UK Solar Subsidy Cuts: How to Kill an Industry

UK Solar Subsidy Cuts: How to Kill an Industry

Due to proposed subsidy cuts, the future for the UK's solar industry looks extremely dire.

In other countries, the economics of solar energy is rapidly improving. In Europe, installation figures in France, Italy and Germany are increasing rapidly; in the US, Obama boasts that every two minutes a new solar system is being installed. And while India has set a target of lifting millions of people out of poverty through solar power, the UK appears to be going in the opposite direction. An 87% cut in the Feed-in Tariff (FIT), the subsidy that is funding small solar installations, will have come into force between 2010 and January 2016 if the latest FIT cuts take effect.

The evidence so far is, that since it was announced at the end of August, the solar industry is already suffering from these subsidy cuts. Three solar companies: 'The Mark Group' 'Climate Energy' and 'Southern Solar' have all gone into administration and are facing bankruptcy. In addition, Zep Solar UK, a subsidiary of SolarCity, is considering taking operations out of the UK. In just one week over a thousand jobs have been lost in the industry, and it has been estimated that a total of 20,000 jobs could go. On top of this, the Solar Schools initiative run by the charity 10:10, that installs solar panels on schools to cut energy use and teach children about energy, also now faces closure. Serious questions are now being asked as to whether the industry really can survive this onslaught.

Of course, as the cost of solar declines while efficiency increases, subsidies have to be adjusted to reflect this, but this should be done gradually so as not to damage the industry. Taking such sudden and drastic measures, is not good business strategy. This is unless of course your aim is slowly to kill that industry, which appears to be exactly what the UK government is trying to do. Let us remember that these tough, drastic and anti-business cuts are being enforced by a party which prides itself on being pro-business. It is reasonable to ask where the pro-business argument comes into this unfair attack on the solar industry.

The government has defended these measures by saying that they had to cut subsidies to protect energy bill payers. But again this argument does not really hold up. Yes, it is true that subsidies, such as the FIT, are paid through our taxes and show up as such on our energy bills. But this is nothing compared to the huge amount of subsidies we also pay for the Hinkley Point C nuclear power plant, together with tax breaks for fracking and North Sea oil and gas. Compared to those, solar subsidies are peanuts. No matter what your views are on nuclear power, directing greater subsidies at it while reducing subsidies for renewables does not make economic sense. The role of subsidies is, eventually, to make a young industry stand on its own feet, and not to feed mature energy technologies.

Instead, it begins to appear more like a Conservative attack on solar, based on ideology rather than economics. This view is summed up perfectly by the managing director of the solar installer Lake Energy, Jonathan Selwyn, who said to the Guardian: "when the government talks about nuclear and fracking [shale gas] it's all about investment in energy security and jobs. When it talks about renewables - not just solar - it talks about the costs to hard-working British families"

There is no doubt that the present policy has established an unfair playing field. This is as far removed from the Conservative's free market policy as it can get. And in fact, they are using regulations to support industries that they like, or in other words, enabling measures to support vested interests that fund their party and members.

But if we were to concentrate on value for money, let us look at the present energy policy. That policy is spending millions of taxpayer money on a shale gas industry that might not even take off, and on subsidising nuclear by more than our previously most expensive subsidy, which is the one we already pay for offshore wind. Can you see the hypocrisy?

The reality is, that a tiny fraction of those sums that are subsidising nuclear and fracking could be spent safeguarding a British solar industry. This is an industry that is, in fact, creating jobs and investment in the British economy and is delivering clean energy that helps the UK to meet its legally binding climate targets. Targets that are now threatened by the subsidy cuts.

Another version of this was published on A greener life, a greener world.


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