The Government’s official stance is that the cuts are to do with the fact that the photovoltaic equipment prices has fallen considerably (by up to 30%). In essence, the feed-in tariffs were implemented to counteract the unreasonably high prices that were charged for installing the photovoltaics – they were not designed as a money making mechanism.
Private homeowners shouldn’t be worried though, there’s no direct threat to home installations. A lateral damage may occur if too many solar energy companies go out of business – our consumer prices will then rise inevitably.
The part of the eco friendly energy industry that is affected is the large-size installations – solar farms, for example. They used to get paid 32.9 pence per kWh and now the solar incentive for commercial photovoltaics is set to fall to 19 cents per kWh.
The Feed-in Tariffs Had to Decrease
Yes, it is a steep fall, but the incentive was bound to decrease eventually. It is falling everywhere in the world. For example, Germany is reducing its FiTs regularly. Last year the German FiTs were higher than in the UK. At the beginning of 2015 it was reduced to around 24 pence per kWh and it is planned to cut it by another 15% very soon.
It is difficult to take a position in this situation, especially for somebody who is pro-sustainability. However, you have to understand the Government’s position. Yes, maybe they’re making a mistake in a way that they’re applying such a steep cut suddenly. Still, not cutting the commercial feed-in tariffs would mean that some companies delivering eco friendly energy would end up profiteering on the back of our ever-increasing fuel bills.
Finding the Right Balance
How does that come about, you might wonder? Well, when the feed-in tariff was started in April 2010, it was made perfectly clear that the amount of subsidy is limited and that the money should be spent prudently. It is estimated that implementing the feed-in tariffs adds around £8.50 to our gas/electricity bills every year. We are paying out of our pocket so that the country on the whole can implement eco friendly energy production. I’m fine with that! However, with the photovoltaic elements entering mass production, their prices are falling and we don’t have to support the installers with the same amount than we used to. That, my friends, would be a clear case of profiteering and green-washing.
During the last two years, the UK solar industry has grown to a 25,000-employee mammoth. What I am afraid of is that cutting the tariff so steeply might see some of the companies going out of business. If I was to advise the Government, I’d say – spread the cut over a longer period of time. What do you think?
