeds with plans to axe the feed-in tariff (FIT) without a replacement, a new survey has indicated.

The poll conducted by a subsidiary of the Renewable Energy Association (REA) found 78 per cent of the 140 solar installers who responded are considering reducing staffing levels if the proposals are enacted in their current form, whilst 40 per cent are considering leaving the sector entirely.

Half of the respondents said they would cut more than 75 per cent of their workforce if the changes went ahead.

The FIT mechanism was introduced in 2010 to support the adoption of small-scale (less than 5MW) low-carbon generating technologies. As of March 2018, more than 800,000 installations with a combined capacity of 6GW were registered with the scheme – many of them solar panels fitted on the roofs of homes and businesses.

Beneficiaries receive payments for both the power they produce (the generation tariff) and for the power they supply to the grid (the export tariff).

In July, the Department for Business, Energy and Industrial Strategy announced plans to close the scheme to new applicants from 31 March 2019 without implementing a replacement.

REA warned there could be thousands of job cuts if the sentiments expressed in the survey are representative of the sector as a whole. It noted that around 9,000 roles were lost the last time the government cut FIT rates in 2016.

An annual report published by the trade body found nearly 11,000 people were employed in the solar PV sector in 2016/17.

REA said the withdrawal of the export tariff would essentially mean that new solar installations would receive nothing in return for feeding power into the grid. It called for the export tariff to be retained to “soften the blow” of removing the generation tariff.

The association also petitioned for favourable tax arrangements for small-scale renewables to “alleviate the cliff edge in support coming next year” and maintain deployment rates until “truly subsidy-free projects begin to emerge en-masse”.

It said onsite renewables should be exempted from VAT and eligibility for Enterprise Investment Scheme and Enhanced Capital Allowance tax relief should be reinstated. This support was previously withdrawn on the basis it provided a double subsidy, but the REA said the argument will no longer hold water once the generation tariff has been removed.

The trade body additionally suggested that the Energy Company Obligation scheme could be reformed to support onsite renewable generation as a means to alleviate fuel poverty.

“While we would not normally be so stark, it is becoming increasingly clear that the government is endangering the jobs of thousands with the current proposals for the closure of the feed-in tariff without any adequate replacement alternative measures to assist this important sector,” said REA chief executive Nina Skorupska.

“The world of energy is changing from one dominated by centralised energy generating systems, to one based on local distributed energy which is ideal for solar,” she added.

“Combined with battery storage technology, solar has enormous potential to meet our energy needs now and for generations to come.

“The government should be deploying its energy policy to support the solar sector’s growth and not pull the rug from under the feet of thousands of hardworking business men and women up and down the country.”

Mark Smith, director of ZLC Energy, said: “I think the general population would be utterly dismayed to hear what is being proposed for the current feed-in-tariff scheme. For solar generators to not be paid for energy being exported onto the grid makes no sense at all.

“There is clear evidence all around us right now that the world’s climate is changing. The deployment of small to medium scale solar on rooftops in the UK is a cheap and easy method to assist in reducing our reliance on fossil fuels.”

Clean growth and energy minister Claire Perry was recently sent an open letter signed by more than 200 people calling for the export tariff to be maintained.