Solar sector prepares for possible August subsidy cut
A worker fits solar panels to a roof of a council house in Wrexham, Wales, on 24 February, 2012. U.K. house prices held their value for a second month in February, boosted by a seasonal increase in demand and a rush to beat the expiration of a property-tax exemption, Hometrack Ltd. said. Photograph: Paul Thomas/Getty Images
Speculation is mounting that the government will impose the next round of cuts to the subsidy for solar electricity on 1 August, after it last week missed a legal deadline to make the changes on 1 July.
The Solar Trade Association (STA) has today written to its members advising them to prepare for the next round of cuts to the feed-in tariff in the first week of August, as many installers were confused by the government’s failure to clarify its plans.
Energy and climate change ministers last week hinted they would push back the expected 1 July deadline for the next round of cuts, in the wake industry warnings that demand had dropped significantly in recent weeks following the most recent round of cuts in April.
A spokeswoman for the Deparment of Energy and Climate Change (DECC) today told BusinessGreen that the cuts were now unlikely to take place on 1 July, as it had missed a legal deadline for notifying Parliament 40 days prior to introducing the cuts.
However, she refused to confirm the new date, saying only that an announcement would be made in the coming weeks.
But Leonie Greene, head of external affairs at the STA, told BusinessGreen that it now believes the cuts will be pushed back to the first week of August, adding that it would “make sense” to delay the plans by exactly one month from to 1 August.
She said STA has sent a short note to members explaining that their predictions were based on its “best intelligence”. The letter also forecasts that DECC would confirm its plans within the next week.
She maintained the STA does not know the proposed scale of the planned cuts, but said it was confident that the government was listening and responding to industry concerns about its plans to impose complex cost control mechanisms.
Solar installers are particularly concerned that the proposed policy would only allow the government to reduce tariffs if demand was too high, but would not include a way of increasing the tariff if demand crashed.
Greene said members were also keen for the government to publish further details on whether it would continue to link the feed-in tariff to the Retail Price Index, and to find out the future subsidies for aggregated solar schemes.
However, the news is likely to frustrate some members of the solar sector who have been urging the government to delay the cuts until October to allow time for demand to pick up following the recent market crash.
The Cut Don’t Kill campaign last week warned that any change should have a genuine effect on helping to boost demand, rather than being a purely “cosmetic” delay.
Author: Jessica Shankleman