Small business solar hopes dashed

Renewable energy subsidy review will cut funding to larger scale ‘solar farms’ and only domestic installations will be eligible “I am aggrieved, definitely aggrieved,” says Rod Pearson, managing director of Crealy Adventure Parks . “We were trying to be carbon-neutral, and we wanted to use solar panels to do that. It was an excellent plan.” But those plans – to cover the roof of his two amusements parks in Devon and Cornwall with solar panels that would provide 90% of his energy needs – are now in jeopardy, owing to a sudden U-turn in government policy. This week, ministers will lay out the details of a planned review of renewable energy subsidies, focusing on proposals to limit the size of solar panel installations and cut down funding to larger scale “solar farms”. The likely result is that only small domestic installations , of less than 50kw capacity – enough to cover the average house roof – will be eligible for the feed-in tariffs that have fuelled the first widespread take-up of solar power in the UK, and created hundreds of new jobs. Anything bigger than that – from a farmer’s barn roof to a school building or a supermarket’s covered car park – will receive much smaller subsidies, allowing a rate of return of about 5% rather than the 12% envisaged for smaller projects. The lower rate would not be enough to attract the bank loans and investment needed, solar experts fear, especially as investors and banks have been spooked by the government’s willingness to drastically reform the system so soon after implementing it. The proposed reforms, first flagged up in early February , mark a reversal of the original feed-in tariffs, brought in last April, under which sites of up to 5MW capacity – enough to cover about 30 acres with solar panels – were allowed. It is the second major reform within a few months, as the amount earmarked for feed-in tariffs was cut by £40m in last year’s spending review. The government argues the reforms are needed because the subsidies, paid for by adding a small amount to electricity bills, were intended to promote solar power among households, rather than encourage larger installations, of the kind being planned in the south-west. Greg Barker, climate minister, hit out at what he called “hot money” entering the solar market, with City speculators attracted by the prospect of rates of return of 10% or more. “We were told it should be about Bert and Doris Miggins putting them on their roofs,” says Mark Shorrock, director of Low Carbon Solar , which has plans for over 200 community solar farms. But the image of “solar fatcats” turning a fast buck in the City is ridiculed by the likes of Pearson, and Adam Twine and Colin Parker, both farmers with plans for solar parks on their land. Shorrock says most of his investors are local authority pension funds, which want a steady long-term return on their cash and prefer to spend it on socially useful schemes. Solar farms can be built faster than erecting panels on roofs, and benefit from scale, as they are cheaper to install per unit of electricity generated. Ironically, given the government’s localism agenda, solar panels – even in the biggest arrays covering 30 acres – tend to be much more popular than windfarms. Standing about 2 metres high – about the height of a field of maize – they can be hidden by hedge boundaries, make no noise, and the fields in which they are set can still be used for livestock grazing. “I’ve gone to parish council meetings about solar panels and everyone in the hall is in favour – that doesn’t happen with wind,” says Shorrock. His company, which has grown to 40 employees on the back of the promise of feed-in tariffs, backs community solar schemes, which he says gives people the chance to participate in the green economy by a taking a stake of a few hundred pounds. Now, he says: “We’re semi-stuffed.” Colin Parker, a Cornish farmer whose plans to plant solar panels near his woodland are now on hold, points to his scheme as an example of David Cameron’s “big society”. Parker is re-converting much of his land to the woodland that was cleared centuries ago, opening it to public use and running courses for schoolchildren to learn about sustainable living. He hoped to use the income from 3.2MW of solar panels to help finance the tree-planting and school visits, but that has now been thrown into doubt by the government’s U-turn. Cameron’s catchword is also invoked by Adam Twine, whose £14m plans for a 30-acre solar farm in Oxfordshire, financed by thousands of local people taking shares, are now on hold. “I’d have thought this was what the ‘big society’ was supposed to be about,” he says. In Cornwall, the review of the feed-in tariffs is seen as a direct attack on the county, which enjoys 15% more light than the rest of the UK and is home to dozens of plans for solar parks, which have been enthusiastically taken up by the local authorities as a way to stimulate much-needed investment in the region. “Yet again, London