Working with your MP on solar energy

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Last year 3.6% of UK electricity came from solar (half as much as coal) and on 1st May 2018, the UK reached a record, generating 24% of its power purely from solar panels. The cost of solar has also decreased dramatically. In 2011, the average cost of a 4 kWp system was around £12,000. By June 2017, the cost had decreased to under £6,500 on average.

The solar industry has faced some serious challenges and has seen the removal and reduction of state support mechanisms:

CUTS TO FEED IN TARIFFS (FITs):

 In 2010 the Government introduced FITs, which meant that homes, which had installed solar panels, saw a good return on investment. This was a hugely successful policy, and resulted in much more solar energy coming online than the government anticipated. The FITs have been gradually cut:

  • In 2010, when the FIT was first introduced it paid 43.3p per KWh
  • In 2012, it was cut to 12.92p per KWh
  • In 2016, the FIT was reduced by a further 65% to just 4.39p per KWh (Mongoose Energy, 2016).

At the end of 2017, the Government announced that FITs will end in 2019, and there is uncertainty as to what will replace it.

FITs CONSULTATION JULY 2018

  • Ministers confirmed that there will be no replacement for FITs from April 2019. There is now uncertainty as to what, if anything will replace it.
  • The government also launched a call for evidence on the future of small-scale, low-carbon generation to get business and public opinion. This suggests a potential opportunity for small-scale solar projects.

Since the FITs scheme was launched in 2010, it has encouraged 800,000 homes to install solar panels. 

REMOVAL OF EXPORT TARIFFS

The Government’s decision to remove export tariffs means that if you now decide to install panels on your house, you wouldn’t be paid for the surplus power you generate that is fed into the grid. You would, in effect, be giving free electricity to the Big Six energy companies, who would sell it to other people. 

BUSINESS RATES

The Government has implemented between a six to eightfold increase in business rates on self-owned commercial rooftop solar. The Solar Trade Association also reports that marginal tax rates are 50% for any company wanting to put PV on their roof. Now there are no subsidies, these tax anomalies must be removed to allow fair competition.

WINDING DOWN OF THE RENEWABLES OBLIGATION (RO)

The Renewables Obligation came into effect in 2002 in England and Wales and placed an obligation on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources. It has now been cut for small and large-scale projects and is closed to all new entrants.

You can also view our resource on community energy here, to learn more about some of these issues.

SUBSIDY FREE SOLAR

There have been a couple of announcements on solar energy projects, which are now ‘subsidy free.’ While this is clearly really good news, it is yet to be seen if all new projects can be built this cheaply, or whether these ones have certain characteristics that others won’t have. Cleve Hill, for example, is quite near London, so it will be cheaper to get power from there to a major demand centre, which isn’t the case for a solar farm in Cornwall or Wales etc.

CASE STUDY:

Cleve Hill Solar Park

This project is proposed for the north Kent coast, with a generating capacity large enough to power 110,000 homes per year. This project will be entirely non-subsidised, receiving no government funding. The projected £1 million per year income for the councils from the solar park will be reinvested into Kent and Swale, improving local services. The proposals include an option for onsite battery storage in the future. 

  Image Source:  Cleve Hill Solar

Image Source: Cleve Hill Solar

Councils can take a lead on solar

Your local council also has the ability to take a lead on solar energy. A new report from the Solar Trade Association, called Leading Lights highlights some of the progress that councils have already made:

  • 85% of local authorities own solar panels
  • Nearly 1/3 of local authorities have incorporated solar in their environment strategies
  • £80 million is the combined investment of the top 10 local authority investors in solar.

As Local Authorities are able to develop medium to larger schemes without central Government support, the Solar Trade Association make some recommendations about steps that local authorities can take:

  • Make full use of planning powers to ensure both higher energy efficiency standards in new builds and ensure a meaningful contribution from renewables.
  • Retrofit existing council buildings making use of Salix Finance interest free loans.
  • Help local residents and Small to medium enterprises (SMEs) by running bulk purchase discount schemes- this is already happening in London.
  • Provide relief from business rates for solar energy for schools, community centres etc. £300 million has been made available from the Central Government to support such relief in local areas.
  • Provide land or roof space to support local community solar energy initiatives.
  • Include solar when developing electric vehicle charging infrastructure, to ensure the increasing demand for electricity comes from clean energy sources.

All of the above suggestions can also be translated to other forms of renewable energy. You can read the full report here where you can view other suggestions made by the Solar Trade Association. If you would like further help in contacting your councilor on solar energy, contact us here.

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Solar and Storage

Due to the intermittent nature of the sun, storage allows more solar to be consumed, allowing solar to be available around the clock. 

The solar + storage market is estimated to be worth $8bn globally by 2026 (Lux Research, Inc., 2016) and there will undoubtedly be opportunities for UK solar companies as the market develops. 

Benefits of storage alongside solar include:

  • Economics: storage adds value to the solar business model.
  • Emergency back up power
  • Can be used to power electric vehicles
  • Energy independence
  • Can be used for smart homes

Take a look at our resource on energy storage here.

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What can I ask my MP to do?

  • You could ask your MP about the potential to reward businesses who invest in solar through the tax system. This may include reduction in business rates for example.
  • There is uncertainty for solar energy post Brexit. The energy sector received more than a quarter of the European Investment Bank’s €29 billion of investment in the UK between 2011 and 2015 and the EIB has also pledged £360 million towards the UK’s smart meter roll-out. You can ask your MP to work on ensuring continued investment into renewable energy post Brexit, without funding from the EU level.
  • As FITs are due to end in 2019, you can speak to your MP about the need to provide an alternative financial mechanism in the short term so that solar energy projects can continue to exist.
  • As the rules of the UK’s energy market are designed by the ‘Big Six,’ smaller scale solar energy projects miss out on the financial value of the energy they produce, because they must sell their energy to the grid before buying it back again. You can talk to your MP about the need to update market rules, so that small-scale solar projects are rewarded through lower bills, providing an incentive and benefits.
  • Brexit may also slow down the construction of new interconnectors. Interconnectors allow for the transfer of energy between countries. New interconnectors are planned to link the UK with Belgium, Denmark and Norway, as well as further links with France. Delayed interconnectors could mean the UK instead needs to increase generating capacity and ministers would need to consider whether solar could play a major role in that (PWC).
  • Support for smart grids and storage is vital if solar is to grow as an industry. Storage must be set as a clear priority through a storage strategy. You can read our resource on energy storage here.

Date of Publication: 4.07.2018

Date of update: 27.07.2018