China has reinforced its commitment to moving forward to a more progressive, green economy by agreeing with First Solar the construction of a 2GW solar facility in Ordos, Inner Mongolia. The construction of the large solar facility will begin in June 2010 and is expected to be completed by 2014 in a multi-phase operation expected act as a demonstration of the Chinese governments resolve to make giant leaps towards a renewable energy economy.

 With the solar feed in tariff legislation making the headlines in the UK under the guise of the Clean Energy Cash Back Scheme, the Chinese project will be taking advantage of a similar tariff system with the price of electricity guaranteed at a premium rate over a period of years. Tariff systems such as this have generally proved to be extremely effective means of generating investment in new solar sectors.

 Mike Ahearn, CEO of First Solar commented that,

 “The Chinese feed-in tariff will be critical to this project. This type of forward-looking government policy is necessary to create a strong solar market and facilitate the construction of a project of this size, which in turn continues to drive the cost of solar electricity closer to ‘grid parity’ where it is competitive with traditional energy sources.”

Certainly, it is expected that with the Chinese feed-in tariff policy in place, there will be a number of other large investments in the Chinese photovoltaic (PV) market over the coming months and years. China is also the largest manufacturer of PV product needed for solar projects around the world and is therefore attracting much interest from those wishing to provide turn-key products from manufacturing, construction and installation.

“This major commitment to solar power is a direct result of the progressive energy policies being adopted in China to create a sustainable, long-term market for solar and a low carbon future for China. We’re proud to be announcing this precedent-setting project today. It represents an encouraging step forward toward the mass-scale deployment of solar power worldwide to help mitigate climate change concerns,” announced Mike Ahearn.

With China and in particular the capital, Beijing under the spotlight in recent years with concerns over pollution and carbon emissions, China is now making a very powerful statement to the world that they are about to be at the forefront of the solar revolution.

The New York Times has run an editorial highlighting mistakes made by the Spanish government in subsidising their solar industry in recent years. While Spain was held up as an example of how strong feed-in tariff (FIT) laws can greatly encourage investment and growth within up and coming renewable industries, amendments made by President Zapatero’s government have caused a crash in the photovoltaic market in Spain.

The essential problem of the Spanish tariff which was introduced back in 2007 was that it had no long term provisions or ideas of how to be market reactive in the case of various investment paterns. The generous tariff offered 0.44 euros per kW of energy fed back in to the national grid. The Spanish government anticipated a steady investment pattern over a period of years, however, the media interest along with the high yields made possible by the tariffs caused a short term boom in the solar industry.

In response to the inundation of solar installations across Spain, the government was forced to make changes to the tariff system. With many already signed into investment scheme the government pulled the rug out from under them by reducing the tariff incentives by 30%. With investors already tied into long term deals and with large quantities of PV equipment already being shipped from manufacturing bases in China, many had there fingers burnt by a solar industry which had been created artificially over a short period of time.

Santiago Seage, the CEO of Abengoa Solar SA commented on the situation saying, “What’s important for the regulation of solar is stability. Unfortunately, up to now, we have had too many changes and if the context changes, you can make mistakes in business decisions.”

The Spanish lesson, as set out in the New York Times indicates clearly the need for a tariff which both encourages strong growth of the industry but also offers long term stability by not creating an artificial market with tariff levels which are too high. Germany perhaps offers the best example of long term stability with a healthy PV market capable of being market reactive.

With regards to market stability, Julie Blunden from the US company SunPower Corp was quoted in the New York Times as saying,

“The most important lesson, which everyone has learned, is that if you’re going to establish a feed-in tariff, you need to figure out how to make it market-responsive.”

At the beginning of the month the British parliament voted in favour of a parliamentary motion supporting next year’s introduction of feed-in tariffs by a massive majority of 240 MPs. The legislation designed to spur investment in the photovoltaic (PV) industry will, when implemented be an extremely effective mechanism for promoting growth in the fledgling renewable industry in the UK as it has been in other regions where feed-in tariff legislation has been introduced.

Feed-in tariffs work by offering fixed, premium rates for electricity fed-in to the grid by small scale solar energy producers. Over a period of 20-25 years the feed-in tariff (FIT) contract offers a return to solar investors thus greatly increasing the installation of PV plant. In Germany, for example where the tariff has been extremely successful in attracting investment there have been other market advantages such as job creation in the solar industry and of course a sharp rise in solar equipment manufacturing.

Members of the UK solar industry are now increasingly optimistic that the government FIT will generate a successful solar industry across the UK. As Clive Collison, head of Action South Facing a Hertfordshire based solar installation firm commented,

“We are very excited about this. We are now getting all sorts of inquiries from companies, local authorities and individuals. But nothing is guaranteed. We don’t know the level it will be set at yet and the big energy companies are still lobbying against it.”

With big conventional energy producers lobbying against solar energy legislation and a lingering support for nuclear power, it will be essential that the government seizes the opportunity this year to set up a FIT which offers real possibilities for a vibrant PV industry in Britain. With Gordon Brown’s commitment to the ‘Green New Deal’ with planned job creation and economic revitalization by means of the renewable energy industry, it is expected that the UK will reap the benefits of a strong tariff mechanism. Jeremy Leggett, Chairman of Solar Century has added his wait to the debate by pointing out the dangers of missing the boat on effective PV policy,

“UK plc will essentially have to sit and watch as other countries create jobs, tax income and energy security in one of the fastest-growing industries within the emerging green industrial revolution.”

A poll released this ahead of the World Climate Day on Friday revealed that the British public has a keen concern regarding action to tackle climate change. The poll, carried out by Christian Aid illustrates a general consensus of concern and awareness of government policies with regards to matters concerning meeting climate change targets.

With the UK government passing the Energy Act and establishing the Department of Energy and Climate Change, they have taken important steps to both meet their climate change objectives and revitalise the economy through the nurturing of a new green economy. Certainly, with the European elections at the fore, many of the electorate are taking a much closer look at the green policies of prospective political parties. Indeed, the results of the survey were thus,

·          77 per cent believe the UK government ought to do more to reduce carbon emissions

·          57 per cent say a political party’s climate policies would influence how they vote

·          70 per cent want the UK government to take a leading role in international climate change negotiations

·          90 per cent have taken steps to reduce their own carbon emissions

With these results in mind, the importance of recent climate change legislation affecting the solar industry will be even more in focus. The feed-in tariff provisions set out in last years Energy Act will become a reality next year as a mechanism designed to kick start investment in the fledgling industry.

With the UK government going through a consultancy process to determine the optimum tariff structure to energise the much hyped green economy, the YouGov report findings such as those above will offer a stark reminder that the public are now fully aware of the importance of government action in determining the success or failure of the UK solar industry.