Solar FIT to Bust #3

Jeremy Leggett of SolarCentury is just one of the sunshine power leaders begging the UK’s Coalition Government to hold fire on drastically cutting the state subsidies, early.

Me, too, in my own way, I have been trying to address the Cabinet, through my Member of Parliament, who happens to be a Minister.

I took the trouble to hand this letter in by hand at the House of Commons – or rather – the place where mail and post gets X-rayed before delivery, these security-challenged times we live in.

To: Rt Hon. Iain Duncan Smith MP

1st November 2011

Re: Feed-in tariffs for domestic solar photovoltaic systems

Dear Iain,

I am writing to alert you to problems I have been experiencing in arranging an installation of a solar photovoltaic power generation system on my roof at home.

If the installation does not go successfully, I expect I shall be one of several of your constituents who have been let down by the start-stop nature of the Coalition Government’s support for the advancement of this vital small-scale renewable energy. I am therefore asking for your support as my democratic representative in addressing this issue in Parliament.

As you and I discussed in your surgery meeting a few months ago, increasing British solar power generation capacity is a highly desirable goal. For a number of reasons, solar generation is still expensive, not least because of the costs of hiring fitters and technicians. Yet as you yourself recognise in your role, increasing employment is for the benefit of all.

The first phase of development of virtually all energy technologies since firewood and horsepower have required the support of the state and the financing of large research facilities. Eventually, the energy technology can stand unaided and compete in the marketplace, but that initial incubation is vital to its widespread deployment and creating the economies of scale in the production of equipment.

The recent rapid increase in the size of the UK solar power installation industry has been solely down to the feed in tariff. I recognise, as do your colleagues in Government, that the feed in tariff needs to be wound down as the solar industry finds itself capable of walking on its own two feet, unit cost prices tumble with improvements in the engineering, and competition develops within the solar industry.

But it is in many expert opinions wrong to reduce state support sharply and prematurely, in the way your colleague The Rt Hon. Greg Barker MP of the Department of Energy and Climate Change has announced this week.

I understand that this is partly because of the economic situation, and the imposition of caps on budgets; and partly because of commitments made to other players in the energy industry who also need extensive subsidies and other financial support – such as the nuclear power industry.

However, since developing the energy supply in the United Kingdom is of critical importance, as identified in repeated reports from responsible authorities such as the House of Commons committees, the National Grid and Ofgem, I would suggest that support for the domestic solar power industry should be increased, not cut back.

I am willing to be corrected, but my cursory look at the figures from the most recent Digest of UK Energy Statistics report (DUKES), suggests that, last year, the feed in tariff cost the domestic energy bill payer £10 for the whole year. Of course, this figure should not be allowed to rise sharply, as this could start to make a meaningful impact on those who are fuel poor. However, it could be increased a certain amount.

Those who have not had the savings or the credit to purchase a solar power system at home will of course be paying a surcharge on their bills without receiving compensation from the feed in tariff. However, those generating power on their rooftops are providing a service to the nation, and I feel it is right they should be compensated for investing their own savings into national power generation. Domestic solar power has the potential to help prevent drastic negative steps such as opening a new coal-fired power station, something that would affect air pollution and carbon targets. The question has to be asked, even though the feed in tariff has caused an increase in everyone’s household energy bills, is the rise in domestic solar power preventing other kinds of costs, that everyone would have to bear ?

The main reasons why peoples’ energy bills are increasing are to do with the general market conditions in fossil fuels, and Government plans to levelise the playing field between high and low carbon energy sources. By contrast, green energy investment subsidy policies are only small factors in the change in the cost of bills.

The Coalition Government is considering applying a variety of means to penalise high carbon power generation, and incentivise low carbon power generation, in the Electricity Market Reform, and this financial support will be very costly. The “contracts for difference” and “carbon price floor” will benefit existing low carbon generators, such as nuclear power operators, but not necessarily stimulate new nuclear power construction. Added to which, a new nuclear power capability is at least ten years away. Instead of paying vast sums of public money to the nuclear power generators, why not put more money into the feed in tariff budget to increase generating capacity right now ?

My demand is that the Feed in Tariff budget be increased, I would suggest doubled. The Feed in Tariff is working, and resulting in a rapid increase in generation capacity from solar photovoltaics.

I would also ask that individual feed-in-tariffs are only slowly ramped down. The reason for this is because of the nature of the industry. When the generous feed in tariffs were announced, the order books of the solar power companies filled rapidly, and they have been unable to clear their back logs in a timely fashion owing to global market conditions and the availability of parts.

To cut the feed in tariff early and sharply is already having an impact on the viability of community schemes and solar power companies. Threats and actual lay-offs have already started. Order books have been closed. In your role in the Department of Work and Pensions, I would suspect you would prefer people to stay employed, so it may be an appropriate position for you to back the solar industry during the transition to lower feed-in tariffs.

I am enclosing a letter of “last chance” to my solar installer, to indicate my personal situation. Because of the state of the industry, I have been kept waiting for months for the right parts to be delivered, despite having paid a deposit in July.

Any help, advice and support you can offer would be very welcome. But in particular, I am asking for you to request your colleagues in HM Treasury and the Department of Energy and Climate Change to double the feed in tariff budget and decelerate the reduction in individual feed in tariff guarantees.

Yours sincerely,

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