MSE news: Government solar panel plans legally flawed

magyar

Butti wrote: »

The problem with changing the rules in the middle of a consultation is it's not legal. We can all debate the level the tariffs should be at and the companies agreed that they should be negotiated down. By unilaterally cutting them though the government has bankrupted a number of companies and destroyed the trust of any investors thinking of supporting green companies.

I agree with the rest of the sentence but as per post above, it's not illegal to change rules without a consultation. The consultation will help the government's case for changing policy, it doesn't legitimise it.

Cardew

Butti wrote: »

The problem with changing the rules in the middle of a consultation is it's not legal. We can all debate the level the tariffs should be at and the companies agreed that they should be negotiated down. By unilaterally cutting them though the government has bankrupted a number of companies and destroyed the trust of any investors thinking of supporting green companies.

It was a 'consultation' - NOT a 'negotiation'

The Government has scores of consultations with interested parties - including the public: See

http://www.direct.gov.uk/en/Governmentcitizensandrights/UKgovernment/PublicConsultations/DG_170463

Having listed to the various representations the Government decides what action to take.


With Solar, the Government had set a finite limit for FIT expenditure(bear in mind that we pay this in higher prices - not from taxes) they had originally set up a consultation period so that the various factions could give their view on how the remaining money should be spent.

There was never any intent to 'negotiate' in the consultation period - nor should there have been.

At the end of the consultaion, the Government would have been perfectly entitled to suspend the FIT scheme for a period.

Knowing that it was inevitable that FIT would have been drastically cut, the solar industry(understandably) rapidly increased their rate of installations to such an extent that there would have been no money left, so the Government declared a cut in the FIT wef from 12 Dec 2011.(and then the rate really increased;))

2 years ago there was hardly any solar PV companies, they all formed, or dramatically expanded, to take advantage of the rich pickings.

There is absolutely no requirement or need to protect these companies from bankruptcy. It was an artificial market that everyone in the solar industry knew would come to an end sooner rather than later. If they cannot make the new lower rate of FIT pay - then they move on to pastures new - and not expect electricity customers to carry on paying them further subsidies.

magyar

Cardew wrote: »

There is absolutely no requirement or need to protect these companies from bankruptcy. It was an artificial market that everyone in the solar industry knew would come to an end sooner rather than later. If they cannot make the new lower rate of FIT pay - then they move on to pastures new - and not expect electricity customers to carry on paying them further subsidies.

Whilst I agree that the subsidies were of course far too high this doesn't mean that DECC wasn't almost negligent in the way it has handled this whole affair. Firstly, it woefully underestimated the costs and likely take-up. Since they more or less copied both the Spanish and German models it's incredible that they seem to have assumed they'd get less take-up than in either of those countries.

And I do think there is one important reason that this dealt with properly: if the government is seen to be effectively changing legislation retrospectively, then it undermines its credibility.

WIth the possibly exception of gas, no power plant can be built without subsidy, and companies will not put £bns at risk if there is significant chance that regulations will change.

Cardew

magyar wrote: »

Whilst I agree that the subsidies were of course far too high this doesn't mean that DECC wasn't almost negligent in the way it has handled this whole affair. Firstly, it woefully underestimated the costs and likely take-up. Since they more or less copied both the Spanish and German models it's incredible that they seem to have assumed they'd get less take-up than in either of those countries.

And I do think there is one important reason that this dealt with properly: if the government is seen to be effectively changing legislation retrospectively, then it undermines its credibility.

WIth the possibly exception of gas, no power plant can be built without subsidy, and companies will not put £bns at risk if there is significant chance that regulations will change.

Totally agree it has been handled very badly from the beginning. However having realised that matters were getting out of hand with the high take up of subsidies, they tried to rectify the situation. The action they took was commendable IMO, and it is only on a legal technicality that the Judge has sent the matter for Judicial review.

There is a finite sum of money available, so they cannot just allow firms to carry on once that money has been spent.

On subsidies for other Energy sources. Gas and Oil not only don’t receive subsidies, they pay huge amounts in taxes.

The other point that needs emphasis is that any subsidy for Nuclear, Coal etc is paid by the Taxpayer and is used directly by the industry to produce electricity at a lower cost and every consumer benefits from the cheaper energy.

