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UK Solar Industry Still To Be Number One In Europe Despite Reactions To Subsidy Review

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Solar UK has been watching the media and industry reactions to the leaked announcement of a potential review of subsidies in UK. Some of the gloom and doom reactions seem unwarranted. 

A number of media outlets are stating they have received insider information from Whitehall that reveals the Government is intending to begin a review of the level of support levels for solar power. The reaction was fast and sharp with the memory of the last turnabout from the government regarding solar subsidies still fresh for many. In that instance a section of the industry took the Government to court and won. The main concerns with the latest leaked proposal is once again about the negative impact it could have on investor confidence as the UK market is tipped to be the number one market in Europe this year.

Some of the concerns are warranted as can be seen in a new report from the Renewable Energy Association (REA), that will be released tomorrow, that "˜clearly demonstrates the close relationship between clear, stable policies and the ability of renewable energy sectors to attract investment, create jobs, and grow the share of clean energy in UK'. The difference here is that any details on possible changes are in line with government commentary of late as further details suggest the focus will be specifically on large scale ground mounted plants currently being approved across the UK, mainly on farm and brownfield land.

The criticism against large solar farms in the countryside has been building across the UK for some time. Initially from local communities fearful of spoilt views and a sense that their control of the local environment was being taken from them, but soon those groups connected and the concerns became complaints that could affect votes. There is a national election next year and energy has become a very large and hot potato for political parties with rising costs and increased consumption making the goals set and laws developed regarding carbon control becoming a fine balancing act between environment and finance.

Solar energy has grown faster than anyone could have imagined. Only four years ago the industry advice was that it would be pleasing if the UK industry could achieve 500 MW in a year. This year alone the UK solar industry will install between 2.5 and 3GW of renewable energy. Only last week the industry was applauding the release of a Solar Strategy plan with comments about how supportive the relationship between industry and government had been. Part of that strategy was planned reviews of subsidies based on changing market dynamics.

This impressive industry number achieved is both a blessing and a curse as the positive side is growth but the volumes achieved have put pressure on the pot of money earmarked to pay for the planned solar subsidies. The sometimes hysterically presented link between consumer bills and renewable energy subsidy has been used as an additive to local concerns about large solar farms and suddenly the complaints in the government ears are joined by other groups with similar but different goals. In achieving the admirable target the industry has also helped drive the cost of solar down to a third of some wind options and the government will use this as a basis for reducing subsidies.

Only last month Greg Barker, Minister of State for Energy and Climate Change, was quoted at the launch of the Solar Strategy as saying "˜he would not allow unrestricted growth of solar farms in the British countryside'. He has also made it clear in a number of courses that he wants to push for increasing solar installations on large roof-tops across the country. Many industry leaders feel the entire process is a political move to shore up votes from growing right wing party pressure in the country areas. Although there is probably some truth to those claims there is also the financial reality of the need to continually fund promised subsidies.

From what we know the government is planning to reduce the ground mounted PV in favour of the rooftop as they have stated. Some industry commentators have accused the Government of a knee jerk reaction in attempting to achieve political goals but the aggressive reaction of gloom and doom from the industry can be just as potentially damaging to investor confidence and some of those claiming to represent the entire industry should wait until more details are announced.

It was a perfect opportunity to use the positive strength of the industry to ensure positive messages would reach such a review and maintain investor confidence until more real facts are known. The current stance seems to be any change will be met with resistance when offers to provide key data to help decision making within the review process. Instead we see imaginary battle lines being drawn, especially in the more dramatic media outlets, both mainstream and trade.

Companies that have profited greatly in the ground-mounted arena will rightly be concerned and some may not have prepared a move towards roof-top arrays. Even with fresh memories of the last challenge to change an opportunity seems to have been missed to present a strong industry determined to be the number one in Europe rather than get bogged down in talking things to death.
Again

Whatever happens next the solar industry will be watching the Government with eagle eyes to seek any cracks in the review process that is rumoured to be announced, with a view to challenge any proposed changes. The number of media outlets claiming Whitehall sources suggests a flood of indiscretion in the appropriate departments and it is easy to cast doubt on any attempt to hold the news for more official announcements. All conjecture which is of course the situation fuelling industry and investor fears.

Most of all the government will have to contend with accusations of reducing customer confidence in a market performing beyond all expectations. Solar PV has produced one of the genuine shining lights in terms of employment and market growth in a challenging term of government. While there are plenty of financial reasons for a review to take place, the government was probably not expecting such close scrutiny and aggressive reactions to the news.

Solar UK does not normally respond to rumour but the size of the leak suggests high placed loose lips and the strength of the reaction provided impetus to call for the industry to maintain focus on the positives whilst dealing with such situations or else appear to behave in the very manner they caution against. 
As the review takes shape and more details emerge I think it will be fair to say the government may discover vote-turning issues on all sides of the forthcoming debates.  With elections looming the industry needs to gather its strengths to fight its case so as to become part of the mainstream energy discussion and not an add on that can too easily be targeted when pressure is on to reduce costs in a given department.

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