Whilst the Feed In Tariff (FIT) review has prompted huge disappointment across the solar industry in the UK, FIT regimes across the continent have been unstable for a couple of years. So what causes governments to wobble on FITs?
Too many projects
Fundamentally, the explosion of installations underpinned by FITs in many countries has caused great concern to the powers that be. In France 9MW of solar was installed in 2009, then over 900MW in 2010. In Spain 300MW was expected over the same period, 3000MW was in fact approved. No wonder ministers sit up and take notice.
Underlying tax burden
While FITs are paid for by utility companies, when total tax payments are calculated they qualify as a tax. So while the government doesn’t pay out FITs to qualifying installations, they appear on the government’s balance sheet. Bizarre though this may seem, in an era of austerity the pressure cut to the tax burden seems irresistible.
Technical
There are plenty of experts in the renewable field so I’ll go out on a limb here. Electricity engineers have told me that because renewables are unpredictable the underlying generators that fill the gaps when the sun’s not shining (i.e. gas and nuclear power stations) also constantly adapt to changing demand. Operators don’t like this as it’s more complex to do. Although this technical difficultly seems valid, it’s hard to believe that someone who runs a nuclear power station can’t figure it out.
Other players
Lobbying is always hard to verify. By it’s nature it’s informal and discreet. Questions remain, however. Why has Scottish and Southern got an office in Westminster? Renewables pose an existential threat to the business models of Utilities, generation companies and the oil and gas industry. And the city tends to view this upstart industry with a qualified disdain – a view often shared with banks and other establishment financial machines, witness the fact that the principal investors in renewables tend to the the risk-taking venture capital funds. Some installers complain of waiting months to get their FITs accepted with utilities, and that connecting their systems is costing disproportionate amounts.
