Just a day after a High Court judged ruled that the government's consultation on cuts to solar incentives is legally flawed
, two parliamentary select committees will today launch a blistering attack on the government's handling of proposed changes to feed-in tariffs, accusing ministers of undermining confidence in energy policy and landing a potentially "fatal" blow on the UK's solar industry.
The Energy and Climate Change Committee and the Environmental Audit Committee joined forces to investigate the government's controversial plans to half feed-in tariffs for solar installations
completed after December 12, following complaints from the industry and green NGOs that solar firms had not been given long enough to prepare for the changes.
Tim Yeo MP, Chairman of the Energy and Climate Change Committee, said that while the government was right to try and cut incentives it had handled the changes "clumsily". "Ministers should have spotted the solar gold rush much earlier," he said. "That way subsidy levels could have been reduced in a more orderly way without delivering such a shock to the industry."
His comments were echoed by Joan Walley MP, Chair of the Environmental Audit Committee, who warned the government was in danger of doing significant damage to a successful industry.
"It doesn't make economic sense to let the sun go down on the solar industry in the UK," she said. "As well as helping to cut carbon emissions, every panel that is installed brings in VAT for the Government and every company that benefits from the support is keeping people in work."
The report also questions the government's plan to ensure all homes meet a minimum ‘C' energy efficiency rating before they can qualify for solar feed-in tariffs, warning that with 86 per cent of homes currently not meeting the standard the restriction could have a "fatal impact" on the solar market.
"The Government is right to encourage people to focus on saving energy before fitting solar panels," said Walley. "But these proposals will require most households to spend thousands of pounds on extra insulation before they even purchase the panels.
"This will stop nine out of ten installations from going ahead, which will have a devastating effect on hundreds of solar companies and small building firms installing these panels across the country."
The report comes just hours after a High Court judge upheld a legal challenge from Friends of the Earth and two solar firms arguing the government's consultation on the proposed cuts was illegal. He ruled that the consultation was legally flawed, effectively forcing the government to reconsider its plans or else face a judicial review.
The MP's report similarly criticises the time line for the government's proposed changes, concluding that the consultation has been "rushed", the official impact assessment was "inadequate", and the proposal to cut incentives for all installations completed after 12 December was "unfair". Yeo warned the mishandling of the changes could have a knock on impact on the wider low carbon economy.
"The consequence of the rushed, eleventh-hour consultation will be uncertainty among investors in all kinds of renewable energy
, which will inevitably push up the cost of capital,"he warned. "This is an extremely unfortunate outcome, because right now we need unprecedented levels of investment to replace ageing power stations and reduce emissions."
The report also notes that a number of projects have been suspended as a result of the changes and households, businesses, local authorities, and community groups could have been left out of pocket as a result of cancellations.
The report calls on the Government to allow anyone who had made a contractual financial commitment to install solar panels before the 31 October launch of the consultation to receive the existing tariffs.
It also urges the Department of Energy and Climate Change to urgently develop a new system to review and adjust feed-in tariffs in a more orderly manner, consider relaxing the proposed energy efficiency requirements, launch a new community tariff to support social housing and community owned projects, and better promote domestic solar manufacturing.
The report also recommends that electricity suppliers be required to provide annual data on how much feed-in tariffs have added to bills - an approach that would make it harder for critics of renewable energy to exaggerate the cost of green policies.
A DECC spokeswoman said: "The Government welcomes the joint EAC/ECC report and will give its findings and recommendations careful consideration. We appreciate the uncertainty faced because of the changes we have proposed to the feed in tariff scheme but we believe solar projects will still be an attractive investment.
"We stand by the need for the proposed changes in order to protect the budget which is funded by consumers through their energy bills. We will consider all responses to the consultation on FITs for solar PV carefully and will announce the outcome early in the New Year."