As a new renewable energy systems installation business, one of the hard things to deal with in the last few months has been the government’s tinkering with the Feed-in-Tariff (FiT).
If, like most people, you don’t really know what the FiT is, but you can vaguely remember hearing a bit of controversy about it in the news, then you’re in the majority. Basically, the FiT is a system to get micro-generation technologies, particularly solar photovoltaic panels, up and running as an industry. The government force the energy companies to pay a tariff to their customers who are generating electricity-this is the case whether the electricity is being consumed by the customer or fed onto the national grid. In fact, the FiT rate is slightly higher if its fed onto the grid-it really should be called the generation tariff.
Anyway, up to last year the FiT was 43.3p/kWhour. This may not mean a lot to you but a kWhour (kilowatt hour) is the standard unit of electricity consumption. You will buy a kWhour from your energy provider for about 12p. You can see then that 43.3p is incredibly generous-and not long-term sustainable.
Everybody knew that and the planned programme was to reduce the rate on 1st April 2012, to probably around half-still a generous rate. The whole solar pv industry was set up for that and prepared. Then, at the start of November last year, came the bombshell that the government would in fact reduce the rate to 21p/kWhour on 12th December and not the 1st April. This, bizarrely, while carrying out a consultancy which would last until 24th December!
At this stage, there was panic amongst solar installers to get hold of the required equipment. Pv panels and inverters particularly, became hot property across the land. As you can imagine, the bigger installers flexed their financial muscle and stocked up their warehouses leaving very little for the little guys like me who cannot afford to purchase big stocks in advance. I had my first job starting on 15th November on which I was to be audited. I must have made hundreds of phone calls to suppliers and other installers across Scotland and beyond to see if anything could be spared. Eventually I managed to cobble everything together, the installation went well and I passed my audit. Phew!
As you may know, the change in tariff rate was challenged by Friends of the Earth and it is currently being dragged through the Supreme Court. The thing which is frustrating isn’t the drop in tariff rate-we all knew that was going to happen and that it had to happen. It is the fact that the government does not seem to realise that businesses need to be able to plan to a reliable timetable. We need to resource labour and supplied. This is true for me as a small business so you can multiply that by a thousand for a business employing lots of people.
The other thing which is annoying is that it undermines the impression of the government’s commitment to micro-generation renewable energy. The FiT is promised for 25 years, but people understandably think, “well, if they can just change it like that, how do I know that in ten years they won’t just pull the plug altogether?” Chopping and changing an agreed timetable undermines confidence.
Just so you know, solar pv is still a great investment and will continue to be for many years to come. Don’t listen to the doom-mongers! PV is here to stay!