Entire energy services division at risk of redundancy thanks to government’s FITs cut
Carillion has put 4,500 staff - its entire energy services division - on notice of redundancy following the government’s decision to cut to solar power subsidies.
The staff were told today that a 90-day consultation on their posts had begun. It follows the fallout from the government’s decision to halve the feed-in tariff (FIT) rate, the amount paid for solar power which is fed into the national grid.
The move - which Building understands could lead to about 1,500 jobs being lost - comes just nine months after Carillion paid £306m for Eaga, the renewable energy firm which became its energy services division.
Last month, the government announced plans to cut feed-in tariffs including on the type of larger installations Carillion has been engaged in fitting, which will drop from more than 30p per kWh to 16.8p or less per KWh.
The changes are set to come into effect from 12 December and all of Carillion’s solar fitting work past this date has been put on review.
A spokesperson for Carillion said: “We expect the government’s plans for much larger and earlier than expected cuts to feed-in tariffs to reduce the size of the solar PV market significantly. In order to react to the effects of this on our business, we have launched a statutory 90-day consultation process with our people on how we can reshape our business.”
Carillion said it does not expect the reshaping of its energy division to effect its profitability for the year.
Meanwhile, Breyer Group - another major solar panel contractor - reported this week that it could lose up to 15% of its turnover this year thanks to the slashing of FITs.
Last week, housing provider Peabody cancelled its order for solar installations from Solar Bright, Breyer’s energy arm, at its homes from 12 December, costing the company £12m in lost revenue.
Ashley Powell, business development director at Breyer, said: “We had also just been awarded a contract to do half of a £10m scheme for Islington Council. It has been put on hold. They are trying to get as much done before 12 December but our difficulty is delivering for that and [a £22m scheme in] Colchester.”
The worsening fall-out from the FITs cut will ramp up pressure on the government, which has been accused of backtracking on its green commitments this week.
George Osborne’s autumn statement contained no further Green Deal incentives while the government’s National infrastructure Plan was criticised for not integrating green construction principles.
Paul King, chief executive of the UK Green Building Council said it was a missed opportunity to put green growth at the heart of recovery.