MPs slate ‘clumsy’ cuts to solar subsidy

21 Dec 11
MPs have condemned the government’s ‘panicked’ and ‘clumsy’ changes to its solar power subsidy scheme.

By Vivienne Russell | 22 December 2011

MPs have condemned the government’s ‘panicked’ and ‘clumsy’ changes to its solar power subsidy scheme.

Solar panels

A joint report from the energy and climate change and environmental audit select committees today warned that the government was undermining confidence in its energy policy as well as harming the solar panel industry.

It is published the day after the High Court ruled that the cuts to the solar elements of the Feed-in Tariff scheme were illegal.

Under the FiT scheme, households and businesses that install solar panels or other means of generating renewable energy are guaranteed payments in return for the power they provide.

But the rush to install solar panels was so great that the £637m four-year funding pot was in danger of running out next year.

On October 31, the government launched a consultation proposing that the tariff rates for domestic-sized solar panels be reduced by half. To receive the tariff at the higher rate, installations had to be completed by December 12. This was before the consultation was due to end on December 23.

It is also proposed that homes have to meet a higher rate of energy efficiency before they are eligible to receive FiTs.

But the two select committees said that, while solar subsidies needed to be cut, the government had not handled the move well.

Energy and climate change committee chair Tim Yeo said: ‘Ministers should have spotted the solar gold rush much earlier. That way subsidy levels could have been reduced in a more orderly way without delivering such a shock to the industry.’

Joan Whalley, chair of the environmental audit committee, added that it made little sense to deliberately damage the commercial prospects of the solar industry.

‘As well as helping to cut carbon emissions, every panel that is installed brings in VAT for the government and every company that benefits from the support is keeping people in work,’ she said.

The committees said the government’s consultation was rushed and based on an inadequate impact assessment while the imposition of the December 12 deadline before the end of the consultation period was unfair.

The two committees are calling on the government to review and adjust FiTs in an orderly and timely manner.

Yeo urged the government to build ‘predictability’ into its energy policy. He pointed to Germany and France where FiTs are reviewed regularly and changes made with long lead-in times.

Yesterday, the High Court upheld a legal challenge to the cuts to solar tariff payments. This had been brought by environmental campaigners Friends of the Earth and two solar energy companies.

The court agreed that proposals to cut the FiT rate 11 days before the consultation period ends were illegal.

Friends of the Earth’s executive director Andy Atkins said: ‘We hope this ruling will prevent ministers rushing through damaging changes to clean energy subsidies - giving solar firms a much-needed confidence boost.

‘Ministers must now come up with a sensible plan that protects the UK's solar industry and allows cash-strapped homes and businesses to free themselves from expensive fossil fuels by plugging into clean energy.

‘Solar payments should fall in line with falling installation costs but the speed of the government's proposals threatened to devastate the entire industry.’

Climate change minister Greg Barker said the government disagreed with the High Court’s decision.

He said: ‘We will be seeking an appeal and hope to secure a hearing as soon as possible. Regardless of today’s outcome, the current high tariffs for solar are not sustainable and changes need to be made in order to protect the budget which is funded by consumers through their energy bills.’

Commenting on the select committees’ report, a Department for Energy and Climate Change spokesman said: ‘We stand by the need for the proposed changes... We will consider all responses to the consultation on FITs for solar carefully and will announce the outcome early in the New Year.’

CIPFA logo

PF Jobsite logo

Did you enjoy this article?