Wednesday, 16 February 2011

Solar PV hits interesting times in the UK

We begin our case study into the development of a solar PV niche in the UK at a very interesting moment in its history. Of course, the saying, "may you live in interesting times", is reputed to be an old Chinese curse. Certainly for PV, the things that make it so interesting right now leave its fortunes in some doubt. One of the key policy measures for supporting solar PV (amongst other renewable energy technologies) has been cast into doubt, threatening confidence in the sector precisely at the moment when it was finally enjoying something of a take-off. Many solar firms have come to the UK to take advantage of the burgeoning market, local installers are increasing in number, and UK manufacturing capacity for panels is growing.

Last week, Chris Huhne, the Secretary of State for Energy and Climate Change, announced an early review of the Feed-in-Tariff scheme for renewable energy that had been in operation since April 2010. Solar PV was singled out as a chief cause of this unscheduled review. Ostensibly, there is concern in government that the tariff rate for solar PV generation (currently up to 41.3 pence/kWh, depending on the system installed) was attracting some very large, farm-scale projects, whose impact on payments, electricity bills, and Treasury targets under the FIT would be disproportional if there were a great many of these schemes. However, the energy secretary has defined large energy projects as those over 50kW, considerably smaller than the 5MW solar farms that were causing Huhne so much concern. The 50kW scale brings into the definition of ‘large’ many street, public building, and community-scale developments that were being developed by local groups, social enterprises and solar entrepreneurs alike.

Unsurprisingly, the review announcement has received heavy criticism from the solar industry and supporters. Given that only a few solar farm projects have been announced to date, some suspect lobbying from large energy businesses interested in other energy technologies. Others in government have criticised solar PV and FIT as a very expensive way to cut carbon emissions. Some in government take quite a narrow neo-classical economic perspective, and expect it to stand up to narrow price per tonne of carbon reduction evaluations. Justine Greening, economic secretary to the Treasury, was reported last year as saying:

"We will focus on the most cost-effective approaches [to tackle climate change] ... In fact, the more you care about climate change, the more value for money counts. We have to make sure every penny saves the maximum emissions possible. And we will put a stop to the last government's obsession with equating high levels of expensive inputs with high impact."

Such a view brackets out other benefits claimed by niche advocates, such as the creation of jobs, other environmental benefits, and resilience in the face of local energy security concerns. These broader energy and industrial policy expectations are held by other groups, but who might consider other renewable energy niches (alongside nuclear and CCS) along similar lines, and trade one off against the other. It is interesting that some solar advocates claim the ‘knife has been twisted’ when local community tax breaks for boosting onshore wind are muted by energy ministers at the same time as the FIT review. The diversity of views and expectations implies groups are framing the solar PV niche in very different ways. The politics of niche development certainly seem to be heightened at this ‘interesting’ moment for solar PV.