Senior Policy Advocate – Sustainability
After six weeks of huge effort to install panels before the proposed cuts to Feed-in Tariffs take effect, many solar PV companies will be waiting anxiously for their phones to ring. How will consumers respond to the cuts in the Feed-in Tariff (FiT) that came into effect on 12 December? And will social housing projects be able to finance systems at the new rate?
In September, we researched consumer experience of microgeneration and the FiT. Our new report Keeping FiT presents our findings along with insights from the Energy Saving Trust on consumer attitudes to renewable technologies.
The report does not dwell on the cuts, not least because their timing and scale were unpredictable at the time of the research, but there are lessons that we must draw. I’ll start with the positive…
- The private sector showed it can respond promptly and at scale to market interventions from Government
- Customer satisfaction is high, countering traditional distrust of energy and building sectors
- Customers were willing to make long-term investments, believing that they were increasing the value of their home
Where there are problems, some could be resolved by the Government in their ongoing review: for example, eligibility should be based on the date of installation, not registration; and suppliers must not overcompensate consumers who have meters that run backwards when exporting electricity.
Other solutions are down to the installers, particularly the problem of misselling. Some suggest that the cuts will put ‘cowboys who jumped on the solar band wagon’ out of business. The development of the energy services market needs a stronger consumer protection framework than that though – from tougher rules on cold-calling to more resources for enforcement.
So where do FiTs go from here? We think opportunities will remain, particularly if the Government can put the funding of the tariff on to a more stable footing. Some people will still get a decent rate of return, provided they meet energy efficiency criteria; investors are not necessarily after a large return; and energy prices will continue to rise. But we are yet to see if consumers and communities will have the confidence to invest.
Government has talked of its concern about the impact on consumers’ bills. We support the need not to overcompensate, but our response to the challenge would be very different. Fairness comes from opportunity for all, not by further limiting access. Price rises from energy companies swamp the impact of the FiT, and the latter enables consumers to protect themselves from the former.
We want Green Deal to provide up-front finance for microgeneration alongside other low-carbon measures (subject to energy efficiency eligibility criteria). And we want Government to wrap not-for-profit social housing schemes into the community tariff (proposed as part of the FiT review), with an interim solution announced for those installed by April 2011. But contracts will have been cancelled, or gone unsigned, and it is uncertain if trust can be won back.
Finally, up to this point Government has avoided retrospective impacts on contracts due to the need for investor confidence. It must act now to re-invoke that confidence in its low carbon policies by basing changes to the tariff on the date of contract, not registration.