comes and pulls the rug out from under us,” says Parker. “We are not happy bunnies round here.” Case studies Colin Parker, farmer, Cornwall “I don’t think they know what they’re doing – this is the most knee-jerk government, where nothing seems to be thought through,” says Colin Parker, a Cornish farmer whose plans to plant solar panels near his forest are now on hold. He has been angered by the government’s surprise U-turn on feed-in tariffs for solar power, announced early last month and scheduled to be set out in detail this week. Under the original tariffs, his 3.2MW solar scheme would have been eligible for a return of investment of about 10% – enough, he says, to gain financial backers for the scheme, and to generate income to allow him to convert more of his 212-acre farm to woodland. This is a process he has had under way for more than a decade, aiming to restore the ancient Forest of Moresk, famous in the time King Mark ruled Cornwall in the sixth century, which would have stood on his farmland. He also runs school visits to the wood to teach children about sustainable living. But Parker’s vision also encompasses Cornwall’s more recent history – in the early days of steam, he says, Cornwall was at the forefront of the industrial revolution, with steam pumps for the tin mines. Today, he says, Cornwall could once again be in the vanguard, this time of the green technology revolution. “This is an absolute godsend to Cornwall,” he says. “We have sunlight, we have waves, we have wind – we are the natural place for renewable energy.” “The way I see it, I grow trees that convert sunlight, and now I could be growing man-made trees to do the same thing,” says Parker. Rod Pearson, managing director, Maximum Fun “We have been here for 22 years and we have always tried to be a green company – we’ve been doing recycling, we have a staff bus so people don’t need their cars – and we have been aiming to become carbon-neutral,” says Rod Pearson, managing director of Maximum Fun, which runs the Crealy Great Adventure Parks in Devon and Cornwall. “We thought we had found a great way to do this, by using solar panels.” The company planned to erect panels on its covered children’s play areas and car parks, which would have been enough to cover about 90% of the amusement parks’ energy use. But those plans are now in doubt, as the government’s proposed changes to the feed-in tariffs would mean tearing up the current business plan. Even if the plans are still feasible under the revised proposals, the installation will be subject to a lengthy delay at best, he says. Pearson says he is “aggrieved and frustrated” by the sudden change in policy. “This review will take months, and that leaves everything on hold,” he says. “The uncertainty is a big problem, it’s very annoying.” With the government willing to make sweeping changes to policies at short notice, businesses will find it more difficult to draw up business plans and gain financial backing, he says. “The entrepreneurial spirit is still alive in Britain, but this makes it very frustrating.” Adam Twine, farmer, Oxfordshire When it comes to community schemes to generate renewable energy, Adam Twine knows what he is talking about. The organic farmer, from Westmill near the Oxfordshire/Wiltshire border, set up a community windfarm scheme a few years ago. With 2,500 investors from the local area, he raised £4.5m and set up a small windfarm with five turbines and a 6.5MW generating capacity, which has now been operating for three years. Now he wants to do the same again, this time with solar power, and has consulted with the local community and applied for planning permission for a 5MW solar panel installation that would cover about 30 acres near an old airstrip. Local people were enthusiastic, he says, and he spent about £15,000 in carrying out tests on the site, examining everything from the wildlife to the soil substructure. “What we are talking about here is the ‘big society’ writ large – local people getting together to generate their own energy in a clean, effective way,” he says. But with the government’s proposed changes to the feed-in tariff rates, his plans may no longer be viable. The windfarm was attractive to small investors because it offered a gradual but steady return, likely to average about 10% a year over 25 years – a better return than that on offer in banks. But if the feed-in tariff rates are slashed, the rate of return will be much lower, and banks may be less willing to lend the money needed, or will charge a higher interest rate, which could mean the scheme is no longer viable. He is calling for the government to make a special provision for community-based renewable energy schemes, which he says offer social advantages beyond the financial return, which he says offer social advantages beyond the financial return. Feed-in tariffs Energy Renewable energy Energy bills Solar power Fiona Harvey guardian.co.uk

Posted by on March 14, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.