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  • Solar FIT to Bust

    Posted on October 30th, 2011 Jo No comments

    [ UPDATE : The full feed-in-tariff cut-off date has now been put back a week to 12th December 2011. Apparently that's up for consultation. A consultation that closes on 23rd December 2011. ]
    Once again the UK Government has failed to understand the Laws of Microeconomics and the need for consistency in energy policy. Once again, the nascent solar power industry in the United Kingdom will undergo disastrous reconfiguration. On Monday, it will probably be announced that the Feed in Tariff for small photovoltaic systems will be cut in half for new installations. That’s bad enough, but this widely-anticipated subsidy review would have a cut-off date of 8th December 2011.

    Wait for the howls of frustration.

    Since the Chancellor George Osborne, the “Vicious Smirker” as some have it, appears to have no idea what will happen by bringing forward the cut-off date from April 2012 to December 2011 (or has every idea and just wants to make everyone suffer) and since I blame him personally for everything that is fiscally disastrous in this country (because it makes so much sense to have one target to concentrate all ones opposition upon), here’s the draft of an e-mail :-

    Dear, no, expensive, George (and I’m calling you “expensive” because you are costing this country a lot of economic woe),

    Since this is Monday 31st October 2011, and I expect the Department of Energy and Climate Change to be announcing a major, early reduction in the Feed-in-Tariff for solar power, may I be the first to congratulate you for destroying the small-scale solar power industry in the United Kingdom.

    I’m holding you personally responsible for this decision, as you hold the pursestrings of the nation, and you have well-reported but completely uninformed opinions about renewable energy, mirrored accurately by the faceless gentlemen of the press.

    Your total lack of perception about the impact of this decision does not excuse the fact that you will be directly responsible for the loss of high technology UK companies and the subsequent unemployment.

    On the plus side, you will be fulfilling your own prophecy about the low growth potential of renewable energy; but on the negative side you are going to make a lot of people very irritated. I can hear the faint rustle of votes being withdrawn as we speak.

    Your failure to understand the wealth creation and genuine long-term assets that renewable electricity and renewable gas can bring to this country means that you are unFIT to be in charge of energy policy subsidies. In my humble, aggrieved opinion.

    Here’s what an almost immediate cut in the feed in tariff will achieve. I’m basing this on my own individual circumstances, just to give you a flavour of the pain you are inflicting on your countrymen and women.

    On 8th July 2011, I invited a photovoltaic engineer into my loft to survey it for a solar power installation. Over the next week or so, they designed a lovely clever-sounding system, so I paid my deposit. I chose a small company because I wanted to support the industry from the lower rungs, to help build it up by giving it my custom.

    The PV company were confident that they could arrange the installation on 25th August 2011, so I paid the second tranche of the bill. However, that installation date was missed. And this was because, on the other side of the world, a vital component of my system design became unavailable.

    The solar company were highly apologetic and re-scheduled an installation date with me for 13th September 2011. I did not have the time to make any in-depth enquiries into the situation at this point as at the time I was head-down in writing my Master’s Degree dissertation – my thesis researching readiness for change in the energy sector.

    The September installation dates came and went without me getting a solar power system on my roof.

    On the 21st October 2011, I received a call from the manufacturer of the missing system components, explaining the problems, apologising, and offering hope that shipments were re-starting.

    I had a new installation date set for me for 18th November. A bit late, but well, OK. Being considered as a non-priority customer was tolerable as long as I could get my PV system before the full Feed-in-Tariff ran out in April 2012.

    I had missed all the solar power from the bright summer months, but I reasoned that would be OK if I could still get the full feed in tariff deal.

    And then, on Friday, I received a bombshell – positive confirmation that the Coalition Government were going to pull the rug out from underneath the solar industry by cutting the feed in tariff by half in December, not April.

    That changed everything, George.

    Let me spell out for you what this means for me personally :-

    1. I could lose my deposit and half the cost of the photovoltaic system.

    The sudden “haircut” in the feed in tariff will inevitably cause lots of disturbance in the solar power sector. Customers will walk. Small firms will go bust. And that in a time of high unemployment. What a great move, George !

    If the small company I trusted goes belly up, then, despite any system of guarantees, I may well lose my money. I could end up with no PV system to show for all that cash. A large number of people are likely to be in the same position of risk, and they are going to be livid.

