Government cancels own solar projects after FiT cuts

Plans to install solar panels on hospitals and council buildings are feared to have been hit by the government’s own feed-in-tariff (FiTs) cuts, leading to cancellation of a number of projects.

Following a Cabinet Office meeting in November, departments across Whitehall were told to assess the potential for the installation of solar panels on a variety of government owned buildings, however it appears that due to the recent changes to the FiTs, the projects are now unviable.

Business Green has been made aware that the government’s own plans for solar installations are subject to a rather embarrassing u-turn – seemingly caused by its own policies.

While the panels could have been used to generate more income for cash strapped services, the Department of Energy and Climate Change’s review of subsidies for installations over 50kW has meant that procurement firms such as Buying Solutions will no longer be able to continue with plans to install panels everywhere from buildings to unused land.

“All stakeholders were told that it has been decided not to proceed with the Solar PV Project because of the impending changes to the FiTs for solar PV and therefore it wouldn’t be prudent to continue,” said Katie Moore, co-founder of the Solar Club, a community which was planning on investing in the government scheme.

Unfortunately the Cabinet Office was unable to comment on questions as to why the programme has been stopped, even before the consultation, as part of the review is due finish on 6 May. And whether cancelling its own projects sends the correct message to the industry that it is supposedly trying to be supporting, giving scant hope for positive answers to either.

The review and consultation have caused uproar in the solar industry due to the difficulties it places on larger installations, a change in policy that is meant to help small-scale projects, with claims that costs will go up across the spectrum as big suppliers will not be enticed to the UK industry.

TechEye spoke to the Department of Energy and Climate Change, DECC, which was keen to downplay responsibility in the cancellation, denying that it had direct involvement.

However, a spokesperson highlighted that it was not the original aim of the FiT scheme to provide large scale installations with subsidies, with the focus on spending the money raised by energy bills from home users to return to smaller scale installations.

When asked whether the larger scale investments were part of the government’s agenda it was said that “if this does happen in the industry then this is fine, but we are aiming to encourage smaller projects, with around 25,000 having already benefitted from the scheme.

“What we are doing is trying to avoid a boom and bust by making sure growth is sustainable.”

Of course this is likely to hold little sway with critics who see large scale installations as a vital part of the overall system in which costs, for example for components, could be lowered.

According to solar expert at IMS Research, Ash Sharma, it is clear that the cancellation of the government solar projects are symptomatic of a lack of confidence by those seeking to put money in solar technology.

He believes that the cuts to incentives will leave returns far lower than the 10 percent seen in many parts of Europe which “stimulate” but crucially do not “overheat a market” making installations less attractive.

The knee-jerk reaction seen in changes to the incentive system, without proper industry consultation, are damaging to the UK’s reputation for being a stable place to invest in.

“What happens if an investor backs a plant and the government changes its mind again and cuts tariffs when you’re only halfway through an installation,” he pondered to TechEye, “or decides to retroactively cut tariffs or retroactively impose additional taxes like we’ve seen in other countries?

“It makes it very difficult to attract investment again if perceived as too risky.

“Currently the cuts are too severe to stimulate any non-residential system growth – the rates are far too low to make systems over 50KW financially viable.” 

Also, as with the cancellation of the government scheme it is clear that without installations the jobs that are potentially on offer for installing the panels are put at risk.

“It is difficult to quantify but this industry could have created tens of thousands of jobs which will now disappear,” Sharma continued.

“It could have also attracted local manufacturing and additional tax income which if handled correctly could have offset much of the financial burden of paying feed-in tariffs.

“In contrast Germany is aiming to employ 130,000 people within its photovoltaic industry.”