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Cut to the PV FiT tariff is justified

I've never understood why one particular technology should have such a massive indirect government-controlled subsidy. In fact, we consumers are providing the funding through our electricity bills. The problem with this is its not equal and those at the poorer end of society see few of the benefits.

The PV industry has made some green entrepreneurs and investors very rich with schemes like "lease a roof" and some land owners who were able to capture the generous subsidy for larger arrays of PV installations of solar farms, before it was scaled back earlier.

Some would argue that without this subsidy, the deployment of the PV technology would not have had the scale of impact that it has had. This is probably true. But it doesn't take away the fact that gimmicks to provide a bit more "green bling" has negatively impacted on areas where the money could have been spent , for example, providing more targeted lower carbon and energy saving measures like insulation, controls and making sure householder's heating systems were set up correctly and re-commissioned for optimal performance.

It's a national scandal that so many people - especially the young and elderly - live in fuel poverty. This should be the priority of any policy makers.

So I wouldn't argue with the fact that the Government has announced that the tariff for householders will be reduced from 43p to 21p per PV unit generated (still a very big subsidy). Perhaps the big argument should be that the Government has ineptly made the cut within six weeks of Christmas. The onset of winter weather makes roof installation potentially problematic and the 11 December deadline is likely to create a stampede akin to the Klondike gold rush.

PV panels and the inverters they need are in short supply, with some wholesalers running out of stock completely. One told me: "The cupboard is bare. Contractors are scrambling to find the kit accepting panel manufacturing names they've never heard off to meet customer demand".

On top of this, prices are rising with the resulting problem of supply and demand. This leads to the possibility of unscrupulous installers reaping more rewards as householders try to beat the deadline.

With an estimated three-fold monthly installation increase over the next four weeks, there is also the prospect of Microgeneration Certification Scheme providers not being able to cope with the administration and verification of these installations. And the administration of the electricity companies will be stretched as they try to cope with an influx of FiT applications.

All this goes to show what happens when the bean counters at the Treasury make a knee jerk reaction to a scheme that has provided the inevitable gold rush for the better off in society.

If the Government had stuck to their original plan of reducing the FiT on 31 March, 2012 - after all only four months away - the transition would have been more orderly and they wouldn't have created such a mess. This is another example of politicians and bureaucrats out of touch with the real world of industry.
Posted by Mike Malina 09 November 2011 10:47:12 Categories: Malina mulls it over

