In the latest developments, Chris Huhne has suggested that a ‘capacity trigger’ model of subsidy restriction could be used in the future to limit the amount of subsidy available for solar PV installations. The idea follows the German model, and will be discussed in consultation documents to be released before the end of the year.
In light of the changes, many companies have commented that they may be unable to progress projects. Ecotricity for example has cancelled plans for a solar farm in Somerset, while electronics giant Sharp is reviewing its plans to invest in the UK:
Sharp’s Andrew Lee told REfocus, “we are genuinely concerned by the Government’s comprehensive review of the feed-in tariff. We are also particularly critical of the 12 December deadline set for the change in tariff, as this will have negative connotations for businesses and individuals with plans already in place to install solar PV that are not able to meet this short deadline. This review time frame is unrealistic, and like any good business we have to review our position and our offering in line with market changes. We have written to the Prime Minister to communicate these points.
“However, there are no plans to shut our manufacturing plant in Wrexham. There have been workforce fluctuations at our plant in response to variable demand within the European market. Decisions made by the UK and other European governments do affect our industry.”
Many firms are now frenetically engaged in trying to complete projects before the 12 December deadline, while also doing their best to try and adapt their business strategy. While some privately accept that Tariff payments were initially set at too high a level, there is widespread concern throughout the industry that two changes to the scheme in a matter of months (the second giving little time for businesses to adapt) could effectively scare off investors and kill the industry, leading to the loss of some 25,000 jobs.
Climate Change Minister Greg Barker is taking part in an enquiry to determine the effect that rapid cuts to FiTs will have on the UK solar industry. The inquiry is being chaired by Tim Yeo and will see the CC Minister, along with DECC Permanent Secretary Moira Wallace and Director General Simon Virley being questioned by members of the Energy and Climate Change Committee and Environmental Audit Committee.
The inquiry will also press Barker to reveal exactly how much FiTS will add to domestic energy bills after he suggested on Twitter that this figure was likely to be £55, while Chris Huhne implied it could reach £80 by 2020. Industry representatives have accused the department of inflating this figure in order to justify the cuts.
Controversially, the consultation on the proposed cuts is due to end after the 12 December cut off point, something which has led to a legal action against the Government. The High Court has agreed to hear applications by Friends of the Earth and two solar companies – Solarcentury and HomeSun - for permission to challenge Government plans to slash financial incentives for solar electricity on Thursday 15 December 2011.
Confirmation of the hearing follows an earlier High Court ruling [Friday 25 November 2011] rejecting permission for a legal challenge. The organisations are now asking the High Court to reverse the decision and allow a hearing into the legal challenges as soon as possible.
Friends of the Earth is also asking the High Court to cap its potential legal costs for the case. International rules specify that costs should be limited in public interest cases on the environment.
Sources - Business Green, The Press Association, Financial Times, and ClickGreen: reporting by Robin Whitlock.