In my capacity as Policy and Public Affairs Manager at the Sustainable Energy Association (SEA) I have received a number of calls in recent weeks from concerned members asking for advice following disappointing Government announcements. Policies causing immediate impact on business include:
- The end of further funding to the Green Deal Finance company
- The scrapping of the Zero Carbon Homes scheme
- DECC consulting on ending Renewable Obligation support for solar farms
- DECC consulting on huge reductions in Feed in Tariff payments and huge reductions in the overall budget.
These announcements have caused considerable uncertainty in the market place and are having an immediate impact on business with both investors and potential low carbon/renewable heating customers getting cold feet (excuse the pun)! The proposed considerable reductions in the feed-in-tariff for solar PV is impacting solar businesses and also the low carbon heating sector as there is a knock-on effect which pervades other business activities and other businesses. Customers are unwilling to close orders because those announcements already made have created a pessimistic outlook for them pending new policies being announced on heat policy and energy efficiency, both of which Amber Rudd has indicated will not be concluded until after the Chancellor’s Autumn Statement.
Businesses are now facing the very real prospect that customers, with whom they have been in contractual discussions for some time, are considering pulling out as they are concerned that the Renewable Heat Incentive scheme (RHI) will close before contracts are in place, leaving their investment facing fiscal uncertainty. As a result of the policy uncertainty investors are pulling out, companies are closing and people are losing their jobs.
I support the Government’s aim to ensure value for money for the taxpayer and avoid cost overruns in its policies. However, I believe that the cuts proposed to the FIT regime and rumoured to the RHI will be counterproductive for the Government’s long term economic plan. I agree that subsides should be phased out over time and should only be in place for a period necessary to allow new industries to compete effectively. However, there is a real risk that if the investment in a permanently lower future cost base for the provision of our country’s energy is removed before the transition to competitiveness is complete, not only will we lock the country in to a higher energy cost than necessary for the long term, but also we will render stranded the good work and public funds that have been invested so far. The RHI is a national investment which will lead to a more cost effective heating market tomorrow. Removal or significant cuts to the RHI now will hinder our efforts to reduce costs and negate much of the Government and industry’s investment to date.
Bringing industry and Government together to find a solution is the way forward. To this end the SEA has carried out a significant amount of modelling to assess the value for money delivered by government policies such as the RHI compared to other alternatives and to identify ways in which the scheme could be improved to cost less and deliver more.
Much has already been achieved by industry and Government working together to develop a market and a supply chain for renewable products so let’s finish the job. As the market develops, volumes increase, costs and emissions reduce, customers get cheaper energy and the UK gets a sustainable industry with lower costs locked in for the future, thereby permanently reducing future needs for imported fossil fuels, and providing the most cost-effective way of meeting the Conservative manifesto commitment to meet the carbon budgets set under the Climate Change Act. A win-win!