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Monthly archives: April 2009

With the British government currently assessing the details of the feed-in tariff which is to be introduced in 2010, they will undoubtedly heed the example of Spain and the way in which the government there failed to live up to the initial expectations of the tariff. Spain, despite having one of the strongest photovoltaic sectors in the world, failed to capitalize on the successes of the solar industry there by changing the way PV investment was subsidized, something which has led to a steep decline in photovoltaic investment and installation in that country.

In conjunction with the global financial crisis which has taken a particularly strong hold of the Spanish economy, the reduction in solar investment has contributed to a culling of jobs and cutbacks in PV manufacturing in Spain, something which will see a surplus of PV plant being exported to growing solar sectors elsewhere in the world.

Industry insiders in the UK have put pressure on the government and lobbied the Department of Energy and Climate Change by expressing the importance of a feed-in tariff which stimulates sector growth by offering incentives and security to investors. It is generally accepted that a tariff rate of at least 20p per unit of electricity fed-in to the national grid by small scale energy suppliers would be sufficient in part to kick-start the solar industry in the UK following its inauguration in 2010.

Certainly, elsewhere where comprehensive feed-in tariff legislation has been introduced there have been marked successes in the uptake of photovoltaic technology and job creation in renewable industries. In Germany for example, the feed-in tariff legislation has proved to be consistent and generous in the provisions offered to those wishing to invest in the German green sector. Indeed, the German tariff model is often held up as an example of how to incentivise investment and build public awareness.

Spain is expected to experience a dramatic reduction in photovoltaic installation in 2009 with 375MW compared to 2008 installations of 2,500MW. Spain will now fail to live up to its ambitions of becoming the European Union’s leading renewable energy producer by 2020 largely because the Zapatero’s government has neglected the tariff scheme across the country. The introduction of a 500MW project cap along with the withdrawal of essential subsidies has seen the solar industry stagnate and since the new year, decline. Members of the solar industry in the UK will therefore be hoping that the British government follows the example of Germany rather than Spain in the way that they choose to roll out the much talked about feed-in tariff next year.

 

A report released last week announced that the solar industry has grown worldwide despite the recession which has gripped economies. The report stated that the photovoltaic industry saw a 89 per cent increase through 2008, something which has been reflected through the first quarter of this year with the rise of investment in green technologies.

2008 marked an important watershed for the solar industry and photovoltaic technology in general, particularly in the UK as the British government passed legislation designed to promote green energy. The Energy Act of November and the establishment of the Department of Energy and Climate Change was seen to mark a shifting of gear in British political circles as the UK government sought to establish environmental legislation, emulating the success stories of California, Spain and Germany. The solar successes, particularly in Western Europe have been based largely on the establishment of coherent feed-in tariffs which have proved to be effective mechanisms at incentivising investment in the green sector.

In spite of the global photovoltaic revolution breaking out, the UK government has been slow to get behind the solar industry with enough weight to encourage green investment en masse. The recent political rhetoric of the prime minister Gordon Brown in which he espoused the need for a ‘Green New Deal’ in order to revitalise the economy through ‘greentech’ investment has not been immediately followed up by action. The feed-in tariffs which were established in principle at the end of last year will not come into effect until 2010 and until then, there are no other government schemes in place to make solar investment viable since the government terminated its grant program without warning at the beginning of the year.

Leading members of the solar industry, along with representatives from the construction industry have lobbied the government in order to ensure that the government’s rhetoric on solar and climate change is matched by action which will allow the solar industry to reach its potential in the UK, just as it is doing in Germany with outstanding commercial results.

A Global Solar Report card, designed by lobby group Green Cross International to evaluate government action on solar policy has awarded the UK government a D-minus this week. Based on an assessment of the world’s sixteen largest economies, the report aims to provide a stark indication of where various governments stand with regards to their respective solar policies.

Despite the UK governments recent action on solar policy in the form of last year’s Energy Act and the setting of provisions for the introduction of feed-in tariffs in 2010, the report criticized the UK, stating that it lagged behind rival states in terms of current initiatives in place to incentivize the growth of the solar industry in the UK. With this deficiency in mind, the report offered the British government the D-minus grade along with an assessment that the solar industry in the UK remained,

“A very small market with no significant support for growth at this time”.

The Global Solar Report Card highlighted the fact that subsidies for carbon energy still outweigh those offered to renewable energy producers and that this will have to change if there is to be a large-scale revolution in the way energy is produced in the UK. The report, based on three main criteria, the scale of government incentives and legislation, the kWh of solar plant installed and campaigns designed to change behavioural patterns among the population was damning of the UK government’s failure to plug gaps in solar funding.

Although it is expected that 2010 will see the introduction of a coherent feed-in tariff, until then the government is doing little, particularly in comparison to other large economies to kick-start the solar industry with legislation. The solar feed-in tariff, thought to be the most effective means of stimulating investment in the solar industry has been highly successful in those places where they have been introduced with generous incentives for investors.

Germany topped the report card with an A-grade, an accolade based on the German government’s strong action with regards to setting up provisions for the industry and initiating a revolution in the behavioural changes of investors who now see Germany as a secure, high yield prospect for building their green portfolio. This obvious correlation between solar industry success and the implementation of solar feed-in tariffs will hopefully not be lost on the Department of Energy and Climate Change, currently going through a consultancy process on the best way to set up tariff legislation.

The number of lobby groups lending their support to the solar industry has grown exponentially over the last year with the We Support Solar Campaign acting as a focal point for members of the UK solar industry. Those within the industry will have some sympathy with the Global Solar report card’s findings and will see the absolute necessity for a strong feed-in tariff to breathe life in to the solar sector up to, and beyond 2010. The report went on to state that,

“Latest estimates by the International Energy Agency show renewable sources account for only $10bn (£7bn) of the $250bn-$300bn allocated to annual energy subsidies worldwide. If we are to deal with the current crises and the ones just around the corner, then every dollar, euro, or yen is going to have to work smarter and harder.”