The Solar PV Debate and FiT Cuts: Why it’s not all doom and gloom for the solar industry
The announcement from the government at the beginning of November that the government will slash solar subsidies by more than half shocked the solar industry, as many businesses panicked that it was the end of the solar industry as we know it and it would destroy businesses.
But it’s not all doom and gloom, according to a boss of a solar panel firm that Train4TradeSkills News spoke to.
UK Climate Change and Energy Minister Greg Barker confirmed on October 31 that from 12 December, Feed-In Tariffs for solar power would be cut from the 43.3p/kWh to 21p/kWh, because of a skyrocketing demand for solar panels.
Mr Barker said at the time: “The plummeting costs of solar mean we’ve got no option but to act so that we stay within budget and not threaten the whole viability of the FITs scheme.”
“Although I fully realise that adjusting to the new lower tariffs will be a big challenge for many firms, it won’t come as a surprise.”
This decision sparked anger from solar firms, who were annoyed at the prospect of not making as much money from solar installations.
But the decision is not all doom and gloom for the solar industry, as not only was it expected (although it did come into effect earlier than many had foreseen) but it was unsustainable in the first place.
“Initially the jerk reaction is that it will affect the business but once you look at the calculations of the 43p return and then you escalate that up by the rate of inflation (at 5.4%) and you actually assume the money’s invested – the return to the householder goes down to about 5 years.
Bearing in mind the situation that our government is in, really it was an unsustainable situation to be in. I was expecting it to change, not as fast as it did, but it was expected. I did say to a number of people that this level of return is unsustainable in the long-term and it was due to go down on March 31st 2012, but obviously they have brought it forward. “
“Realistically speaking the tariffs were high anyway because the cost of installations have gone down in the last few years and the return on capital the householder gets, bearing in mind they’ve got to pay the cost of installation till the Green Deal comes in, it’s quite a good return on capital – there’s still about 6-7% return on capital for installation of solar panels.”
The latest news is that the government is considering phasing in the cut to solar power feed-in tariffs, so companies who have taken deposits from customers and cannot meet the deadline, have extra time to do the work at the current prices, before the cut comes into effect on 12 December.
The Telegraph reported last week that Greg Barker is considering this, and Train4TradeSkills News will keep you up to date with the latest developments.
What do you think of the Solar FIT cuts – are the government right to do it? Let us know what you think and share your thoughts by commenting below or on the Train4TradeSkills Facebook Page.
Posted on November 18, 2011, in construction jobs, construction news, Electrical News, electrician, electrician courses, electrician jobs, Renewable Energy, t4ts, train4tradeskills and tagged Business, feed in tariffs, Feed-in tariff, FIT cuts, Government, green deal, Greg Barker Climate change, Greg Barker solar, Greg Barket, Renewable energy, roy tomkinson, solar energy, solar FIT cuts, Solar panel, solar panels, Solar power, solarwise renewables, train4tradeskills news, Train4TradeSkills Radio. Bookmark the permalink. 1 Comment.