Government impact assessment reveals potential full impact of the subsidy cut
More than half of all jobs in the solar sector are under threat from planned swingeing cuts to feed-in-tariffs, the government has admitted.
In an impact assessment published alongside confirmation of a 64% cut to the subsidy - which comes into force on 8 February - civil servants calculated the cut could result in up to 18,700 job losses in the circa 32,300-strong solar sector.
Mandarins classed this as a “high” impact scenario, with the “low” estimate put at 9,700 jobs, equivalent to 30% of jobs.
Both the feed-in-tariffs (FITs) cut and the impact assessment were published last week. The 64% cut to FITs - reducing the subsidy to 4.39p/kWh, down from 12p/kWh today - was actually smaller than the 87% cut to 1.53p/kWh the government previously proposed.
Civil servants described the job impact forecasts of the FITs cut as “tentative” and said the potentially dramatic drop in headcount could partly be attributed to people transferring back to their former professions, including roofing and general building trades.
Commenting on the policy, Paul Barwell, chief executive of the Solar Trade Association, said: “Government has partially listened. It’s not what we needed, but it’s better than the original proposals, and we will continue to push for a better deal for what will inevitably be a more consolidated industry with fewer companies.
“However, in a world that has just committed to strengthened climate action in Paris and which sees solar as the future, the UK Government needs to get behind the British solar industry. Allocating only around 1% of its clean power budget to new solar is too little, particularly when solar is now so cost-effective.”
The government has argued a significant cut to FITs is justified due to the balooning projected cost of the subsidy, with the costs passed to consumers’ energy bills.
At the time of its introduction in 2010, the government forecast the FITs scheme would cost £490m over the course of 11 years to 2021. By the comprehensive spending review in 2012 this forecast had hit £1.1bn, and in the most recent forecast by the Office for Budget Responsibility earlier this year it had hit £1.7bn.
The FITs scheme allows households to claim money from energy suppliers if they generate their own electricity through renewable sources, most popularly used through solar panels, but also through wind turbines. The deadline for projects to receive the current higher tariffs is 15 January.