05 May 2011 08:05:00
Last Chance to Respond to the Solar FIT Review – This is LowCarbonEconomy.com's submission...
We have only one day left to respond to the Government's Solar FIT Review – if you have not already done so, the link is:
https://econsultation.decc.gov.uk/decc-policy/fits_fast-track_review/consult_view.
We have posted our response below.
1. Do you agree or disagree that there is a need to limit access to FITs for large scale solar PV installations in order to meet spending review targets? Please give reasons for your answer. If you agree, what do you think is the best way of doing this?
Disagree. The spending review targets were based on completely flawed and inaccurate predictions, generated by consultants that market evidence has proved beyond doubt, lacked a basic understanding of how the FIT would likely stimulate larger UK PV projects – hence no larger installations above 10kWp were predicted by them for a number of years. This is an accepted fact by DECC.
It is therefore completely illogical to prevent the valuable benefits that either small scale or large scale solar PV arrays can deliver the UK, just in order to meet specific targets in the spending review – when it is clear to all that the targets were based on wildly incorrect data in the first place.
Large-scale solar PV is a necessary part of the energy mix. Just because it was not predicted by people who really should have known better, this is not a good reason to try and prevent it happening by limiting access to FITs for large scale solar PV installations.
DECC should either admit that the budget submitted to treasury was incorrect, based on inaccurate predictions generated by consultants employed to the previous government, and submit a revised budget that allows for larger-scale projects to also flourish, and/or alternatively combine both the under spent ROC and (predicted to be) overspent FIT budgets to create a single vehicle which has the capacity to support both large and small scale solar projects.
2. Do you agree or disagree with the proposed new tariff bands and the accompanying proposed reduction of tariffs for PV installations in these bands? Please give reasons for your answer. If you disagree, please provide evidence to support an alternative.
Disagree. It is neither reasonable, or in the best interests of the UK, to create tariff bands that prevent any scale standalone solar PV from happening in the UK (currently the proposals put a 1kWp standalone PV array in the same ballpark as a 1GW offshore wind farm – this is illogical by any standards).
Furthermore, larger scale solar PV arrays up to 5MWp, especially on large rooftops, offer significant benefits and should be encouraged, not discouraged. These benefits include greater energy security through more widespread use of decentralised energy, and protection against rising energy costs. Large buildings are often a necessity for large energy users such as factories, or hospitals which use significant amounts of energy in daylight hours. As such it makes no sense to only be able to place a very small PV array on the roof of a large building. The amount of power produced should be able to be in-line with the energy demands on the building. Furthermore, excess energy produced should be allowed to be exported to the grid to contribute to the UK’s low carbon energy needs.
The 50kWp to 150kWp limit is financially unviable for many companies using UK manufactured technology, such as Sharp modules, especially small companies who cannot benefit from economies of scale and greater buying power (hence lower costs). It also increases the demand for lower cost primarily Chinese modules as these generate greater financial returns.
The 250kWp limit is only financially viable if you use the oldest, and cheapest amorphous silicon single junction (mainly Chinese manufactured) technology. Is this really what we want in the UK?
Instead of putting the best technology on large UK roofs, such low tariff levels for larger projects will ensure that the cheapest, lowest efficiency technologies are used, as these will guarantee the best returns, as space is then no longer an issue. Surely this is the opposite of what the UK needs or wants – rather than being left with a 25-year legacy of roofs containing the lowest efficiency, lowest cost modules. Surely it is in the best interests of the UK to have a policy that ensures people will focus on advanced PV solutions that are optimised to deliver the most amount of power for every viable roof?
An alternative to this situation happening, is to cut ALL tariff levels across the board by 25%, and to then merge the under-spent ROC budget with the over-spent FIT budget. This solves the fundamental challenges:
1: The tariff’s levels are reduced as they are currently too generous due to the reductions in costs in the solar industry. This means the subsidy is used in a more efficient way, however solar PV projects at all scales remain financially viable.
2: Because ROCs are designed for large-scale projects, and FITs for small-scale projects, the newly merged budget will have been designed to support both small and large-scale projects.
3: This will restore faith in the UK as a safe place for low carbon investment. This is critical, especially given our impending wider energy challenges over the next decade, that will require many billions of investment to resolve.
3. Do you agree or disagree with the proposed timing of the change in tariffs including the implementation date of 1 August 2011 and that the tariff change will apply to all installations with an eligibility date on or after that date? Please give reasons for your answer. If you disagree, please provide evidence to support an alternative.
Disagree. If the UK Government is to be perceived by both its citizens and on the international stage as serious about the transition to a low carbon economy, a safe place for low carbon investment, and really ‘open for business’ , we must provide a safe environment for investment.
Changing the goalposts in such an irrational manner has done the UK no favours, and has already frightened off countless investors, who were previously committed to investing billions of pounds in UK energy projects, in the process creating green jobs and much needed new taxable income.
The only reasonable date for any change should be the end of March 2012. This is the only way the Government can truly stand behind its claim of not making any retrospective changes, i.e. people and companies have invested millions in project development on the basis of information provided by UK Government, as it was perceived we were in safe hands. By making subsequent unpredictable changes such as implementing the proposed new tariff levels by August 1st, the Government writes off virtually all investment in any standalone project or project over 250kWp. This clearly demonstrates to any savvy investor that this would be a retrospective change, and therefore this situation should be avoided as a matter of priority to safeguard any future investments taking place.
4. Can you provide any further information or evidence on predicted uptake of installations or other insights that you think DECC should be aware of about how the market for PV is evolving in the light of FITs?
DECC’s early review has already frightened off investors, and is currently destroying the perception of the UK as a safe place for low carbon investment. Irrespective of which type of solar projects the UK Government ‘picks as the winner’, the budget will all be spent within the next 18 months, as it is insufficient to support the growth of anything but a cottage industry, because it was based on flawed predictions in the first place. When the ‘newly capped’ FIT funds are used up, the industry will collapse. To prevent this happening, the FIT and ROC budgets need to be merged immediately, the FIT rates for all bands reduced by 25%, and for all size projects up to 5MWp to become financially viable again.
This is the only course of action to prevent an inevitable boom and bust scenario in the solar industry, and to support the growth of such a popular and beneficial low carbon renewable energy technology in the UK.
