Since the government’s decision to review, and consequently cut, the Feed-in-Tariff (FiT), the solar industry has been rife with confusion and speculation. Claim and counter claim has been made resulting in a slashed tariff, a series of government court cases and an industry once again being left with an uncertain future.

So, what now for the government and solar industry? Andrew Lee, international sales manager for Sharp Solar, examines where the UK solar industry goes from here and looks at what might lie ahead in 2012.

The see-saw approach to solar support

The Feed-in-Tariff, launched in April 2010, has seen energy generated by solar panels increase 41 times over, from 26MW of solar before the scheme, to 1GW at time of writing. This uptake and resulting cost of tariff pay outs surprised the government and it reacted swiftly by cutting the financial incentive in half. The speed of which led to legal challenges and has seen courts twice rule unlawful.

The government has now submitted an appeal to the Supreme Court against the rulings. In turn, this has prolonged the uncertainty for homeowners, businesses and investors around what rate of payment they will receive and under what conditions they need to operate in to ensure a profitable return.

To add to the mixed messages – the reaching of 1GW follows a claim by the government in February that it was raising the ambition for solar power in the UK, and that 22GW of solar – the equivalent of panels on four million homes – would likely be fitted by the end of the decade.

The government has sought to address some of the confusion by tying the Feed-in-Tariff to the Green Deal, a green policy that enables firms to offer consumers energy efficiency improvements paid in installments through their energy bill. Recently, DECC withdrew a proposal that any property benefiting from a solar Feed-in-Tariff should have Green Deal measures in place first, or alternatively, the equivalent Energy Performance Certificate rating of ‘C’. However, this has recently been amended by the government and downgraded to category D – requiring less front-up homeowner investment to meet the criteria. This is scheduled to come into place from this April.

How the government sees it

If the government achieves the proposed tariff cuts, it argues that instead of a scheme for the few, the new Feed-in-Tariff will be accessible to far more people, claiming plans will see almost two and a half times more installations than was originally planned for at launch, by 2015.

The government argues that the target is possible despite the cuts because of the falling cost of panels and installations – brought about by the huge uptake of solar, at home and internationally, due to tariff rates.

What does this mean to the UK’s solar industry?

There are 30,000 people currently employed in the industry, with 144,567 installations taking place in 2011 alone. Sharp’s own research has shown that solar is the preferred technology of consumers with 40% of those polled preferring to see more domestic solar power in their community.

It is imperative that the government realises this and continues to provide support for a FiT, allowing consumers the opportunity generate their own electricity and keeping its eyes on the long term 2050 carbon reduction targets.

Earlier this year, the German solar trade association announced that the renewable energy technology increased in output by 60% in 2011 to reach 18.6TWh. The soaring popularity of the technology in Germany has now seen over a million systems installed, with solar energy now accounting for four percent of total energy generation with installations for 2011 beating the previous record set in 2010.

Other figures indicate that renewable energy now accounts for just under 20% of electricity production in Germany, up 3.5% on 2010. Solar technology is still a young industry in the UK and now is not the time to lose faith in what has the potential to be key part of our low carbon economy for years to come.

What does the future hold?

The main challenge for the solar industry in 2012 is to ensure the long term survival of the sector and guard against any further knee-jerk cuts. For this to become a reality, stability and foresight are going to be a vital part of the decision making process. Setting the FiT at a long term sustainable level with a clearly mapped out digression rate, specially designed tariffs for social housing, schools and hospitals and tax relief for communities projects are all viable options that should be explored.

This is a view supported by the coalition of community groups, who recently commented that community owned green energy projects present the best chance of converting the UK to a low carbon economy and should receive more government support. It is essential that the current ongoing political uncertainty and legal wrangling, and the new appointment of Ed Davey as energy secretary, does not overshadow the main aim of the Feed-in-Tariff, which is to provide a structure for the UK to develop a sustainable solar industry and to support a low carbon economy.

We must trust that the government will not implement further damaging cuts and create an environment of long term stability. We must look at all options to maximise the number of installations that are possible within the available budget. Above all else, we must be unswerving in our commitment to building the UK green economy to rival the world leaders in the space.