Sunday, February 19, 2012

The UK Feed-In Tariff Saga Continues…

This is a special guest post from Martin Breeman of Intelligent Energy Solutions, a regular reader of our site. Enjoy his useful perspective on the crazy story (as it now stands) regarding the UK’s solar feed-in-tariff scheme:

At a time when unemployment is reaching record levels in the UK, people could be forgiven for asking why the government insists on cutting the feed-in tariff rates for solar power in such a drastic manner, when they have been driving growth in the sector, creating much-needed jobs, and generating tax revenue. The main issue behind the government’s actions is that the feed-in tariff scheme is in danger of exceeding its budget, but the decision to cut the rate before the consultation period had finished simply didn’t make sense, which is why the High Court deemed it to be illegal.

Similarly, the government’s choice to appeal this decision doesn’t seem to make much sense either, and it has only served to cast a shadow of uncertainty over the UK solar power industry. It’s clear that the economy is stuttering with several growth forecasts downgraded over the course of 2011, and it’s quite hard to see where the recovery might come from, with many experts predicting more trouble for Europe in 2012. This is why it is important for the UK to generate its own domestic demand without relying on export-led growth from Europe and the solar power industry, one area which has been thriving from the government support in the form of feed-in tariffs.

Many academics and experts in economics often discuss ways to stimulate an economic recovery, and their focus often includes government investment in infrastructure projects, which create much-needed jobs. This includes areas such as transport, housing, and energy, which is why the decision to halve the feed-in tariff for solar panels with such a short notice period has been criticised by many supporters of clean energy.

With the scheme in danger of surpassing its budget, action needs to be taken, which includes either reducing the feed-in tariff or extending the budget. If the government chooses to reduce the tariff, this should be carried out in small steps over a long period to reduce the impact on an industry that has experienced a recent and rapid expansion. The alternative is to extend the budget to support the 4,000 solar businesses operating across the UK, but there appears to be very little discussion on this choice, which may show that the government doesn’t even consider it an option.

The UK government’s commitment to clean energy will be closely examined in the coming months and the manner in which it chooses to reduce feed-in tariff rates will have a significant impact on one of the only industries helping to stimulate growth and create jobs in the UK.

For those looking to install a solar PV system this year, Intelligent Energy Solutions suggests you make sure that the installation is completed and registered before the 31st of March 2012, to give you the best chance of receiving the original feed-in tariff.

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