    2. I could end up missing the full feed in tariff.

    Clearly, the solar photovoltaic company who are holding my deposit have had problems in fulfilling my order. Our contract was based on the economics of the full feed in tariff. My intention was to use the proceeds from the full FiT to do something useful – help other people to get solar power on their roofs. If I miss the full FiT cut-off date, I won’t be able to do that. Great, George, you have just knived in the back my plan for a small-scale mutual solar funding scheme !

    3. I could end up with a lesser quality solar photovoltaic system.

    If I suddenly become important enough to justify getting a solar system before the full feed in tariff cut-off date, but the missing parts don’t arrive in time, my chosen installer will have to offer me a lesser design. I won’t get the most from my roof or the feed in tariff.

    4. I could end up without a solar photovoltaic system.

    If the decision about the early cut-off date is announced on Monday, there will be, I can guarantee you, a stampede at the gates, as customers besiege solar PV firms for installations before December.

    Great job, George ! Lots of business just before Christmas, but people could get crushed, and I could be one of them. If my chosen installer cannot make the dates, and I decide I’ve been strung along for long enough and jump ship to another installer, I may end up chosing a company that not only cannot deliver, but go bust at the same time.

    Small firms can expect lots of custom before December, but very little afterwards. So, a great massive hole in the order books for the New Year. What a party. Balloons and everything.

    And if all the small photovoltaic companies go bust, so will the investment funds that have put peoples’ hard-earned savings into solar. Some peoples’ 2012 Christmases are going to be very poor indeed.

    5. I could end up without a career.

    If you succeed in killing off the small- to medium-sized solar photovoltaic companies with this nonsensical sudden cut-off date and cut in subsidy, how on Earth is anybody going to justify to themselves that they need to be working in solar power ? And with a contraction in the renewable energy sector, I could end up without career prospects in energy engineering and very, very miffed. Have you thought about that, George ?

    Mr Osborne, I want accountability.

    In order to grow a recovered British economy, there needs to be at least one sector that has the capacity to grow. What you need to ask yourself is – what areas of the economy have the capacity, the capability, to grow and create wealth and genuine assets ? This is macroeconomics. Know anything about that ?

    Selling financial products or charging for currency transfers does not qualify as economic growth. The fabled Knowledge Economy does not qualify as economic growth, when there is such a high international mobility of brainy people. Privatisation of everything including utilities and local/national public works companies, and the cherry-picking of profitable services, have led to low levels of investment across the board, which has allowed the basic roads, waterways, energy networks and built infrastructure of the economy to slide into decrepitude, even as private companies have been enjoying rising share prices. But that does not count as economic growth.

    Because successive UK Governments have been pro-business, they have been pro-globalisation, and so most manufacturing industry has left the building. What things could the British build and make money, George ? Wealth and assets that stay in the country, George ?

    And let’s consider the energy crisis – who is going to pay to keep the lights on ? Ofgem in their Project Discovery said that the UK should spend £200 billion pounds by 2020 to renovate the energy sector with new investments, including low carbon energy plant. There is little movement. What on Earth is going on ? Low carbon energy investment can count as proper growth. Why aren’t we doing it ?

    How does the UK Government effectively stimulate that level of investment in the energy sector ? How are new assets traditionally created ? By subsidy, of course. Clear, targeted support. Sufficient levels of subsidy to attract money to the sector of growth. Once the money is crowding into the growth sector, the subsidy can be gently deflated. But extreme caution should be exercised, or the whole project could fall flat on its face.

    If the Department of Energy and Climate Change announce an early cut in the solar feed-in-tariff on Monday, I shall not be afraid to engage Full Derision Mode.

    You have failed to win my respect with your careless handling of this issue, and your callous, uneducated remarks about renewable energy engineering show you have been suckling on the large energy companies, fossil and non-fossil. The big players will win, George, from this change in the feed in tariff. They will win, and everybody else will lose. You can impoverish the whole country by destroying small engineering companies. Your logic is definitely on vacation.

    I nurture a sneaky half-hope that the newspapers and the deniable young Labour Party researchers find out something about your “sordid past” that boots you right out of your Ministerial role.

    You’re not worth it, so stop grinning.

    And while you’re at it, sit in some university lectures on mixed economies and the foundational role of public spending. Although you appear not to have taken in the necessity of raising taxes on the rich and corporations to trigger energy investment, you might learn something if you apply yourself.

    [ All names and exact details of technology have been redacted. The electronic mail was not finally send-ed. It felt good writing it, though. ]

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