Isra-Mart srl: Solar industry 'despondent' as Barker rules out immediate delay to feed-in tariff cuts

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Climate minister Greg Barker has today all but ruled out any delay to the proposed changes to solar feed-in tariff incentives due to come into effect from 12 December, arguing he cannot legally change the proposals until the official consultation exercise is complete.

Barker today met with representatives from the solar industry to discuss the government's controversial plan to halve the level of incentives available to solar installations and bring the changes into effect from next month – a move that, according to the solar industry, will result in widespread job losses and possible bankruptcies.

BusinessGreen understands representatives from across the solar industry argued that while the scale of the proposed cuts would damage their growth prospects, it is the pace of the proposed changes that will cause the greatest damage to the sector.

One industry source said Barker faced a "lot of flak" over the government's decision to effectively pre-empt the results of the consultation and propose that all installations completed after 12 December will only receive the current level of feed-in tariffs until April next year, at which point they will see the incentives they receive halved.

"There was a lot of talk of people being made redundant just before Christmas, the risk of unscrupulous dealers not giving back deposits on projects that cannot be completed before 12 December, and stranded assets where firms have ordered panels they will now struggle to sell," said the source. "There was an unbreaking consensus among the firms that the 12 December date is going to be very, very difficult."

The government is now facing at least two separate legal actions challenging the legality of the proposals and seeking an interim injunction to force the government to delay any changes to the incentive regime until after the official consultation exercise is completed.

But Barker insisted that because the consultation was now underway he could not legally make any changes to the proposals until after the exercise was completed and ministers had taken time to consider the responses.

The stance means that while ministers could, as a result of the consultation, change the 12 December cut-off date for installations to receive the higher rate of feed-in tariffs, they would not be able to announce such a move until mid January at the earliest.

"It is absolutely farcical," said one industry insider. "The 12 December date could technically be changed because it is subject to consultation, but we would not find out until January, by which point it will be too late because no one is going to take the risk of going through with a project when they know they could be left with the reduced tariff rate... People are pretty despondent."

Barker apparently stressed that all the proposals were still subject to consultation, but left the industry with the clear impression that significant changes remain unlikely.

Tweeting following the two-hour meeting, Howard Johns of the Solar Trade Association revealed Barker had warned that if current levels of feed-in tariffs were retained until April as originally planned, the scheme's entire budget would be gone. "We have to take demand away," he was quoted as saying.

A separate source told BusinessGreen that Barker had repeatedly stated that any changes to the proposed cuts to incentives, or the date they will be introduced, would have to ensure the scheme remains within the current spending cap.

Arguments that the feed-in tariff spending cap could be raised by transferring funds from other energy bill levy funded schemes were put forward by the industry, but Barker said such an approach would only gain traction if the industry could demonstrate it represents good value for money compared with other forms of renewables.

The meeting appears to leave legal action as the only avenue left available to solar firms as they attempt to force the government to delay the introduction of the changes and give the industry more time to adapt to the reduced feed-in tariff rates.

However, insiders said the meeting did deliver a number of positive developments.

Barker again said he was fully committed to developing a sustainable solar industry in the UK, and reiterated he wanted to work with the sector to develop a clear and stable degression mechanism as part of the second consultation on reforms to the feed-in tariff scheme, which is due to be launched before the end of the year.

Tweeting after the meeting he said: "Constructive meeting with solar stakeholders. Budget under huge strain but genuinely keen to engage industry + consumers on proposals."

He also told industry representatives that he wanted to meet with them again next month and in January to discuss the issues raised by the consultation exercises.

The industry was also given the opportunity to voice concerns that while government proposals to introduce energy efficiency standards for any building fitting solar panels were welcome in principle, they would have to be well managed to ensure they do not block large numbers of potential installations.

One industry source said the sector would continue its campaign for a rethink on the pace and scale of the proposed cuts, and continue to argue that only a modest increase in the scheme's spending cap is required to minimise the disruption caused by the cuts.

He added that the industry would now also begin work on submissions to the consultation that aim to set out a clear "flight path" detailing how incentives can be reduced over time to support the sustainable and cost-effective development of the industry.