Comment: Government is killing solar industry
The government has left the solar industry in complete chaos. Its green credentials are in tatters.
By David Hanson MP
A little over a year ago prime minister David Cameron stood next to energy secretary Chris Huhne and committed the coalition government to the path of being the “greenest government ever”.
Last week the government confirmed plans to reclassify the tariffs for solar installations. A move that the solar industry has been clear will “effectively kill” the sector in the UK.
This decision has left the solar sector in complete chaos after a bungled review into feed-in tariff rates only ten months after the scheme became operational.
It was all so different back in February 2010. The previous government, under then-energy secretary Ed Miliband launched plans to reward home owners and communities who generate their own clean electricity on a smaller scale. This meant providing people with incentives to help them reduce their use of carbon-based energy through feed-in tariffs.
The need for governments to move towards a low carbon economy has become more pressing in recent years. The alarming results of climate change are already starting to be seen and the price and sustainability of oil means that we need to invest in long-term renewable alternatives.
The scheme provides guaranteed financial return to people, communities and businesses who install and use clean electricity generation technologies up to five megawatts (which could power 2,000 homes).
The feed in tariffs have been a huge success, having helped to provide 14,000 homes with photovoltaic technology and enabling community groups to begin to develop viable business plans for locally owned renewable energy developments.
This scheme encouraged new manufacturing by companies across the UK and particularly in North Wales. Sharp in Wrexham and Kingspan in Holywell in my constituency invested to make the most of this opportunity and push themselves forward in what is an increasingly competitive global market.
In opposition, current energy ministers were supportive. In 2009, the then-shadow minister Charles Hendry, endorsed the We Support Solar Campaign, stating that he hoped that one day the UK sector would rival that of Germany. Last year the then shadow minister Greg Barker MP backed community energy as “the perfect expression of the transformative power of the Big Society”.
Indeed, when in government Huhne himself took part in an event at Sharp’s Solar Factory in Wrexham to celebrate the doubling of their production and creation of 300 additional jobs on the back of feed-in tariffs. He stated, "This is excellent news for the solar industry and for Sharp, which shows that green growth is a vital part of our economic recovery".
However, two weeks later, he announced the review that has caused such consternation within the UK solar industry.
The government then consulted on its proposals which would reclassify all systems greater than 50kW as large scale. This is key as it would mean that the 50KW level would affect community-scale schemes (such as local authority, school and hospital schemes) – not just the solar farms that the government highlighted as a concern.
I raised the concerns of Kingspan and others repeatedly in the House of Commons and met with the energy minister Greg Barker, but it was clear from the outset that despite the lip service it had previously given to green growth that the government was not going to listen to the voices of the sector and opposition MPs.
Indeed, last week, when the government announced that they were pursuing this policy change, the consultation results showed that 81% of responses to the government’s fast track FIT consultation disagreed with the new solar power tariff rates.
Solar energy is exactly the type of energy we should be encouraging in the UK. The decision to cut reclassify feed-in tariffs in this way will lose us major manufacturing opportunities, jobs and global competitiveness.
The industry has seen a 230% growth in jobs in solar installations since the introduction of the feed-in-tariff. Investments in major UK manufacturing opportunities like Kingspan's insulate and generate solar roofing are now in jeopardy, as investors move away from the UK. Instead of expanding and developing further opportunities, many of these jobs are now under threat.
This decision is short-sighted and it came in a week where the first of the major energy companies in the UK announced it was to increase gas prices by 19%. Countries like Germany, Japan and China are all investing in the solar sector as they recognise it is an economic driver for the future and a way to rebalance the energy economy.
The chairman of the Solar Trade Association has warned that: "Ironically crushing solar makes zero economic sense for UK plc because it will lose us major manufacturing opportunities, jobs and global competitiveness. It also risks locking us in to more expensive energy options in future.”
I believe that the Renewable Energy Association is putting it mildly when they describe this move as a “horrendous strategic mistake”.
The government has plunged the solar industry into chaos and in failing to support the green technologies and jobs of the future its green credentials are in tatters.
It is time for a rethink.
David Hanson has been the Labour party MP for Delyn since 1992.
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