Comments

By Michael Langford
09 November 2011 11:03:12
I run my own business and have no problem with making money. However, to introduce a scheme paid for by the elderly and those less well off so a minority of people can line their pockets is morally wrong on so many levels. Had money been spent on addressing the issues associated with our current housing stock as Mike states. This would have benefited many more people, creating numerous jobs and reducing carbon to boot. The Politicians of all parties should hang their heads in shame, somehow I think they won't!
By chris rudge
09 November 2011 11:02:12
The soon to be released nuclear programme (no surprise of fund re-allocation) will make even fewer even more rich. The FiT scheme will be seen tame by comparison. Don't complain that people were getting rich; it is a fact that greedy people will always try to grab what they can from subsidy.
By John Randle
09 November 2011 11:01:12
It's a shame the whole way the Government have handled this scheme. Such a rush on stock; now we can't find the kit to install! Does anyone know where I can get decent inverters? Actually in-stock rather than a promise?
By Gareth Lloyd Jones
09 November 2011 11:00:12
Imagine basing an energy policy on a number of disparate schemes; FiT, RHI, Green Deal; it will be Green shield stamps back next (this is for the older readers), nectar points in modern times! We need a government lead with big ambition. How many times are they going to do this before they realise that its needs a massive programme of technological change and investment in energy reduction and finding ways of large scale electricity generation from wind, wave and tide? Let's build the Severn Barrage. It would create thousands of jobs here in South Wales - far more than could be lost in PV.
By Andy Doyle
09 November 2011 10:59:12
The big dilemma here is which industry or technology gets a State subsidy. PV is just one example. There are so many other possibilities. The problem is all governments have had no coherent energy policy and has been dodging the major issues for years. Surely the answer is to prioritise not using and wasting energy in the first place, rather than dabbling in bitty schemes that contribute a comparative drop in the ocean. Now there's an idea; energy from the waves and tide. We need a big solution and we need very soon or the lights are going out!
By Grant Harrold
09 November 2011 10:58:12
Stop subsidies period. Let market forces prevail. Help the renewable sector by all means but make it even across the board - PV, heat pumps, biomass, voltage optimisation, wind turbines, etc all have their merits and part to play in reducing our reliance on carbon fuels. FiTs payments on PV were very generous, too generous it seems; they were fast draining the pot and it had to end sooner rather than later. Seems there are not many that agree with the way the Government suddenly pulled the plug and were surprised by it. Historically, they have done it before remember what they did with the heat pump grants, literally over night?
By Les Bassett
09 November 2011 10:57:12
The fact is PV systems are not economically viable. Very little benefit is gained by reduced energy consumption or energy cost savings. Energy prices, rather than taxation, have been increased to pay for the FiT which offsets some of the potential cost savings anyway, all of which is being paid for by all of us, the consumers(including those who are in fuel poverty). And, on top of that vast profits have and will continue to be made from our money for the next 25 years by the individuals and companies set up to offer 'rent a roof' schemes. The scheme should have been scrapped before it was ever started.
By Simon Robertshaw
09 November 2011 10:56:12
George, where did you get those figures? Massive exaggeration! Yes the Government is going over-the-top with the cuts. It's much worse in the public sector. So choose between a PV subsidy for the few by the many ie. the consumer, or spending the money on funding hospitals, schools and all the other crucial infrastructure in the country. Seems to me like a lot of people with a very minority financial interest are at work here. True, sustainability is all about fairness and a just equal society. I agree with this article; making sure that elderly people don t freeze this winter is way more of a priority.
By John Skrine
09 November 2011 10:55:12
Thank you, George, my point exactly. I'm sure there's merit in what others are saying, but this Government is, indeed, all over the place on this issue.
By George A. McAdams
09 November 2011 10:54:12
Are you all mad? 100,000 jobs face the axe; 50% companies face closure and just before Christmas!
The Government are all over the place and obsessed with cuts. No one will have a job in the industry soon.
By Ariel Beresniak
09 November 2011 10:53:12
I would agree that PV has had its day for massive subsidy. What about the RHI? Isn't it time this got a fairer share? Heat pumps and solar thermal are just as good and should be promoted as well, on an equal basis with PV. I also agree that I'm seeing a lot of PV inappropriately installed. Good salesman for the money, not good for the reputation of the industry. We have a desperate situation of potentially seeing a repetition of the double glazing industry of the 1980's. We definitely don t want a repeat of that!
By David Fruse
09 November 2011 10:52:12
An interesting debate. I think the PV specialists shouldn't despair. The Green Deal looks a good bet for the future, assuming the Government don't mess this up! The idea that you have to be energy efficient first before fitting the green bling as Mike puts it, makes perfect sense. Our industry should place more emphasis on getting the basics right - good commissioning and fitting appropriate technologies for the right application. Most importantly, these need to be integrated and controlled properly.
By Mike Malina - replies
09 November 2011 10:51:12
Thanks for the comments. I am in business and run a building services engineering consultancy so yes, making money is fine and does come in handy! The points Rob makes (thanks for the support by the way) are exactly the way l would like us to proceed with the sustainability agenda. Otherwise look at what greed can do; the bankers, for example!
By Rob Fitzroy
09 November 2011 10:50:12
The whole point of the FiT was not about making money! It should be about reducing our carbon impact and saving energy. Mike's points are spot on. The PV industry has been hijacked by many people outside our industry, with no interest in the issues that this scheme was intending to fulfil. Yes making money is OK, but not at the expense of the taxpayer and the fuel poor.
By Danny Lang
09 November 2011 10:49:12
The way the cuts have been carried out is unacceptable as is the 50 per cent deduction. We started installing three years ago and have always expected the cut this year but the initial proposal was a reduction to the mid-30 per cents. We have built our business and lives as well as the lives of the lads who work for us around the scheme, and now we are all looking at a very bleak Christmas. We will survive as we were here before FiTs but I wouldn't like to say what state we will be in.
The article above talks as if having money to invest and achieving in your life time is a bad thing.
If it wasn't for those who work hard in professions and in business there wouldn't be any tax money to pay for the benefits of the under classes, which i think is something that should be thought of before slating people who strive to achieve.
By John Skrine
09 November 2011 10:48:12
This article strikes me as a touch complacent; the tone suggests that there's something wrong with making money. To carry out this measure in the way the Government plans is wholly unacceptable, and will act as a disincentive to all entrepreneurs who depend to any extent on sound government. And, given the state of our Government, the thought that the money saved by this panic measure might be applied to other green initiatives is a real triumph of hope over experience. This scheme may have been too popular for its own good, but this is no way to go forward.
Comments are closed on this post.
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