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UK Prime Minister responds to industry group’s call for critical Government support for solar

David Cameron assures Solar Trade Association that Government and industry will continue to work together on laying the foundations for the successful future of solar in the UK.

The Solar Trade Association has released a letter from UK Prime Minister David Cameron, in which Britain’s leader responds to the group’s recent request1 that the UK Government “act to secure the UK solar industry and strengthen the country’s position on the thriving global solar market.” Specifically, the Solar Trade Association has voiced its serious concerns about the levels of uncertainty in the solar power industry as a result of proposed policy changes by the UK’s Department of Energy and Climate Change. These proposed policy changes, the group argues, would restrict solar’s growth in cost-effective applications such as large-scale rooftop and ground-mounted schemes.

In its letter to Prime Minister Cameron, the Solar Trade Association stated: “Just a short period of stable Government support is needed to deliver subsidy-free solar in the UK [by the end of the next Parliament]. We very much welcome the very positive benefits solar parity will deliver for UK businesses, including improving international competitiveness, lower energy price inflation and improved electricity sector competition.”

In presenting its case to the Prime Minister, the Solar Trade Association provided supportive statistics:
 

  • Thousands of UK businesses have already invested in onsite solar power in order to reduce their climate impact and to benefit directly from more stable energy costs.
  • The UK industry comprises more than 2,000 SMEs, directly employing 16,000 people.
  • 61 per cent of the value of large-scale solar investment accrues to the UK — higher than the rate seen for many other energy sources.

Prime Minister Cameron indeed acknowledged the positive impact of solar, adding: “It is clear from the rapid deployment of solar PV in the UK over the last four years, that is has the potential to play a valuable part of the UK’s renewable energy mix.” The Prime Minister, in his response, went on to say that “solar PV remains one of the priority renewable energy technologies set out in the Government’s Renewables Energy Roadmap and its subsequent updates.”

At the same time, however, the Prime Minister stressed that it is essential that the UK Government maintain strict control over the impact on consumer bills. Large-scale solar PV, under the Renewables Obligation, is deploying much faster than previously expected, and the Government is concerned about the impact this could have on the Levy Control Framework (LCF). As the Prime Minister explained: “As the costs of levy-funded schemes are paid through energy bills, the Government takes potential risks to the LCF very seriously.”

Having considered a range of options, the UK Government has proposed closing the Renewables Obligation to large-scale solar developments from the end of March 2015. This, according to the Prime Minister, will include a “grace period” for projects which have already made significant financial investments. 

Not far enough?

While the Solar Trade Association seemed appreciative of Prime Minister Cameron’s feedback and thoughtful responses, the group cited a recurring sore point in his response. “The Prime Minister, however, yet again repeated the Government’s emphasis on growth in solar PV on larger scale commercial roofs, without recognising the policy barriers currently in place that are hindering deployment in that sector  – in particular the failure at the top end of the Feed in Tariff (FIT),” an STA press release stated. “DECC’s own impact assessment shows that the changes they are proposing to the existing FITs will add only 5 to 15 of the largest roof schemes per year and could lead to a cut in overall PV deployment by 2020 of 420 MW.”

Meanwhile, it is the UK Government’s position that the Contracts for Difference (CfD) being introduced under Energy Market Reforms will provide a “viable route” to market for larger scale solar PV going forward. On that issue, Prime Minister Cameron noted: “With the sector’s continuing drive towards subsidy-free solar, it should be well placed to compete in CfD auctions. As a number of large-scale solar PV developers have publicly recognized, the inherent merits of a CfD could make it more attractive than the Renewables Obligation, despite the allocation risk.”

Leonie Greene, head of external affairs at the Solar Trade Association, outlined a path in moving this issue forward, citing a few ways in which the association and Government can work together effectively:
 
  • Make absolutely sure that Contracts for Difference will work for solar
  • Retain (but review) the existing RO to ensure we don't lose the level playing field for solar
  • Fix the Feed in Tariff for large roofs as soon as possible
     
“The solar industry has done its bit to lay the foundations for the successful future of UK solar,” Greene stated. “But we can’t start building the house if the architect keeps changing the designs. Solar can become subsidy-free next Parliament, but only if Government provides a level playing field and stable policy.”

Prime Minister Cameron encouraged the Solar Trade Association to continue its productive discussions with the DECC, adding that he hopes this important dialogue will continue as Government works with industry on “laying the foundations for the successful future of the solar PV sector in the UK.”

In the interim, the Prime Minister said the DECC is currently “considering the consultation responses and will issue the Government’s response shortly.”
 
 
REFERENCES
 
  1. The letter to the Prime Minister, which was delivered by the Solar Trade Association on Monday 7 July, was from a wide coalition of both big and small businesses, including household names such as IKEA, and asked the Prime Minister to back the UK solar industry. Signatories included Triodos Bank, Ecotricity, KYOCERA, Interface, Good Energy and the Centre for Renewable Energy Systems Technology at Loughborough University. The letter highlighted the critical importance of commercial and industrial roofs, as well as solar farms, in delivering low-cost solar. It urged the PM to secure the UK industry with an eye on the £78billion per annum global solar market anticipated in 2020.

 

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Energy efficiency  •  Energy infrastructure  •  Photovoltaics (PV)  •  Policy, investment and markets

 

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