Inept and Inconsistent - FiT Cuts and DECC

Few involved with the UK solar industry would argue that the current level of governmental Feed-in Tariffs are sustainable. With the costs involved with production having dropped 30% since April 2010 it is right that the subsidies are adjusted to reflect this.

But DECC’s announcement this morning of cuts from 43p/kWh to 21p by December 12^th do not represent a balanced review of the tariffs, they do not represent a necessary trimming of funding to one of the fastest growing industries in the UK, and they do not represent a ‘sustainable growth path’ for solar businesses. They represent the execution of domestic solar installations.

Everything involved with this morning’s announcements reeks of governmental ineptness. As the blood of the solar industry collectively boils, this post will detail the government’s failings involved with this announcement.

1.       Uncertainty

Low carbon and renewable industries continually face the criticism that they are too unreliable to be invested in, and that there is too much uncertainty regarding their future. Now reputation is always a difficult problem to overcome for any industry, given its intangibility, but it is the one area where governments can have a real impact. Providing a solid base, being consistent in its support for the industry, and reassuring investor confidence is all an integral part of a government’s involvement with any area of economic growth. But this announcement is indicative of the government’s ability to do the complete opposite.

Today’s announcement will send shockwaves through the solar industry not just because of the halving of the FiTs, but because of the deadline of December 12^th. It is almost inconceivable that Greg Barker and DECC would allow the cuts to be introduced so early. It means that any large scale projects – predominantly those involving Housing Associations – will be almost immediately abandoned. This not only represents a great loss of work for the entire supply chain, but also has a knock-on effect throughout tenants of these HAs.

We have seen the halving of electricity bills for tenants of social housing, and the plug being pulled on these projects is only going to thrust the poorest into fuel poverty as winter approaches.

Furthermore, these measures are only supposed to be introduced after consultation. The consultation is due to end on December 23^rd. Nine days after the cuts are supposed to be introduced. I am not the only one who has noticed this discrepancy, as Jeremy Leggett (Solar Century) highlighted via Twitter.

So what does this actually mean? Will the consultancy period be changed, or is the 12^th only provisional? Nobody knows. I suspect not even DECC. The only certainty is the uncertainty.

2.       Timing

In today’s announcement on the DECC website Greg Barker writes:

The tariffs are broadly comparable to those offered in Germany, which has also recently reduced its tariffs.

Now excuse me for being a pedant, but when you are announcing cuts that will result in mass job-losses then there is no place for such loose hyperbole. ‘Broadly comparable’ is too vague. The German government has announced cuts to their tariffs. Cuts of 15%. Scientist, mathematician and layman alike can establish that when you are talking about subsidy reductions, 15% and 50% are very different entities.

Secondly, the German government also made the announcement on October 28^th, for the new rates to be enforced from January 1^st. Our government gave us six weeks to prepare for 50% cuts.

Furthermore, the Germans were aware that these cuts were coming and not completely blindsided. Admittedly predictions were for 12% reductions, but the difference between 3%, and the assumption that UK cuts would be introduced in March, is very different indeed. It is staggering that Greg Barker would assume that this vague reference would in some way soften his announcement. It only highlights governmental ineptitude.

3.       Leaks and Incompetence

Yet another unbelievable indication of the mess that was occurring behind the scenes at DECC was the leak by the EST on Friday. Not only did this force an announcement from Greg Barker today, but it plunged the industry into panic late on a Friday afternoon.

There was nothing that could be done as the industry collectively turned to the government in search of an answer; the only forthcoming reply was ‘wait until Monday’.

It was dismissed as ‘inaccurate’ by DECC, but the only inaccuracy was that it comes into force on the 12^th, and not the 8^th, of December. Well, thank goodness for that. Rather than it coming into force on the Thursday, we have until Monday. It is truly staggering.

Anyone in the industry who has Twitter will have been seen the outcry spread around the UK this morning, and Encraft Managing Director Matthew Rhodes wrote to Greg Barker:

You have announced "bust" for every responsible SME in the sector and "boom" for speculators and big six utilities. Shameful.

This is the damage governmental incompetence can cause, and I haven’t even started on the RHI delays...

Encraft launch new Gateway

This week it's a new announcement from Encraft MD Matthew Rhodes.

Encraft have launched a new interface for their web applications customers at http://gateway.encraft.co.uk. The new site allows customers to access a new generation of the widely used Encraft micro-generation calculators and includes the ability for customers to embed the calculators in their own websites and also access the underlying code and databases as web services.

The new calculators are easier to use and include the ability to print pdfs of the output, reflecting user feedback that this would provide additional benefits.

The existing calculators will be maintained for several weeks while customers migrate to the new service, and all existing customers with embedded first generation calculators will find these continue to work unless or until they decide to move to the new service.

Methane, Money and Manufacturing: Encraft at the RESCO Conference

When the renewable and low carbon industries are discussed solar panels, wind farms and Feed-in Tariffs are the first to make an appearance. But last month Encraft Project Engineer Kate Ashworth attended a RESCO workshop in which bio-methane took the centre stage.

Bio-methane energy is generated by the decomposition of organic wastes, most frequently through the process of Anaerobic Digestion (AD). If upgraded, bio-methane can then be injected into the national grid.

The workshop, however, dealt with one significant element of the industry and that is the supply chain. This is the area by which bio-methane can be upgraded for use in the national grid, and it is also the area most likely to generate jobs. RESCO note that the engineering supply can include:

·         Fabrication & machining

·         Pipework

·         Valves, pumps & ducting

·         Electronics & process monitoring systems

·         Process  control systems

·         Chemical treatment technologies

·         Chemical sensors & data analysis

·         Mixing & processing equipment

·         Construction & building

Kate commented that ‘the market conditions are now conducive for a rapid expansion of this technology with the imminent, if somewhat delayed, introduction of the RHI tariff for gas injection, as well as other regulatory incentives, such as green gas certificates.’

Thus the lack of widespread knowledge in this area of the industry should not be considered a disadvantage. Perversely it should be regarded as an asset; an area into which those in the engineering supply chain, as well as specialist technical services providers, can grow.

The emerging bio-energy market in the UK is estimated to be worth £5 billion, and it is further suggested that bio-methane could provide up to 50% of the UK’s domestic gas in the future. Don’t be dissuaded by talk of gas, wind and methane; this area of the bio-energy market looks set to go far.