Isra-Mart srl:Feed-in tariff review sparks solar industry outcry

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The government was yesterday accused of escalating uncertainty for renewable energy investors, after it emerged its new review of feed-in tariffs would affect a much wider range of solar panel installations than initially thought.

Speaking to BusinessGreen, climate minister Greg Barker said the primary goal of the feed-in tariff review was to increase support for anaerobic digestion projects and limit support for large-scale solar farms, which ministers fear could eat into the scheme's £360m budget and lead to a reduction in the incentives available to smaller-scale onsite and building-integrated renewable energy systems.

However, the fast-track review of incentives aimed at solar farms will officially cover any solar PV installation with more than 50kW of capacity, including building integrated and rooftop solar panels.

Figures from across the solar industry reacted furiously to the news, accusing the government of increasing investor uncertainty and undermining a scheme that has resulted in more than 21,000 renewable energy installations during its first nine months of operation.

"It has taken the new government just seven short months to undermine what by their own admission has been a successful programme to date," said Jeremy Leggett, executive chairman at solar specialist Solarcentury. "Bizarrely, DECC officials appear to now be advising their ministers that anything above 50kW of PV, the size of a medium school installation, is "super-size" solar. This is total nonsense."

Leggett accused the government of damaging the investment case for community and business-scale solar installations in a bungled attempt to tackle a handful of solar farms with more than 1MW of capacity. "The fact is that Chris Huhne and Greg Barker are taking a very large sledgehammer to crack a very small nut," he said.

His comments were echoed by Gaynor Hartnell, chief executive of the Renewable Energy Association, who said that while the government's review will increase certainty that feed-in tariffs for smaller installations will not now change until April 2012, larger projects were left facing an uncertain future.

"Developers of PV installations upwards of 50kW, will be left hanging in the air," she said. "DECC expresses concern about field arrays but it is fast-tracking far more than the standalone field arrays. In our view this has escalated the uncertainty."

Shadow energy minister Huw Irranca-Davies accused the coalition of watering down a scheme that had been successfully introduced by the previous Labour government.

"We have already had months of confused messages and dithering from ministers over the future of the scheme, especially for the growing photovoltaic sector," he said. "Over 21,000 solar installations have been registered so far, but there is evidence that the government's dithering has resulted in reduced uptake over the past couple of months. Installers, investors, manufacturers and householders are simply not clear on the government's intentions."

Meanwhile, green groups warned that any scaling back of renewable energy incentives so soon after the introduction of the feed-in tariff scheme would harm the UK's chances of meeting its renewable energy and carbon emission targets.

"Feed-in tariffs have been a huge success – the government should be planning to expand the scheme, not holding a knee-jerk review aimed at applying the financial brakes," said Friends of the Earth's energy adviser Alan Simpson. "This review is exactly the kind of move that will kill off the confidence of investors who have flocked to take advantage of the scheme."

Barker said he was "sympathetic" to concerns the fast-track review of large solar installations could affect building-integrated projects, and reiterated the main aim of the review was to cut support for large-scale, ground-mounted solar farms.

DECC officials hinted the fast-track review, the results of which are likely to be announced before the summer, could retain incentives for the kind of building-integrated solar installations that the feed-in tariff was originally designed to support.

But Leggett expressed frustration that such projects had been included in the review in the first place.

"What is the justification for rushing through an urgent review of PV greater than 50kW when all other technologies up to 5MW are spared that process?" he asked. "We are not given any beyond reports of a few planning permissions for solar parks greater than 1MW. This is the very worst kind of knee-jerk policy response, which we thought was consigned to the dustbin of history with ministerial promises of certainty and transparency in policy making."

The announcement of the review has sparked speculation that some solar project developers could sue the government for cutting support given original indications that feed-in tariffs would remain at their current level until 2012.