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07 November 2011

Government FIT announcement has killed off attraction of solar energy, leaving small firms left dry

Reference number: PR/2011/64

FSB News Release

PR 2011 64

Issue date: Friday 4 November 2011

FSB fears that Government Feed-in-Tariff announcement has killed off attraction of solar energy, leaving small firms left dry of solar equipment

The Federation of Small Businesses (FSB) is concerned that the Government has triggered a rush by big businesses to mass purchase solar photovoltaic (PV) equipment leaving small firms high and dry, following its announcement that it plans to cut the Feed-In-Tariff (Fit) rate earlier than expected.

Earlier this week, the Government announced that it plans to cut the FiT scheme from 43.3p kWh to 21p kWh for solar PV installed after 12 December, rather than at the end of March next year as expected. The FSB fears that as a result of the announcement, a rush by big businesses to mass purchase solar PV equipment has been triggered in anticipation of a huge increase in demand ahead of 12 December cut-off.

This means that small businesses have been left high and dry, since they are unable to make the mass purchases of stock that big businesses can and they are now unable to restock – or if they can get hold of equipment, it is only at extortionate prices.

While the FSB understands the demand for the FiT scheme was higher than budgeted for, a cut of 50 per cent was overly drastic. And with such short notice of the change, it will cripple those businesses in the micro-generation sector – these are exactly the businesses that the Government wants to help generate growth for the economy.

The renewable energy sector has been one of the few good news stories over the past few years, with the industry creating 25,000 jobs – those of which are now under threat.

The FSB is calling on the Government to a commit to pre-agreed framework for future adjustments to the FiT scheme to maintain certainty in the market that allows small firms and consumers to plan. This will help to give long-term support for green industries and the jobs they are creating across the country.

John Walker, National Chairman, Federation of Small Businesses, said:

"The Government''s ill-thought through policy has left small businesses high and dry – unable to stock up on equipment necessary to meet pre-agreed orders and benefit from the increased demand for solar PV ahead of the cuts to the FiT scheme. This is simply because big businesses have mass purchased ahead of the 12 December deadline. We have heard from members who are unable to buy the equipment they need, so they either have to go without, or in some cases pay extortionate prices and are now unable to meet pre-arranged orders.

The Government should be building on public appetite for renewable energy, and maintain certainty in the market that allows firms and consumers to plan ahead. The constant tinkering with the FiT scheme has undermined investor confidence across the green energy sector. Small firms in the green economy now lack the confidence to plan for the future. It is essential that Government does not make the same mistakes with the forthcoming rollout of its flagship Green Deal energy efficiency initiative."