With solar PV the subsidy is not funded by the tax payer but by a levy on every electricity customer and the huge profits go directly into the pockets of a tiny percentage of homeowners(less than 1%) who can afford £10,000+ or the Rent a Roof companies funded by venture capitalists – and they will get those profits tax free and inflation linked for the next 25 years.

HalloweenJack

are there figures available for who actually has installed the most? eg rent a roof or home owners?

magyar

Cardew wrote: »

Totally agree it has been handled very badly from the beginning. However having realised that matters were getting out of hand with the high take up of subsidies, they tried to rectify the situation. The action they took was commendable IMO, and it is only on a legal technicality that the Judge has sent the matter for Judicial review.

There is a finite sum of money available, so they cannot just allow firms to carry on once that money has been spent.

On subsidies for other Energy sources. Gas and Oil not only don’t receive subsidies, they pay huge amounts in taxes.

The other point that needs emphasis is that any subsidy for Nuclear, Coal etc is paid by the Taxpayer and is used directly by the industry to produce electricity at a lower cost and every consumer benefits from the cheaper energy.

With solar PV the subsidy is not funded by the tax payer but by a levy on every electricity customer and the huge profits go directly into the pockets of a tiny percentage of homeowners(less than 1%) who can afford £10,000+ or the Rent a Roof companies funded by venture capitalists – and they will get those profits tax free and inflation linked for the next 25 years.

I agree with all your points entirely. The bit that worries me is if it undermines trust in the UK Government. I have a bit of first hand experience of this from trying to get a Japanese company to invest in the UK power industry. Whilst you and I may see the UK as a very stable country with a government you can trust (in comparison to most other governments, anyway) the world can look very different from 8,000 miles away.

Cardew

magyar wrote: »

I agree with all your points entirely. The bit that worries me is if it undermines trust in the UK Government. I have a bit of first hand experience of this from trying to get a Japanese company to invest in the UK power industry. Whilst you and I may see the UK as a very stable country with a government you can trust (in comparison to most other governments, anyway) the world can look very different from 8,000 miles away.

I wouldn’t ever vouch for any UK Government as political expediency takes precedence over long term planning.

However with regard to Solar PV this Government are complying with the spirit of the Regulations framed by the last Government; namely to produce the maximum amount of solar generated electricity from the allocated funds.

If the Government started paying £1 each for widgets for use in, say, the NHS and found that price was not justified and they could buy them for 50p, they would be applauded for getting value for the taxpayer. So for the £xx million they set aside for widgets, they would get twice as many. There wouldn’t be howls of protest about the widget manufacturing companies being badly treated.

It should be exactly the same reaction with Solar PV. The Government was making us(the electricity customer) pay 43.3p in subsidy for every kWh of solar generated electricity. They found that price was not justified so cut it to 21p/kWh. For the £xx million set aside for solar electricity we will now get twice as many kWh.

Yet instead of applause , there seems to be a delight amongst many people that a technicality might perpetuate the situation where WE will revert to paying 43.3p/kWh and the solar industry carry on making huge profits.

mysterons

In one sentence you are saying we as consumers are all paying via our electricity bills for FIT's for PV. In your next sentence you claim there was £xx milloins set aside by the Government for FIT's.
Both claims cant be correct surely?

rogerblack

mysterons wrote: »

In one sentence you are saying we as consumers are all paying via our electricity bills for FIT's for PV. In your next sentence you claim there was £xx milloins set aside by the Government for FIT's.
Both claims cant be correct surely?

They are - the money set aside is from a levy on the electricity companies.

Cardew

mysterons wrote: »

In one sentence you are saying we as consumers are all paying via our electricity bills for FIT's for PV. In your next sentence you claim there was £xx milloins set aside by the Government for FIT's.
Both claims cant be correct surely?

Perhaps the term 'set aside' could be better phrased.

The money 'set aside' by the government is the(promised) limit of the levy consumers will pay.

i.e. The Government fix the maximum amount of money(£xxx million) that will be available for FITs on new installations in, say, a 4 year period.

That £xxx million will be collected from electricity consumers as a levy .