Treasury, DECC & EU vs. Solar industry

Working in the renewables industry, particularly solar, feels like a constant battle against an ever-shifting enemy. Challenges appear to randomly materialise almost on a monthly basis, forcing industry to limp from one fight to the next. Just when the industry thinks it has managed to successfully navigate the choppy water, a fresh storm breaks sweeping it back into treacherous seas. The sense of optimism that greeted the beginning of 2013 from within the solar industry was palpable; the troubles of the past seemed just that, a thing of the past. The industry had stable policy and was even elevated to a key technology in government’s thinking. Seasoned solar veterans warned me that the period of stability was to be short-lived – I dismissed them as cynics whose sense of perspective had been eroded by years of lobbying a succession of disinterested ministers. However, true to the veterans’ word, the European Commission (EC) announced that it was taking the UK government to court over the reduced VAT rate that solar and other energy-saving technologies enjoy. Hot on the heels of that announcement the EC also announced that it would be imposing the mandatory registration of all imported Chinese solar products in case it wanted to enact retroactive measures. Cue the uncertainty. Suppliers across the UK are now unwilling to import Chinese panels for fear of substantial retroactive duties. When you throw in poor exchange rates and limited availability you create a volatile cocktail. But at least back home the domestic solar policy is finally stable and predictable, right? Well, not quite… Announcing the FiT rates from 1 May, Ofgem listed that the quarter would end on 1 July not 1 August – shortening the FiT period by a month. The decision to shorten the FiT period wasn’t even trailed by DECC. Even when it was ‘announced’ it was just published in small print on the obscure, convoluted back pages of the Ofgem website. The logic behind the change in date is sound – to align solar PV’s quarters with other technologies – but why oh why did DECC feel the need to sneak the announcement out? The whole saga has jeopardised the slowly healing relationship between DECC and the solar industry. Could the Treasury and the chancellor Mr Osborne come to the rescue? The notoriously fossil fuel addicted Osborne (and extended family) has repeatedly pushed for a watering down of the UK’s green commitments. However, before the 2013 Budget, Treasury said it would be accepting the “overwhelming majority” of the recommendations from Lord Heseltine’s 2012 report on boosting growth in the UK; one of these warned that without the “real certainty” of a long-term energy policy, investors will “simply not risk the enormous sums of capital” needed to develop the UK’s energy infrastructure. Surely opening the door for Osborne to praise the shovel ready and low-carbon renewable projects across the UK. Or not. Osborne chose his words very carefully when he said in his Budget speech: “Creating a low carbon economy should be done in a way that creates jobs rather than costing them.” The chancellor then moved on to praise “low cost” shale gas, gifting it a “generous tax regime”. Anyone involved in renewables will take immediate issue to the Osborne’s use of “low cost”. In a recent Energy and Climate Change Committee investigation into the impact of shale gas, DECC itself stated: “EU shale gas production is not expected to have as great an impact on EU gas prices as has been the case with US shale gas production.” The Chancellor also talked up the proposed nuclear development at Hinkley Point, describing it as a “major step forward”, despite the failure to agree a strike price. There are various reports circulating that DECC will offer EDF a strike price of around £100/MWh for up to 40 years – much more generous terms then those being discussed for any renewable technology. STA head of external affairs Leonie Greene said: “The chancellor's fixation with old technologies flies in the face of mainstream evidence. The World Bank said last year that business as usual in the face of climate change presents an international crisis. Rising fossil fuel prices are impacting on inflation and household energy bills. Ofgem analysis shows a gas supply crunch is coming our way, increasing prices. For all these reasons, it is vital to divert energy infrastructure investment into renewables as quickly as possible. “Renewable technologies like solar need bold leadership and a positive vision if we're to compete successfully in the global race the Prime Minister keeps highlighting. We’re on a path to nowhere if his Chancellor continues to ignore climate change, the economic potential of the green economy, and the dangerous upward trajectory of fossil fuel prices.” So here we are again: solar against the world. It’s time to dig deep and start sharpening up the industry’s accidental expertise – lobbying. http://www.solarpowerportal.co.uk/editors_blog/treasury_decc_eu_vs._solar_industry_2356