Only a few years ago, the UK was considered one of the leading countries for producing and developing solar PV infrastructure. Back then, the industry was growing and subsidies were favourable. As we enter the second half of 2016, we have to exchange this image for a bleaker one. Subsidy cuts made the industry lose thousands of jobs this year. But things are not all bad in the UK, says Steven Meredith from Renewable Energy Hub.
In 2015, a report by KPMG suggested that solar power was the most popular of the renewable energies. People were optimistic that grid parity with fossil fuels would be reached soon. But the report also warned that the UK government needed a plan to manage PV’s transition away from subsidies. It suggested “a five-year period, rather than the immediate cessation of support that would result in job losses and industry consolidation.“
Now, it seems that the predictions of the report came true. Support for solar and other renewables depended largely on generous Feed in Tariffs (FIT). They provided payments for homes and businesses that wanted to install solar panels on their roof tops. They also provided a good return on investment, prompting installations and propelling growth of the market.
In Autumn 2015, however, after the Conservative Government’s election, apprehension was mounting that subsidies for renewables would be cut drastically. As expected, almost 65 % were chopped off the FiTs for solar and wind, in January 2016. There was mood of doom in the industry.
Job losses in June
In June, English newspapers were reporting that half the jobs were lost in the UK’s solar industry. Many more companies had to go into administration. The effect is severe with almost 18,000 jobs lost across the industry in less than a year.
The government introduced the cuts because solar prices had fallen considerably in recent years. They thought it was time for the industry to stand on its own two feet. The fact that subsidies would have to be reduced was inevitable. But it was the speed with which it was conducted that caused extreme uncertainty across the industry. Thousands of jobs were lost, which doesn’t seem to concern the government as much.
Resentment among renewable advocates grew even stronger considering the level of subsidies that the fossil fuel industry still enjoys today. The UK solar industry is now forced to reinvent their business models to survive. It is another double standard that many in the industry view as unfair. While much effort seems to be put into saving jobs in the steel industry, politics don’t seem to care as much about solar.
Are Contracts for Difference Working?
The Government’s Contract for Difference scheme bears another problem. The scheme wants companies to bid for large projects and offer competitive rates on the energy they produce. But it’s uncertain whether this will work. (Two companies have had to be shelved because the winning bid companies have suddenly decided they are not viable at all.)
New projects in the UK
There is hope that, the industry will settle and find new models to bring it forward. With coal-fired power stations due to be closed and nuclear becoming a bad financial choice, the Government may have missed a trick with solar. There is a global trend in the development of industrial scale batteries that could solve the problem of renewable power storage. The UK could have further built up the infrastructure for this rather than have it prematurely stalled by the Government.
But the news is not all bad in the UK. There are projects in development, including a new solar farm in North Wales that will provide power to around 5,000 homes when completed. The big worry though is that the UK will continue to fall behind in the growth of renewables following their Brexit decision and without the overarching influence of the EU’s carbon reducing and clean energy legislation.
In the meantime, models will change, growth will slow down, but hopefully the solar industry will recover and once again start to prosper. We will see whether that will happen in time to make a difference.
Steven Meredith for The Renewable Energy World