On coming to power, both the Liberal Democrats and the Conservatives claimed that they would be the Greenest Government ever. Now you might think given the record of previous governments, that this would be one of the easier targets any Government had ever set itself.
So it came as some surprise to the Renewable Energy industry when the Energy Minister, Charles Hendry, stated that the Clean Energy Cashback scheme was going to be reconsidered as part of the Comprehensive Spending Review.
Under the Clean Energy Cashback scheme, households, community groups and businesses are paid generous amounts through Feed in Tariffs to produce electricity by a renewable technology such as Solar PV.
The Renewable Heat Incentive (RHI), scheduled to come into force in April 2011, and supported last year by all political parties, proposed similarly generous tariffs for producing heat from technologies such as Solar Thermal, heat pumps, biomass boilers etc. But it appeared that the Government were also going cold on this scheme by making its future subject to the Spending Review.
According to the Solar Trade Association, the Government’s hesitation on the Renewable Heat Incentive has led to almost 50% of Solar Thermal installers reporting a 75% or more reduction in business since May 6th as potential customers were delaying making a decision on their Solar Thermal installations.
EnergyLink, the leading agency for signposting customers to reputable and accredited installers of Solar PV and Solar Thermal systems, also reported a dramatic fall in interest in Solar Thermal systems.
In response to the industry-wide concerns, manufacturers, distributors and installers of Solar PV panels orchestrated a media campaign urging the Government not to tamper with the Clean Energy Cashback scheme and to press ahead with the Renewable Heat Incentive.
Citing the financial commitment made by hundreds of small electrical companies, and many big companies such as British Gas, Eaga, M&S, Tesco and EnergyLink, the campaign warned the Government that millions of pounds had already been invested. These companies had based on their business models around the Clean Energy Cashback Scheme’s Feed in Tariffs remaining un-touched until 2013.
For many larger companies, the business model involved installing Solar PV panels for free and using the Feed in Tariff to cover the cost. It was therefore critical that the Tariffs remained unchanged.
The industry held its breath and hoped that the Chancellor’s Comprehensive Spending Review wouldn’t be as bad as feared. And it wasn’t. In fact, all in all, the news was rather positive:
It is perhaps not surprising that the Government has chosen to leave well alone. Scrapping the schemes or reducing tariff levels would have undermined business confidence in future investments for Renewable Energy and led to large job losses, particularly amongst the small businesses that David Cameron has asked to lead the economic recovery.
The Clean Energy Cashback scheme also has many things going for it:
EnergyLink have seen the level of interest in Solar PV systems increase significantly in the last 6 months. They are now hoping that there will be a similar rise in interest in Solar Thermal systems once the Government have responded to the consultation and announced the payment levels.
So just for once a UK Government has done the sensible thing by the Renewable Energy industry. It has left things well alone and allowed businesses to invest in training their workforce, with the assurance that for the next few years they will have a good idea of what the market conditions are going to be.
Now doesn’t that make a refreshing change?