At the end of October came the real bombshell. We all knew that tariffs would come down in April 2012 and, given the cost reductions achieved, we would be looking at at least a third off the tariff levels as they were. As it turned out, they went even lower dropping by just over fifty percent. This on its own wasn’t too bad. We can make that work for a lot of systems, particularly in southern areas.
What it did mean was basically an end to free PV schemes where an installer would provide a PV system in exchange for FIT income. With the right financing in place this was an economically viable prospect. It also meant that those without ten grand lying around could get solar power and was increasingly being adopted by social housing providers to help cut the bills of some of the poorest in our society. Now that won’t work any more and the accusation that solar power is a toy for rich greens holds truer that ever.
The other big change coming in is a double edged sword, households wanting to install solar and claim the FIT need to meet a ‘C’ grade for energy efficiency which rules out about 90% of homes. Nobody disputes that as a carbon saving measure, PV is quite expensive and energy efficiency measures are much more cost-effective. Now encouraging energy efficiency, particularly in the domestic sector is like trying to make water flow uphill. Nobody finds it very interesting, not many will brag to their friends about the foot-deep insulation they’ve put in the loft because it’s not exciting enough. Even the relatively easy things like loft insulation fall victims to our inertia (Where will I put the Christmas decorations while I got the insulation put in? Will I end up setting fire to the insulation around my recessed halogen lights?). And most household energy efficiency measures are to save heat not electricity. The comparison I read today by Erica Robb of Spirit Solar was that to make heat saving home improvements a requirement of the solar FIT would be the same as making it a requirement for road tax reduction for low CO2 cars, it might sound a bit silly but it’s basically correct.
Interestingly, one of the latest lines to emerge from the Government is that for every PV system getting a tariff of 43 p/kWh, two will be unable to get a system installed at 21 p/kWh. Now by my maths, if one system is installed at 42 p/kWh then that’s the same cost to the FIT scheme of two at 21 p/kWh. So for every system that gets 43 p/kWh a whisker over one will not get the 21 p/kWh rate (assuming the overall cost of the scheme is fixed).
There now follows a short list of things the Government did wrong on this FIT review:
- They should have looked at reducing all PV tariffs when they reviewed the 50+ kW tariffs back in March 2011.
- They tried to make the changes come into effect before the end of the consultation period. This was the key mistake. We all know consultations are largely an exercise in lip service but this was actually pre-empting the consultation and threatened to set a dangerous precedent about retrospective action by government not just for the FIT but for changes to any secondary legislation.
- They should have switched to the MCS registrations data sooner (the Ofgem FIT register necessarily lags the MCS register usually be about a month)
- Once the consultation had opened, Greg Barker said that he couldn’t prejudice an open consultation by commenting on the 12th December cut-off date before the end of the consultation period. Probably true but on this occasion Greg, two wrongs would definitely have made a right.
- Having had their dodgy dates found “legally flawed” just before Christmas rather than moving on and giving the industry the certainty it urgently needs and moving to cut the tariffs as soon as legally possible they have forced further delays and uncertainty by appealing the judge’s decision. So far this has led to a further week of uncertainty and a further week until the earliest possible date the new tariff levels can be introduced.
Randomly, I’ve seen a few things lately about the positive value of acknowledging failure (This TED talk by a guy from Engineers without Borders is great). Basically the message is that we learn better from mistakes than from successes which seems intuitively true. “Why didn’t that work?” is a much easier question to answer than “Why did that work?”. Dwelling on mistakes and trying resolutely to deny that they’re mistakes when deep down you know otherwise doesn’t help anybody. Recognising mistakes and fixing them quickly and without histrionics is almost always far more successful and likely to lead to more respect than clinging hopelessly to an obviously flawed plan.
My faith in politicians has really nosedived over the FIT review. This is a subject where in all probability I know at least as much about the scheme as they do. Almost every statement that Huhne and Barker have come out with has been so warped, so twisted and so totally fantastically disingenuous about what the implications of their proposals and what the industry wants from them that it makes me assume that this is what is happening in every area of government from defence and crime to education and health.