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UK Climate Minister Accused of Misleading Parliament over Solar Costs

by James Murray, BusinessGreen.

The row over the government's controversial plans to rush through cuts to solar incentives looks set to escalate, after members of the solar industry accused one minister of misleading parliament over proposed changes to the feed-in tariff scheme.

Speaking as part of an emergency debate earlier this week on the proposed halving of incentives for small-scale solar installations, UK climate minister Greg Barker defended the government's plan to cut feed-in tariff rates for solar installations with over 4kW of capacity, from 43p/kWh to 21p/kWh, arguing that the changes were necessary in order to stop the scheme exceeding its spending cap.

Solar industry insiders have been quick to seize on the statement, noting that if the proposed cuts do go through, solar installations will enjoy subsidies below that granted to several other technologies.

Currently, small wind turbines with under 1.5kW of capacity attract feed-in tariffs of 36.2p/kWh under the feed-in tariff scheme, while those with under 15kW of capacity receive 28p/kWh.

Similarly, the proposed increase in the level of Renewable Obligation support available for marine and tidal energy could take the subsidy above that offered to solar, while some larger hydro and community wind installations could also enjoy higher levels of support.

Barker also said the new tariffs proposed by the government were on "a par with the tariff paid in Germany", which itself is going to be reduced by 15 per cent from January.

The same parallels with Germany were drawn by Energy and Climate Change Secretary Chris Huhne this week in a hearing with a parliamentary committee during which he argued the proposed cuts would bring the UK's scheme into line with Germany's.

However, Seb Berry, head of public affairs at Solarcentury, which is supporting the industry's Cut Don't Kill campaign for a rethink on the proposed changes, noted that while this is true for the smallest domestic solar installations with under 4kW of capacity, larger solar installations receive significantly more support under the German regime.

For example, the new German tariff for installations with over 10kW of capacity stands at 20.3p/kWh, compared with a proposed UK tariff of 15.2p/kWh. Similarly, the new German tariff for 5kW installations will be 21.25p/kWh, compared with a proposed rate of 16.8p/kWh for similar size UK installations.

In addition, Barker faced criticism for suggesting the solar sector has seen costs fall by 70 per cent.

Speaking in the Commons, the minister said that "conservative estimates are that the fall in costs is 30 per cent, but others, such as Bloomberg, say it is up to 70 per cent".

However, critics have pointed out that the Bloomberg New Energy Finance (BNEF) report the government is basing its argument on in fact claims solar module prices have fallen 76 per cent since the third quarter of 2008, nearly 18 months before the launch of the feed-in tariff scheme.

In response to questions from BusinessGreen, BNEF issued a statement confirming its research shows more modest reductions in the cost of solar modules since the feed-in tariff scheme launched.

"The government did not put an exact time period on the price changes it talked about," a spokesman for the company said. "Our research shows there has been a 76 per cent fall in dollar module prices since Q3 2008, a 54 per cent fall since the consultation period on the UK scheme, and a 44 per cent fall since the beginning of the UK scheme. That is based on Chinese multicrystalline modules, not the entire system cost."

Solar industry insiders maintain that module costs typically make up around 50 to 60 per cent of the total cost of installation, and as such the total cost of solar projects has fallen by around 20 per cent to 30 per cent since the start of the feed-in tariff scheme – well below the 70 per cent figure quoted by government and the 50 per cent cut now planned for incentives.

Writing in an open letter to Greg Barker, Nick Pascoe, the managing director of Orta Solar and former head of energy at Tesco, accused the minister of inadvertently misleading the house with several of the facts used in his address.

"You used these statements as part of the rational for reducing the Solar FIT so dramatically and hastily, hence they ought to be borne out in fact," he said, arguing that the claimed scale of the reduction in solar costs, the suggestion that solar was the "most subsidised" form of generation, and the stated parallels with Germany were all misleading.

A spokeswoman for the Department of Energy and Climate Change defended the minister's comments, arguing there were reports of significant reductions in the cost of solar installations and hinting that solar is likely to remain the most subsidised form of power generation in the long term.

"Solar is currently the most subsidised form of power generation: the 43 p/kWh tariff for small-scale (up to 4kW installations) solar PV is 7.1 p/kWh higher than the next highest subsidy, for small-scale wind (up to 1.5 kW)," she said. "The Comprehensive Review of the Feed-in Tariffs scheme will be reviewing the tariffs for all micro-generation technologies.

"The first phase has focused on urgent reductions to tariffs for solar PV, to protect the budget for the scheme over the Spending Review period. Tariffs for other technologies, including micro-wind, will be considered in the second phase of the review, so cannot currently be compared with the proposed new tariffs for solar PV."

She also stressed that the proposed level of feed-in tariff support for small domestic solar installations is indeed in line with that offered in Germany.

"Our proposed solar PV tariffs for domestic customers will match the equivalent tariff in Germany from 2012," she said. "The new German tariffs for installations up to 30kW will be €0.2443/kWh, which is 21p/kWh at today's exchange rates - the same as the proposed tariff for small scale PV installations up to 4kW in Great Britain."

However, solar industry executives are now calling on Barker to correct the statements made to parliament, and urging ministers to stop exaggerating the impact of the subsidy enjoyed by solar installations and the scale of the cost reductions the sector has realised.

The latest development highlights growing anger among solar firms, green groups, and councils and businesses that were planning to deploy solar panels, over the scale and pace of the government's proposed changes.

"The more we look at the proposed changes the worse they get," said Berry. "People have gone away and done what the government asked, taken its claim that it was the 'greenest ever' seriously, and invested, only to be told 'sorry, we've made a mistake and everything will change in six weeks' time'."

 

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