Outlook is still bright say energy experts

Whilst the Government’s decision to slash solar incentives by more than 50% will, in the short term, lead to a contraction of the  solar industry in Cornwall, the future of solar remains bright, despite claims to the contrary, according to the county’s leading energy efficiency and renewable energy specialist Enact Energy.

Senior managers at Enact say that whilst the reduction in the Feed-in Tariff payments, announced by the Department of Energy and Climate Change (DECC) were much deeper than anticipated, they were expected and some short-term impacts were always going to be unavoidable.

Despite the cuts, which will see Feed-in Tariff payments reduce from 43p per kWh to just 21p per kWh for installations registered after the 11th December, Enact believes solar electricity will continue to appeal to thousands of homeowners across the UK who will still want an environmentally friendly source of energy that protects them against continued electricity price rises whilst providing a very healthy investment vehicle.

As a result the industry will continue to grow says Enact, but at a more natural rate, and not one that has ballooned artificially by what became an, over generous, Feed-in Tariff rate.

“As an industry we knew the planned reduction in the Feed-in Tariff was coming, although the depths of the cuts have been drastic and the very short notice period does not allow for an orderly transition to the new rates.

“We are all conscious of the state of the British and World economy and cannot stick our head in the sand. We take the Minister at his word that the allocation of funds to support solar PV cannot be increased at the present time. The more money we can keep in the pot to support the longer-term tariff the better. The existing rate is too generous and the level of take up threatened to swallow up the Feed-in Tariff budget, well ahead of schedule” said Enact Energy founder and Chairman Adrian Wright.

“Whilst in the short term the industry will shrink, in the medium term we fully expect it to grow, albeit in a much more sustainable way, so it is not all doom and gloom,” he added.

Enact Energy CEO John Egan, said that even with the Feed-in Tariff cuts, the new tariff levels will still allow for a respectable return of around 4.5-5% per annum, on a householder’s investment, which should be sufficient to see the industry continue to grow.

“The cost of installing a solar PV system is falling, making it cheaper than ever for consumers to buy and as electricity prices rise, as they are expected to, homes with a solar system are likely to save more than the price of the system over the 25 year life of the technology before you even start to look at the Feed in Tariff payments.” said Mr Egan.

Mr Egan warned against the proposed threat of legal action by solar companies to challenge the consultation announcement, believing it would have an even more damaging impact on the solar industry.

“We do not believe that threats of legal action will improve things. All that would be achieved now, if there was any uncertainty in the market, would be that no one would commit to a system based on the new tariffs, in case they changed for the better – and certainly no one is going to buy a system based on the old tariffs in the hope that they might be retained for a little longer – so the market would come to an even more resounding halt than it has already.

“The new Feed-in Tariff rate is, we believe, manageable but not generous, and certainly any further cut would be disastrous. The sooner we can move on from the old world and embrace the new, the better,” said Mr Egan.

Enact said it was much more concerned about the proposed change for homes to be more energy efficient before they receive the new Feed-in Tariff.

“The proposal that from April 2012 a property will need to demonstrate other areas of energy efficiency to qualify for Feed-in Tariff payments puts an almost insurmountable barrier in the way of Solar PV take up. Perhaps when the Green Deal becomes a reality in 2013 this area could be revisited, but for now the cost of and uncertainty around the subsidy regime for things like double glazing and solid wall insulation, makes it next to impossible for a householder to make an informed investment decision.

For more information about solar energy contact Enact Energy free on 0800 093 40 50.