ECA says Government FITs appeal defeat means wild ride for the industry

(25/01/2012)

The Electrical Contractors’ Association (ECA) says the Government’s unsuccessful High Court appeal to the recent ruling on solar PV feed-in tariffs could mean a wild ride for an industry that is already reeling from Government announcements in the last few months.

Paul Reeve, ECA Head of Environment, says: “Before anyone celebrates, we should remember that future funding for FITs is not unlimited. Some of the available cash could now be used up in a second ‘rush to install’ before 3 March, when FITs will be halved to 21p/kWh. The first ‘rush to install’ took place up to 12 December to beat the Government’s initial deadline for halving FITs. That resulted in far more PV installations than DECC planned, which are now claiming FITs for 25 years at the previous high tariff. A second rush now could put even more pressure on future FITs.” ť

Reeve says the latest development could actually undermine many solar contractors who have built up PV installation businesses in the last 18 months, if the planned phasing down of FITs over the next few years is not properly funded.

According to Reeve: “The Government must learn from the quite foreseeable mistakes it made when it hastily announced cuts in FITs before industry consultation was even completed. It needs to engage in proper dialogue with the PV sector, which has delivered the domestic and commercial PV installation, and green jobs, that DECC said it wanted from the outset.” ť

Reeve concludes: “However, even with FITs at 21p/kwh from March, the rate of return on solar PV is expected to be around eight percent, tax free, and the cost of PV is dropping fast. This makes PV a potentially attractive option for many installers and customers - but the Government must provide a predictable business environment for the UK PV industry.”

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