GOVERNMENT plans to slash the subsidy for homes generating solar electricity will deal a major blow to the region's fledgling solar panel installation industry.
Proposals were announced yesterday to halve the Feed In Tariff (FITs) for domestic-sized installations. Larger scale solar panel energy generation schemes will also see their funds reduced.
Climate Change and Energy Minister Greg Barker said: “My priority is to put the solar industry on a firm footing so that it can remain a successful and prosperous part of the green economy, and so that it doesn’t fall victim to boom and bust.
“The plummeting costs of solar mean we’ve got no option but to act so that we stay within budget and not threaten the whole viability of the FITs scheme.
“Although I fully realise that adjusting to the new lower tariffs will be a big challenge for many firms, it won’t come as a surprise to many in the solar industry who’ve themselves acknowledged the big fall in costs and the big increase in their rate of return over the past year.”
What has shocked the industry the most is the speed at which the Government wants to move. Rather than next spring, it aims to change the domestic solar FIT from December 12 this year.
Malcolm Potter, from micro-renewables installers North East Renewables Alliance (NERA), said: “Everybody was expecting it would be from April, but there is concern about the December 12 cut-off. A lot of planned installations will now not go ahead. There are 130-140 North East-based companies set up or accredited to install solar PV panels. There will certainly be some concern about the validity of some business plans as a result of the announcement.
“The reduction doesn’t make the technology unviable, but it will make people providing finance have to rethink their investment.
“Homeowners will have to reconsider and the solar-for-free schemes, particularly social housing, will probably slow down quite a lot. There will be less business out there so some PV businesses are going to suffer a reasonable amount of detriment.”
Terry Skee, commercial director at Durham renewable technology retailer and service firm Clean Air Solutions, said the move could cost thousands of jobs.
“This industry employs 26,000 people and there will be casualties.
“This boils down to customers having to pay £3 more a year for power. The cost of paying for many more people who have lost their jobs will be much more.
“The Government said it was committed to renewable energy. This shows they are not. Companies like mine will have to rethink their strategy. We will find opportunities in other areas, but I cannot speak for every business.”
Northern Bear, the Chester-le-Street building services group, had been planning a major move into installing solar-panelled roofs after agreeing a £10m investment in July from London energy investor Hazel Capital.
There had already been a question mark over whether this would go ahead following the resignation of Northern Bear founder Graham Forrest earlier this month.