With all the furore around cuts to the Feed in Tariff recently, the end of pre-accreditation may have past most people by. This happened on the 1st of October and could well leave many projects that are ongoing on tenterhooks about the level of subsidy they are going to receive in the future.
What was Pre-Accreditation?
For projects that are going to take a while to complete, pre-accreditation was particularly important. It meant that before the installation was up and running businesses and investors could be sure they were going to receive a particular Feed in Tariff for the electricity they produced and that this would not be altered. It gave investors and the developers the confidence to undertake large projects without worrying that the goal posts would be moved and the financial benefits diminished if the Government suddenly decided it want to reduce subsidy levels.
According the Amber Rudd, the Energy Secretary:
“Our support has already driven down the cost of renewable energy significantly. As costs continue to fall it becomes easier for parts of the renewables industry to survive without subsidies, which is why we’re taking action to protect consumers, whilst also protecting existing investment.”
It’s an argument that has been used a lot in recent times and seems to be the mantra that the Government feels explains all. Except that it doesn’t. It particularly doesn’t explain where investors are going to find the confidence to invest if they are not at least partly sure of their return.
Uncertainty in the Market
Not being sure is damaging to any business, particularly the burgeoning renewables industry. Back in July, warnings were issued that getting rid of the pre-accreditation would not only damage investment in projects such as off-shore wind but would also dramatically increase the amount the projects would end up costing. It will mean that local communities who may have been thinking about clubbing together and developing their own power sources will almost certainly think twice.
(Incidentally, the Government is planning a big new nuclear power station. According to the Telegraph way back in 2013, this was set to cost the tax payer some £17 billion as a conservative estimate. That’s more than the cost of building the plant itself.)
It’s one thing to take a punt on a project when you know you are going to get a reasonably good return and another to take a leap of faith and hope it all turns out well. As we keep saying at the Hub, the renewables industry is not averse to the reduction in support but they feel the current timing is inappropriate and the scale of it just too great for many projects to maintain a façade of viability.
Opposition within the industry to removing the pre-accreditation was almost universal. In an article in PV Magazine in September they quoted the results of a Solar Trade Association poll that showed:
“…just 16 out of the 2,372 respondents supported DECC’s proposal to scrap pre-accreditation, yet the government has once again ignored this ‘overwhelming opposition from across the renewables industry and beyond’.”
The problem with the reduction in the Feed in Tariff planned for January next year is that it could go through in just the same way as the cancelling of pre-accreditation – people are voicing their opinions but it seems nobody, at least in Government, is listening.
With major media distractions such as the sudden and catastrophic demise of the steel industry in recent weeks, it is going to be difficult for the renewables industry to get its voice heard unless every one joins in over the next couple of months.
By Steve M.